We are finishing this week with the latest fintech weekly. As Ethereum reaches a new record high, with a 2021 growth that strongly outperforms bitcoin, the world’s biggest cryptocurrency has also been doing well this week. Bitcoin will soon be coming to hundreds of U.S. bank consumers that will be able to sell, buy, and trade using their existing bank accounts. Meanwhile, the Mexican fintech startup that develops other uses for cryptocurrencies is raising $250 million in their series C funding round, becoming the first Mexican startup to pass the $1 billion valuations. However, as cryptocurrency adoption is spreading, the CEO of Ripple gave an extensive interview pointing out the lack of clear regulatory measures. Apart from crypto, we will also talk about the banking race of the digital-only banks in Hong Kong, the majority of the UK customers being dissatisfied with the digital performance of their banks and the long-awaited PayPal Q1 2021 results.
The crypto custody firm, NYDIG, said that for the first time, customers of several U.S banks will be able to buy, hold, and sell bitcoin using their existing accounts. Yan Zhao, the president of NYDIG, said that banks are asking for bitcoin because they can see their customers’ interactions with Coinbase and other crypto exchanges.
NYDIG is a subsidiary of the asset manager Sone Ridge. They have partnered with the fintech giant Fidelity National Information Services to enable several banks to offer bitcoin on clients’ existing accounts in the upcoming few months.
Patrick Sells, the head of bank solutions at NYDIG said that hundreds of banks are already enrolled in the program and the company is in discussions with the biggest U.S. banks.
“What we’re doing is making it simple for everyday Americans and corporations to be able to buy bitcoin through their existing bank relationships,” Sells said. “If I’m using my mobile application to do all of my banking, now I have the ability to buy, sell and hold bitcoin.”
“This is not just the banks thinking that their clients want bitcoin, they’re saying `We need to do this because we see the data,’” Yan Zhao, the president of Nydig said. “They’re seeing deposits going to the Coinbases and Galaxies and Krakens of the world.”
As hundreds of smaller financial institutions are expected to join the bitcoin excitement, the giants such as JPMorgan Chase and Bank of America could face pressure from their customers to do the same.
“Most people can’t invest in things that institutional investors get to invest in,” Zhao said. “With bitcoin available through your bank to be purchased with as little as $1, now you have an attractive asset that’s available to be owned by anyone in any amount. We think that’s huge for economic empowerment.”
On Wednesday, it was announced that one of the most popular Mexican fintech Bitso has raised $250 million in their latest funding round. The new investment represents about 9% of Bitso and raises the startup’s total valuation to $2.2 billion.
“Bitso becomes the first fintech in Mexico to reach a valuation of more than $1.0 billion in the market,” said Cometa, also known as Variv Capital.
Bitso is currently operating in Mexico, Argentina, and Brazil, developing other uses for cryptocurrencies, with some of them including remittances, or the investment fund.
The lenders’ annual reports showed that the digital-only banks in Hong Kong that are backed by ZhongAn Online P&C Insurance and UK’s Standard Chartered moved strongly ahead of newly launched rivals, swiping 70% of deposits in 2020.
The numbers that were displayed in the report give us the first insight into the digital-only banks in Hong Kong, with all eight of them launching last year. At the end of 2020, the eight banks combined had total customer deposits accounting up for HK$15.8 billion ($2.03 billion). Of this amount, ZA bank that is operated by a unit of Zhong An, as well as Mox Bank that is backed by StanChart had deposits of HK$6.04 billion and HK$5.2 billion, respectively.
Deposits are among the most crucial KPIs as they are a source of cheap funding and brand-building.
“Mox and ZA have done a good job of engaging with customers and building a brand, whereas some of the other banks’ websites or app store ratings are a bit underwhelming,” said Ben Quinlan CEO of financial services consultancy Quinlan & Associates.
“Getting a large deposit base quickly can be a good indicator of more efficient onboarding and how consumers perceive early products, services, the overall user experience,” said Andrew Gilder, who leads EY’s Asia-Pacific banking and capital markets practice. “It’ll be important for their longer-term viability also that they roll out new products such as loans and credit cards to make the most of these customer numbers and drive profitability.”
According to the Quinlan & Associates estimation, the virtual-only banks can get up to HK$76 billion worth of revenue by 2025.
On Monday, Ethereum broke past $3000 for the first time. So far, the second-biggest cryptocurrency when considering the market cap has had a 325% growth only in 2021. This easily outperforms bitcoin which rose by 95% since the beginning of the year.
James Quinn, the managing director at Q9 Capital said that a part of the Ethereum rally is catching up to the bitcoin rally that occurred at the end of 2020. He believes it also proves improvements to the Ethereum blockchain and a shift towards DeFi.
“At first, the rally was really led by bitcoin because as a lot of the institutional investors came into space, that would be their natural first port of call,” Quinn said. “But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on Ethereum.”
“Surging DeFi volumes continue to push Ethereum prices higher as investors gain confidence in crypto and see Ethereum as a safe second-place asset,” said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital when discussing the Ethereum rally.
Related to Ethereum: The Best Of Tech 2021: April 26th – May 3rd
FinTech Weekly: B21 Crypto And Celsius To Partner On Creating An Earn Feature That Is A One-Click Method To Earn Maximum Yield On Crypto
Yesterday, Celsius announced it is partnering with B21 Crypto on creating an Earn feature where users can stake their entire portfolio in a single click to earn weekly yield. The Earn feature can be used by users in 82 countries.
Celsius is the cryptocurrency yield-earning platform while B21 Crypto is a mobile-first platform that provides its customers with ways to invest, earn and send crypto.
Using the Earn features, the consumers will be able to earn as much as 18% APY on all of their crypto assets, additionally benefiting from the Celsius earning model that includes rewards without lock-in, weekly payouts, no minimum balance restrictions, and asset transfers and withdrawals anytime.
“Partnerships with crypto innovators like B21 are game-changers for the every-day retail investor looking to cryptocurrency as the new asset class of the future,” said Alex Mashinksy, CEO of Celsius. “The mission of Celsius is to create the best pathways for users around the globe to achieve financial independence through earning on cryptocurrency. We’re proud to be partnering with B21 to reach that goal.”
“B21 is proud to be partnering with industry leader Celsius which provides the best rates and experience for earning yield on crypto assets. We have the shared goal of bringing in hundreds of millions of users to crypto. We see this partnership growing from here and working together to bring the best features, products and experience to our community and users,” said Nitin Agarwal, Founder and CEO of B21.
PayPal has reported its quarterly results for Q1 of 2021, beating the analysts’ earlier predictions. Revenue of the fintech giants has increased by 31% as compared to Q1 of 2020. The net profit rose to $1.10 billion from $840 million last year and the company added 14.5 million net new active accounts, with its new user base standing at 392 million.
Earning per share stands at $1.22, adjusted, as compared to a forecast of $1.01. The revenue was predicted at $5.90 billion but has, in reality, surpassed $6 billion with the $6.03 billion Q1 2021 revenue. The total payment volume has also surpassed the estimations that were placing it at $265, exactly $20 billion less than what the company has recorded.
CEO of Paypal, Dan Shulman, pointed out cryptocurrency is a huge reason for the company’s outstanding performance.
“We’ve got a tremendous amount of really great results going on tactically with our crypto efforts,” said Schulman. He went on to say that half of the crypto users open their PayPal app daily, suggesting that it increases engagement for users.
The mobile payments company made a big push into crypto in the last six months, allowing users in the U.S. to buy, sell, and check out with cryptocurrencies.
Considering its network of 26 million retailers, PayPal’s current crypto ambitions place them as a serious rival to the most popular crypto exchange Coinbase. PayPal also plans to roll out a next-generation digital wallet in Q3 of 2021. Schulman has described it as an “all-in-one, personalized app [that] will provide increasingly customized and unique shopping, financial services, and payments experiences.”
Brad Garlinghouse has pointed out there is a lack of clarity in U.S. regulation of cryptocurrencies. He pointed out that the country is a long way from clear regulatory guidelines for cryptocurrencies that you can see in countries like Asia.
“I give credit to markets like Singapore and even parts of Korea where there really has been a thoughtful government-led effort to define and have clear regulatory frameworks around cryptocurrencies,” he told CNBC’s “Squawk Box Asia” on Friday.
Ripple and XRP have been in an ongoing battle with the Securities and Exchange Commission (SEC) and Garlinghouse uses this as an example of where the regulations are still unclear and fuzzy.
“Ironically, here in the United States, they have not provided that same clarity. It is the only country on the planet that has said XRP is anything other than a currency,” he noted. “The SEC has said… XRP is a security. And so we’re now engaged in a court discussion. So far, I feel good about how that’s been going, but it’s certainly frustrating.”
FinTech Weekly: More Than 50% Of UK Customers Find The Current Digital Banking Experience Lacking
According to the newest research from the digital transformation agency Equator, more than 50% of UK consumers are not satisfied with their bank’s digital experience.
In every age group, over half of the surveyed consumers believed it is a frustrating experience, with the Gen Y and Gen X being the most dissatisfied, with 78% of Gen Y and 83% of Gen Z finding the digital experience of their banks inadequate.
Garry Hamilton, Group Chief Growth Officer, Equator said: “Digital transformation cannot be led by an IT team alone – it is a cultural shift in an organization, a new way of thinking and doing and it must start from the very top of the business. As our survey showed frustration with digital experiences in banking is widespread. Change, therefore, must be led with key objectives based on the customers’ benefits, not software features.”
“Delivering a strong customer experience is a critical requirement for banks and building societies. There are many opportunities for them to make their own super apps, invest in better CX, and offer greater personalization and faster, more efficient processing. Although such changes may seem daunting, one thing is certain – doing nothing is not an option.”