PRESENTED BY TEARSHEET

The Challengers

By Zack Miller -- January 30, 2019

Welcome all our new subscribers from our 2019: The Year of the Challenger Bank webinar. It was a great webinar: we had hundreds of people -- from 21 different countries -- register for the event.

We're editing the video and sound so we can share the insights from Chime, N26, and Revolut.

Your feedback is always welcome -- hit me up at zack@tearsheet.co.

'Country by country, we'll secure banking and trading licenses: Revolut formally unveils global rollout plan'

Challenger bank Revolut has always talked about going global. Now, it has gone public with a formal plan for its international expansion.

Revolut unveiled its strategy to expand internationally by hiring a global licensing team tasked with securing banking, trading, and credit licenses in new markets. Revolut will begin with a focus on the UK and US markets.

The challenger bank‘s team with be responsible for the end-to-end licensing process — from building relationships on the ground and establishing partnership to working with the regulators on requirements. With licenses in hand, Revolut will continue its expansion into a global bank.

Read more about the licensing team's structure and plans

The race to raise interest rates on savings accounts

US banks continue to compete over deposits by raising interest rates in a funny battle of one-upsmanship. Next in line is Varo Money, which raised its rates to 2.8 percent, one of the highest out there.

As new challenger banks like Revolut and N26 prepare to enter the US market, customers stand to win with expanded choices, downward pressure on fees and more generous rates.

Monzo is phasing out paper receipts

Monzo is opening up its digital receipts pilot with startup Flux to all its 1.4 million customers in the UK.

Starting today, Monzo customers will be able to get itemised receipts from four food retailers – Pod, Pure, EAT and Itsu – sent immediately to their app. This will make tracking spending down to every coffee and sandwich a lot easier.

Monzo is actually the third partner bank for Flux, after Starling Bank and Barclays Launchpad, The London-based fintech startup was founded by former Revolut employees in 2016 and wants to prove that getting rid of paper receipts can work at scale.

First Direct launches tool allowing customers to send up to £350 a day via Facebook Messenger and Whatsapp

Developed with Tel Aviv fintech start-up PayKey, the HSBC offshoot bank's new 'fdpay' service allows users to tap a payment icon on a smartphone keyboard within an in-app conversation and make a payment.

First Direct currently has around 1.45 million customer and is looking to enhance its P2P service as it faces increased competition from Monzo and Starling, which are both adding more mobile-friendly financial services.

Why Finxact just got $30 million from the ABA, SunTrust, others

Cloud-based core banking provider, Finxact announced a $30 million investment round. Participating were the American Bankers Association, SunTrust Bank, Live Oak Bank, Woodforest National Bank, First Data and others.

Why the interest? One reason may be the hope that Finxact can crack the stranglehold of the big four in the US.

From American Banker:

...no vendor has yet broken the hold that the big four in core-banking (Fiserv, FIS, Jack Henry and Finastra) has on the U.S. banking market. Outside companies have had wins here and there, such as Infosys’ deal with Goldman Sachs to run Marcus on its Finacle core, but none have gained sizable market share. This strong endorsement from respected players gives Finxact a chance to break in.

More likely it's a combination of founders (the Sanchez brothers are money) and a long-term view that core banking is moving to the cloud, will be priced as SaaS, and be some level of API-enabled.

What we're reading

Monzo's 2019 product roadmap
Cross River and Railsbank launch partnership to offer open banking globally
Competing with neobanks on customer value
CULedger raises $10 million for DLT-based digital ID system
Brazilian challenger Jeitto closes round led by Accion Venture Lab

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