Plaid — Fintech and DeFi Research Archive

Plaid's payments ecosystem & Affirm's decoupled debit card reveal embedded finance Trojan Horse

In this analysis, we want to update the discussion of card networks, money movement, and the potential existential threat — or perhaps evolution — to existing infrastructure. It continues the thread on articles like Is Plaid cheap at $5.3 billion for $500 billion Visa? and Marqeta's $300MM of revenue & Ethereum's $20B in ann. transaction fees highlight opportunity and industry structure, and Who are the customers of Embedded Finance, and what do they reveal about Stripe, Affirm, DriveWealth, and Green Dot?, and more generally in this research section. We map Plaid’s progress in building out a payments ecosystem, and highlight Affirm’s debit card product powered in a novel manner through open banking. The analysis visualizes a likely evolution of the space with the introduction of Web3, and highlights a couple of early symptoms.

paytech, open banking / PSD2, neobank, embedded financeLex SokolinNovember 10, 2021Visa, MasterCard, Marqeta, Affirm, Plaid, Yodlee, Evolve Bank & Trust

The principle behind Mastercard's CipherTrace acquisition, L1 growth, and IRS getting your bank data

Paying attention is the path to seeing and doing. Mastercard has bought CipherTrace to see blockchain-based finance, to launch new businesses, and to plug in more networks into its nexus. The crypto networks proliferate at every layer, creating more computation on Ethereum, Polygon, Arbitrum, Optimism, Fantom, and Solana. The US executive seeks to see more too, asking the banks for their records of financial transactions to enforce taxation compliance.

Is Fintech or DeFi Bigger? And Who eats Whom? Hosted by The Defiant

In this video conversation we feature a roundtable by The Defiant exploring how and if the gap between Fintech and DeFi will be bridged.

DeFi Panelists
Lex Sokolin, head economist at ConsenSys
Santiago Roel Santos, angel investor
Spencer Noon, Investor at Variant
Vance Spencer, co founder at Framework Ventures

Fintech Panelists
Keith Grose, head of Plaid international
Nik Milanović, founder of This Week in Fintech
Simon Taylor, co-founder of 11:FS
Bruno Werneck, Business & Corporate Development at Plaid

Moderator
Camila Russo, Founder of The Defiant

Who wins and loses in the Plaid/Visa divorce, and the $10 Billion in new Fintech SPACs (Spakkt and Spofi), with Will Beeson

In this conversation, Will Beeson and I break down a few important pieces of recent news — the SPACs for SoFi and Bakkt, and Plaid/Visa falling apart.

SoFi is going public with a SPAC deal worth over $8 billion. A few things we touch on in detail: (1) this is still largely a lender, (2) there is a gem of an embedded finance play called Galileo that SoFi owns, and (3) the multiple is a little over 10x T12 revenues, which is not crazy expensive, but not cheap.

Speaking of Galileo and finance APIs, we transition to Plaid, and how it is is not going to be one of the networks in Visa’s network of networks. Who wins and who loses in the equation? And last, we cover the Bakkt SPAC of over $2 billion and our view on its future.

acquisition, IPO / SPAC, embedded finance, paytech, digital lendingLex SokolinJanuary 15, 2021Bakkt, Plaid, Visa, SoFi, Galileo

Will the Blockchain Economy run on Bitcoin, Ethereum, or Central Bank Digital Currency?

This week, we look at:

The Bitcoin money supply being worth as much as the M1 of several countries
The Visa/Plaid deal DOJ anti-trust filing and the PayPal integration of Bitcoin
Understanding Central Bank Digital Currencies in the context of card networks, payment processors, and digital economies
Chinese CBDC and how it could relate to stopping the $34B Ant Financial IPO
How a CBDC ecosystem is like an operating system, rather than a payment rail

crypto, macroeconomics, China, central bank / CBDC, paytechLex SokolinNovember 9, 2020Ant Financial, Bitcoin, Visa, Plaid, DOJ, PayPal, China, E-CNY / DCEP, Ethereum

Learnings from Microsoft & Visa integrating personal financial data into Excel, and the open ecosystems of Google Sheets and MetaMask

At $13 billion of revenue and 800 million users in 2016, Office 365 roughly generated $20 per user. That's like Monzo, but with the user foot print of Ant Financial.

You might think the comparison is daft. But let's dig a bit deeper. Excel, and spreadsheets more generally, are the default behavior for managing personal finances. Even for financial advisors, who are supposed to be the precise niche leveraging financial planning software, Excel is the default "do nothing" option. If you are not paying for digital wealth software as an advisor, you are doing it in Excel.

big tech, cryptoLex SokolinSeptember 14, 2020Microsoft, Excel, Plaid, Google, Chrome, MetaMask, PSD2, Yodlee, Envestnet, Quovo

WhatsApp Payments Halted in Brazil, Stripe competitor Checkout.com is Worth $5.5B, Upgrade raises $40MM

WhatsApp launches payments in Brazil and is unceremoniously shut down by the central bank a week later, MasterCard buys Finicity to protect itself against Visa’s recent acquisition of Plaid, Checkout.com continues its largely silent meteoric rise in payments, Softbank-backed and DAX 30 index component Wirecard “loses" $2 billion from its balance sheet and files for insolvency, Upgrade raises $40 million at a $1 billion valuation to extend its personal credit offering.

Amazon/Goldman partnership, TikTok banking license, and Ethereum fintech through the lens of Aggregation Theory & Super Apps

If you are in finance and only looking at banks, you are missing out on the real change agents. Here's some cross-industry action that we will unpack this week.

Amazon selected Goldman Sachs to be the lender of choice for small business loans. TikTok maker ByteDance is working with a Singaporean business family to get a financial license. And small business bank Starling is integrating Slack, energy switching service Bionic, and health insurance provider Equipsme into their marketplace. And we might as well talk about the Plaid Exchange launch, and end on the computational economy of Ethereum.

$700B Franklin Templeton buys wealth tech AdvisorEngine, while digital investing DeFi revolution only starting

This week, I pause to reflect on the sales of (1) AdvisorEngine to Franklin Templeton and (2) the technology of Motif Investing to Schwab. Is all enterprise wealth tech destined to be acquired by financial incumbents? Has the roboadvisor innovation vector run dry? Not at all, I think. If anything, we are just getting started. Decentralized finance innovators like Zapper, Balancer, TokenSets, and PieDAO are re-imagining what wealth management looks like on Ethereum infrastructure. Their speed of iteration and deployment is both faster and cheaper, and I am more excited for the future of digital investing than ever before.

Apple and Google help with government contact tracing, setting stage for war over Data

This week, we dive into the social, economic, and financial implications of data in a post-COVID world. As Apple and Google work to build out the government's contact tracing apps to combat pandemic, what Pandora's box are we opening without consideration? As Plaid reaches into payroll data to accelerate small business bailouts, what power do we hand to aggregators? Will dignity-preserving solutions come to market in time? The opportunity for decentralized identity and data storage is clearer than ever. Or will fear drive us to make permanent compromises?

Is Plaid cheap at $5.3 billion for $500 billion Visa?

I dig deeply into the $5.3 billion acquisition of data aggregator Plaid by $500 billion payments network Visa. We examine why this deal is worth 25-50x revenue, while Yodlee's sale to Envestnet was priced much lower. We also look at how Plaid could be an existential threat to Visa, and why paying 1% of marketcap to protect 200 million accounts may be a good bet. Broader implications for product manufacturers across payments, investments, and banking also emerge -- the middle is getting carved out, and infrastructure providers like Visa or BlackRock are moving closer to the consumer.

Have Facebook Messenger Chatbots failed for Finance?

In the long take this week, I try out a contrarian point of view on personal finance chatbots. Trim, a savings chatbot, just withdrew support from Facebook Messenger. While lots of other chatbots are still invested in conversational banking, what could we take away from the counterfactual of chatbots failing to get B2C traction? What is the impact on the rest of the platform wars waged by Amazon, Google, and Tesla for connected homes, cars, and the Internet of Things?

Square's Robinhood competitor and Robinhood's Square competitor are rented from API providers, delegating billions

I look at two mental models explaining why and how financial APIs have led to the creation of billions in enterprise value. The driving news is that Square Cash is competing with Robinhood in free trading, powered by trading API company DriveWealth. Last week, we saw that Chime, Robinhood, and Monzo were powered by payments API company Galileo. Should these enablers be worth the billion-dollar valuations of their clients? Are APIs inevitable technology progress? Or are we just seeing venture financing spilling desperately into a rebundling play to find profitability?

$20 Billion TSYS acquisition in the shadow of Alibaba's $500B SME aggregation

I have been reading Alibaba: The House that Jack Ma Built this week, something everyone interested in understanding the future of Google, Goldman, Uber, or Amazon should do. The narrative starts with China's small business explosion, and Ma's genius is to tap into global demand for the products of those businesses through an online marketplace and associated financial services. But I am getting ahead of myself. Let's pause to acknowledge a massive, systemic transaction that was announced this week: payments processing company Global Payments acquiring TSYS (Total Payments Systems) for $21.5 billion.

Fintech & DeFi Research Archive🔄

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