Revolut's Valuation Declines by 46%, Raising Questions About Fintech World

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• 📉 Revolut's valuation has recently declined by 46%, raising questions about the state of the fintech world, despite global fintech funding to startups increasing by 55% from Q4 2022.

• 📈 Islamic fintech is growing faster than traditional fintech, with a projected market size of $179 billion by 2026

• 🤑 Early wage access programs are growing among banks, with Santander and DailyPay leading the way, as consumers look to improve their financial health.

• 🍟 Extra Fries: Bunker, Anthemis, Vesey Ventures, and Aviva Ventures make headlines with new partnerships and investments, while a recent survey highlights adoption gaps in education and income among fintech users in Hong Kong.

• 🖤 +2 M&A Transactions

• 💸 +13 Funding Rounds 

What Revolut's Valuation Troubles Mean for the Fintech World

• In 2021, Revolut had raised $800m at a $33b valuation. At the time, this was not surprising — Revolut's 2021 profitability and revenue growth led to a strong operating leverage and profits, which contributed to investors wanting a big slice of that pie.

• However, Revolut's valuation has recently declined by 46%, suggesting that it was overvalued and raising questions about how much trimming is left to do in the fintech world.

• If we look at the broader ecosystem, fintech funding to startups increased 55% from Q4 2022, making for a global tally of $15 billion, but this is skewed by Stripe's latest $6.5 billion raise alone accounting for over a third of that sum.

• What this means: the profitability of neobanks and their ability to adjust to investor preferences will be crucial in determining how much pain they can expect in the months ahead.

The Growth of Islamic Fintech Outpacing Traditional Fintech

• A new wave of fintechs in Southeast Asia are making services shariah-compliant to attract the region's large Muslim population.

• These companies avoid charging interest, focus on profit sharing, and refrain from transactions involving alcohol and tobacco.

• Examples of Islamic fintech companies include Blossom Finance, Bank Aladin, LinkAja, and Hijra.

Market Size:

• The market size of Islamic fintech in the Organisation of Islamic Cooperation (OIC) countries was $79 billion in 2021, accounting for 0.83% of global fintech transaction volume.

• According to the Global Islamic Fintech Report 2022, the market size of Islamic fintech is expected to reach $179 billion at a 17.9% compound annual growth rate (CAGR) by 2026. This growth rate outpaces traditional fintech's CAGR of 13.5% over the same period.

Problems being solved:

• The growth of Islamic microfinancing, which offers short-term financing with terms of less than 12 months, can play an important role in alleviating poverty in OIC countries. This is because Islamic microfinancing works with customers who are often underserved by traditional banks.

• Shariah-compliant services can also help resolve issues faced by unbanked individuals, such as lack of funds, insufficient documentation, and living far away from conventional Islamic banks.

Early Wage Access Growing Among Banks, with Santander and DailyPay Leading the Way

• Santander Bank has teamed up with DailyPay to offer an on-demand pay benefit to its Commercial Banking clients in the United States.

• This collaboration allows Santander's clients to provide their employees with immediate access to their pay as they earn it.

• In the offering enabled by DailyPay, Santander's clients can transfer a user's earned pay to the account of their choice so that it is available to use at any point in the payroll process.

• PYMNTS research found that 24% of banks intend to add an early wage access program to their offerings soon, joining the 70% of banks that have already done so.

• Early wage access has proven to be a valuable offering for employers because consumers are looking to improve their financial health while they are living paycheck to paycheck and are being buffeted by inflation.

• US fintech BUNKER has partnered with InvestCloud and Apex Fintech Solutions to launch a mobile-first digital investment platform in LATAM. The platform offers multilingual communication, financial education, wellness tools, and AI-powered digital advice for better investor outcomes. It targets affluent Latin Americans seeking an easy and friendly way to invest in safe, well-regulated markets for long-term financial goals. (Read More)

• Fintech-focused VC firm Anthemis Group has let go of 28% of its staff as part of a restructuring effort. The London-based company declined to say which roles were impacted, but has since made two new hires — an investment principal and head of intellectual capital. (Read More)

• However, not everything is bad news for Anthemis. Their Female Innovators Lab Fund has become the biggest early-stage fintech fund focused on female founders with a $50 million total. Visa and BMO have joined Barclays and Aviva as investors in the fund. (Read More)

• Vesey Ventures has closed its debut fund with $78m, which will focus on early-stage fintech and technology companies with opportunities for early partnerships with financial incumbents. Its founding partners have a track record of investing in early fintech winners, including Stripe and Trulioo. (Read More)

• Insurer Aviva has committed £150m to its venture capital fund, Aviva Ventures, which will invest in early-stage businesses in emerging technology and customer trends. Its first investment is in Scan.com, a medical imaging services provider. (Read More)

• 👀 Men and property owners are more likely to use fintech services in Hong Kong, including virtual bank, insurance, and asset services. However, more women adopt digital payments. The survey also reveals ironic adoption gaps in education and income, highlighting the need for financial inclusion. (Read More)

• South Korean fintech Kakao Pay has acquired a 19.9% stake in US brokerage firm Siebert Financial for $17 million. It plans to acquire an additional 31.1% stake, making it the largest shareholder of Siebert. The acquisition is part of Kakao Pay's strategy to expand into the US market and strengthen its brokerage unit Kakao Securities. (Read More)

• Belvo, a leading account-to-account payment provider in Brazil and Latin America, has acquired Skilopay, a Brazilian payment institution. The acquisition will allow Belvo to expand its portfolio of payment products to become the most complete account-to-account payments provider in Brazil. (Read More)

• Super | $80m Series C: saving app that empowers users to spend less, save more, and build credit (link)

• Clara | $60m: B2B LatAm business credit card, payment solution, and expense tracking platform (link)

• Mooncard | $41m: corporate payment card that automates the management of expense claims and business expenses (link)

• Trullion | $30m: AI-powered accounting automation platform that uses AI to automate workflows for accounting and audit teams (link)

• m3ter | $14m Series A: pricing operations platform that integrates usage data, applies pricing, and generates error-free bills in real-time (link)

• Niro | $11m: embedded lending platform that provides customized credit products for consumers (link)

• Wayhome | $10m Series A: debt-free way to buy a home with just a 5% deposit and no mortgage (link)

• Constrafor | $7.5m: construction procurement company that offers financing and software for general contractors (link)

• Summer | $6m: workplace benefit that helps employees navigate college costs and reduce student debt (link)

• Bixby | $5.5m Series A: software platform connecting asset managers and hedge funds to market moving news and financial information in the private debt market(link)

• Ansa | $5.4m: closed-loop payments platform that allows any merchant to integrate user balances (link)

• Yield Exchange | $0.5m: B2B SaaS platform for organizations to access competitive guaranteed investment certificates (link)

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