Fintech Inside #1 - 12th Sept, 2020 | Jane Fraser
Front page for Fintech in Emerging Markets
Hi, Osborne here.
Welcome to the first edition of Fintech Inside. Fintech Inside is intended to be the front page for Fintech in emerging markets.
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Diving right in:
One Big Thought
Citi appoints Jane Fraser as new CEO. Jane will be the first female CEO of a large global bank.
More. Women. In. Financial Services. It’s no secret that financial services are largely a male dominion today and that clearly needs to change. Why? Men can’t think of how financial products impact women. Women need finance to be targetted in a completely different way. Further, Women seem to be largely excluded from owning their own financial lives. That’s changing, yes but more needs to be done.
Further, I also believe CXO’s that are women bring a lot more to the table than just shareholder value growth - as most men do. From my various conversations with women in CXO positions, I feel they’re a lot more well read and confident about themselves. By well read I mean women really know what they’re talking about unlike some men who ramble away with bloated confidence.
I for one hope this is an inflection point for women and more women make it to CXO positions. Who run the world?
India 🇮🇳
Market updates: 🔔
Navi, Flipkart Co-Founder Sachin Bansal’s financial services platform, has emerged as one of the top consumer lenders in India. Navi launched its personal loan platform in May this year - smack in the middle of the pandemic when every other lender had suspended leading. The company claims to have disbursed over USD 17 mn to 40K-45K borrowers since May-20 to Aug-20. Interestingly, the average loan size is ~USD 400-420. Sachin Bansal’s fintech ambitions are larger than life and it’s left to be seen how successful he is at it. Read More
Acko, an Indian general insurance carrier, has invested in Pitstop, a car service and repair startup. Acko itself has raised over USD 130 mn from marquee Indian and global investors at last valuation of USD 400-500 mn. 60% of Acko’s book is auto insurance and hence this investment is fairly strategic. However, Acko’s growth has been muted so far. Read More
IRDAI, India’s insurance regulator has sought to reduce GST (Goods and Services Tax) on life and health insurance products from 18% to 5%. This should prove a boon for consumers as this could result in direct 13% cost reduction. Insurance penetration in India is < 3% of GDP. One can only wonder why insurance was taxed at such a high rate. Read More
Paytm, an Indian payments platform, denied claims that Ant Group has any influence over it. Paytm has been facing heat recently due to its shareholder ANTGroup amid the Indo-China border tensions. ANTGroup owns majority stake i.e. 29.7% in Paytm and claimed it had significant influence over Paytm. Read More
SBI YONO, the digital vertical of State Bank of India - India’s largest public sector bank, claims to have a valuation of USD 40-50 bn! That’s pretty crazy - even for a claim from it’s Chairman - Rajnish Kumar. Does that make SBI Yono the worlds largest Challenger Bank? The Chairman further reports that 55 out of 100 transactions at SBI are happening on digital channels. At present, it is giving loans of over Rs 70 crore per day, including on weekends. Interestingly, SBI’s market cap itself is about USD 24 bn - so it’s anybody’s guess 🤷 Read More
72% India’s corporate sector debt seems to be under stress. 29% of that i.e. USD ~207 bn has been impacted purely by Covid. The rest was already under stress. India imposed probably the strictest lock down in the world coupled with a six month moratorium on ALL loans. This concoction seems to have resulted in a very bad outcome for the Indian economy and the lending sector. Read More
India’s Finance Ministry was quite busy this past week. It introduced a notification that it is mulling a reform allowing Indian companies to list on Stock Exchanges abroad. It will most likely be a secondary listing though. Further, the Ministry also introduced a 5% tax collected at source for foreign fund transfers above USD 9,333! Absolutely ridiculous - not sure what purpose this serves. Read More
Funding Announcements: 💰
Pagarbook, an Indian SME employee management app, is in advanced talks to raise USD 7 mn from Sequoia Capital India at an expected valuation of USD 25-28 mn. The mobile platform allows SME’s to manage attendance, salaries and payroll and is available in 12 Indian languages. The company claims to have 700K SME’s using the app to manage payroll for 3 mn employees . Read More
Groww, an Indian direct investment app, raised USD 30 mn from YCombinator’s growth fund Continuity. Groww targets millenials and first time investors to invest in zero commission mutual funds and stocks. Existing investors Ribbit Capital, Sequoia Capital and Propel Venture Partners also participated taking the total funds raised by Groww to USD 59 mn. The company claims to have 8 mn mutual fund investors and 200K stock investors. Read More
i3-Systems, an Indian insurance SaaS platform, raised USD 1.3 mn from Unitus Ventures and other Angels including Reliance Industries’ CFO Alok Agarwal. From what I understand, i3-Systems provides automatic document processing capabilities to insurance companies. This may seem like a very simple thing but it’s an absolute nightmare in any insurance company. From some of my past conversations with InsurTech founders, I’ve learned that sometimes an insurance company can have as many as 150 different tech systems for various internal processes! Read More
South East Asia
Market Updates: 🔔
Manny Pacquiao, world famous boxing champion, is launching PacPay - his own payments platform in Philippines for cross border payment. PacPay is expected to launch later in 2020. Seems the app will be launched in partnership with another payments company (Remesa) and will issue prepaid cards to users Read More
VIDEO: Here’s how Indonesia’s mom and pop stores are going digital. This is just for informational purposes to highlight the growing interest in tech for mom and pop stores in emerging markets. Indonesia’s general trade segment consists of 3.5 million “warungs” that make up for 70% of the country’s FMCG market. In India and Indonesia, there’s been a flood of investment in this sector. Read More
Revolut, UK based financial services app, has launched its banking app in Japan. The roll out seems to be a phased one with registered users getting a debit card and ability to manage money in 23 currencies. It’s entry in Japan is Revolut’s first in a non-English speaking country. Read More
Funding Announcements: 💰
Sunday, Thai insurance carrier, announced a USD 9 mn fund raise from SCB 10X, the venture capital arm of the Siam Commercial Bank PCL (SCB). Existing investors Vertex Ventures, Quona Capital and LINE Ventures participated in the round too. Sunday was founded in 2017 and aims to be the “one-stop” platform for health care, mobile gadget, motor vehicle, and travel insurance. Read More
ANTGroup, Chinese financial services conglomerate that is listing on the Hong Kong stock exchange, is creating quite a buzz globally. From planning to raise the highest amount ever raised in an IPO (USD 30 bn) to A-list institutional funders queuing up to invest - it’s a crazy IPO no matter which way you slice it. This time, news is that ANTGroup will likely raise from Temasek, GIC and Saudi Arabia’s Public Investment Fund. Read More
JazzyPay, a Philippine payments company, raised USD 500K from Cocoon Capital. JazzyPay provides payment acceptance solutions to underserved merchants i.e. hospitals, schools, clinics and so on. Philippines is still some years behind in digital payments infrastructure and hence this is interesting. To give you a sense, payment providers ask merchants a deposit of USD 10K to install a card terminal! Read More
Europe 🇪🇺
Market Updates: 🔔
European Fintech’s are increasingly starting operations in Asian countries. Seems these Fintech’s from a developed region are entering developing regions for the increasingly digital customers and nascent tech ecosystem. This will most likely go the way India is at the moment - US companies have flooded India. While this has increased competition, it also scares founders from starting up to begin with. I guess time will tell how this turns out. Do take time out to read this brilliant analysis from Sifted. Read More
Starling Bank, UK’s challenger bank, launched Kite - it’s debit card for children below 16. The card comes with a monthly fee of GBP 2 and has features to notify parents of transactions on the card. Will be interesting to see the growth of this card. There’s a lot that can be done with providing financial services for children. Read More
Banco Santander, Spain’s largest bank and among the largest in Europe, spun off a fintech fund, Mauro Capital, while doubling allocated funds to $400 million. At least to my knowledge (correct me if I’m wrong), that’s the most significant amount committed by any incumbent to invest in Fintech’s. Apparently, since being launched in 2014, the fund has an IRR of 25-35% with cash-on-cash return of 1.75x. That’s pretty impressive. Read More
Peaks, Dutch micro-investing app, expanded to Spain and France. Apparently, this expansion will make Peaks the first micro-investing to be present in four European countries. Peaks seems similar to Acorns in US that rounds off every transaction to the nearest 10 or 50 and invests the overage. Read More
Factris, Amsterdam-headquartered SMEs invoice financing startup, secures EUR 50 mn in financing agreement. This financing is most likely debt for on lending. Read More
PODCAST: Inside Shopify’s financial services strategy. Lately, Shopify has emerged as the unlikely Fintech startup with a slew of Fintech products. And Shopify has been winning it. This podcast covers quite a few aspects of their strategy. Worth a listen. Read More
Funding Announcements: 💰
Mollie, Amsterdam-based payment startup, raised EUR 90 mn in TCV-led Series B funding. With this funding, Mollie enters the fintech unicorn club. Total funds raised by Mollie is EUR ~115 mn which is interesting, 115 mn seems quite low for a payments company. Europe is highly fragmented in its payment services and each country in Europe has its own nuances and localised payments despite the Single Euro area mandate. Read More
BIMA, London-based life and health insurance for emerging markets, secures EUR 25.3 mn. BIMA provides teleconsultation along with its insurance product - probably to provide preventive health solutions to reduce claims ratios. I’m unable to decipher whether they are the broker or the carrier but seem to have operations in Africa and Asia. Read More
Mercuryo.io Estonia-based cryptocurrency payment startup, raised EUR 2.5 mn. Founded in 2018, the startup offers a range of options, including virtual accounts, business payments, remittance processing, and mass payouts, no matter the local payment methods or currency. Read More
Dusk Network, Amsterdam-based fintech offering innovative financial products in the blockchain ecosystem, has raised EUR 840K from iFinex Inc. Apparently, the startup is aiming to create a regulated Security Token Exchange. I have limited knowledge of what that means, but the article covers it in detail. Good read. Read More
If you’ve made it this far - thanks! As always, you can always reach me at connect@osborne.vc. I’d genuinely appreciate any and all feedback. If you liked what you read, please consider sharing or subscribing.
See you in the next edition.