Blueprint: Plaid's Wallet Connector to aggregate Web3 wallets; $43MM raise for merchant receipt data company Banyan; NatWest's new play in banking-as-a-service
Plaid has launched a new aggregation service called Wallet Connector, which pulls together access to over 300 wallets like MetaMask, Coinbase Wallet, and Trust Wallet.
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You are the best, today’s agenda below.
CRYPTO: Plaid Takes First Plunge Into Web3 With Wallet Connector (link here) and Mastercard Taps Paxos to Launch Crypto Trading for Banks (link here)
PAYTECH: Banyan raises $43M to grow its network of item-level purchase data (link here)
BAAS: NatWest to launch BaaS business in UK (link here)
LONG TAKE: Emergence of Generative Artificial Intelligence sector, and powering DAOs with shallow labor (link here)
PODCAST: Creating the neobank and embedded finance industry, with Sila CEO and Simple Co-Founder Shamir Karkal (link here) — must listen
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Short Takes
CRYPTO: Plaid Takes First Plunge Into Web3 With Wallet Connector (link here)
Plaid has launched a new aggregation service called Wallet Connector, which pulls together access to over 300 wallets like MetaMask, Coinbase Wallet, and Trust Wallet. The service is aimed at developers that want to integrate onchain crypto experiences into traditional applications.
In the same way that a fintech app may pull in bank authentication and identity, i.e., by plugging in Bank of America or HSBC, the new integration pulls in onchain accounts through particular wallets. This puts Plaid into direct competition with WalletConnect, the current solution for integrating wallet access, though the feature set and positioning are quite different. It also answers the question of who will be the Plaid of Web3 — probably Plaid.
Further, the news neatly fits with our last week’s coverage of Mastercard and Paxos partnering on launching an integrated bank crypto offering (link here). On one side Mastercard will manage regulatory compliance and security for banks, whilst Paxos will manage crypto custody and trading services. These offerings will be bundled together by Mastercard to be integrated directly into banks’ interfaces. Mastercard has been planting seeds for a while, with acquisitions of crypto intelligence firm CipherTrace and of digital identity solution Ekata.
Note that Plaid is the existential threat to the card networks and their positions as aggregators of all money movement rails. Thus we expect similar moves from Visa, Mastercard, and Plaid over the long run, just aimed at different generations of companies.
👑 See related coverage 👑
PAYTECH: Banyan raises $43M to grow its network of item-level purchase data (link here)
Banyan, a commerce focused fintech, has raised $43MM in Series A funding at a reported valuation in the mid-$100 million range. The deal is broken down into $28MM in equity and $15MM in debt, with Fin Capital and M13 leading the round.
The company focuses on commerce, and understanding item receipt transactions data to power offers for a banks, fintechs, and other merchants. It uses a database of SKUs — an SKU is effectively a barcode, and SKU-level data refers to the underlying information of these barcodes, such as historical sales performance, inventory holding cost or turnover — which can then be used by clients for improving fraud prevention, growing targeted loyalty programs, or simplifying business banking. All in, Banyan has worked with more than 35K merchants to process billions of transactions and receipts.
Banyan’s key differentiator is that it accrues its data from merchants, rather than from screen scraping or view aggregator services. This allows for deeper granularity around customer behavior (what the banks see, vs. what the merchant actually does), and that in turn makes a more valuable data set. It makes for a tasty acquisition target, though now expensive.
We also like everything that moves closer to real world commerce and digitizes the physical experience into digital exhaust.
BAAS: NatWest to launch BaaS business in UK (link here)
UK retail bank NatWest and BaaS provider Vodeno Group are bringing a banking-as-a-service venture to the UK market, with Vodeno providing the cloud-based platform and NatWest its banking franchise. The deal is split 82% to 18% — NatWest holding majority share — as well as providing £120MM to fund the project and investing €58MM in Vodeno.
The entity, which builds on Mettle (NatWest’s business banking platform), will provide banking services such as deposits, payments, point-of-sale credit and cash advances for merchants. For context, Mettle currently has around 19MM retail user and 1MM business banking clients — a notable customer base prior to launch, comparable in scale to the usual mix of Revolut, Starling, and Monzo.
This is both a defensive and offensive move. At this stage, most banks are offering APIs per PSD2. Goldman Sachs even has a dedicated tech platform as a division. Therefore, providing an API-based solution is becoming a bare minimum to fend off competing propositions from fintchs. Second, this has real potential for revenue generation — BaaS in 2021 was a $368B market, expected to reach $2.5T by 2030.
Long Take: Emergence of Generative Artificial Intelligence sector, and powering DAOs with shallow labor (link here)
A lightbulb went off. We have been covering creative artificial intelligence for years, but a new framing of these trends as a generative AI ecosystem by Sequoia illuminated several things for us.
First, there is real progress in both infrastructure and applications in this space. Second, augmented humans are able to leverage the entire data set, skill, and labor power of experts at the scale of the human population using these products. And finally, such “shallow” labor of prompting large machine systems could be the core unlock needed for DAOs to build consumer grade products.
Podcast Conversation: Creating the neobank and embedded finance industry, with Sila CEO and Simple Co-Founder Shamir Karkal (link here)
In this conversation, we chat with Shamir Karkal, CEO and Co-Founder of Sila — a banking and payment platform for software teams building the next generation of financial products & services in regulated and unregulated industries.
A true pioneer, Shamir played a crucial part in building the infrastructure that would pave the way for online banking. In 2009, he co-founded Simple, the first bank of its kind in the United States, and later headed the Open Platform at BBVA. Shamir was drawn to serve smaller companies, co-founding Sila in 2018 with the goal of empowering financial innovations.
Rest of the Best
Here are the rest of the updates hitting radar.
PAYTECH: Thunes integrates with Visa Direct’s digital payments network
NEOBANK: Charli D’Amelio-endorsed fintech Step borrows $300M to bring crypto to teens
WEALTHTECH: Welrex Officially Launches Wealth Management Platform
WEALTHTECH: Coinswitch Kuber plans to go live with its wealth tech platform by year end
INSURTECH: OTONOMI raises $3.4 million
INSURANCE: Swiss Re warns of loss over $1.3B hurricane claims
INSURANCE: AXA to acquire Groupe Assurances du Crédit Mutuel España
WEB3: Offchain Labs acquires Ethereum core dev team Prysmatic Labs
CRYPTO: France approves its third-biggest bank to operate digital asset services
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