“I think India has more promise than any country in the world.” - Elon Musk
U.S. tech leaders met with India Prime Minister Narendra Modi last week. Modi and the White House are looking to court tech CEOs for greater collaboration in the sub-continent, most notably in the white hot area of artificial intelligence. Their efforts are already bearing fruit.
Tech entrepreneur Elon Musk, who met with Modi in New York, is excited about India’s future, saying it holds “more promise than any country in the world.” Tesla is likely make a notable investment in India as soon as possible.
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Other tech bosses met with Modi in Washington, D.C., including Alphabet’s Sundar Pichai, Microsoft’s Satya Nadella and Apple’s Tim Cook. Apple has been building more of its iPhones in India lately in a pivot away from its reliance on China. Cook reportedly considers India a “huge opportunity.”
Fintech is booming in India. Take Google, which plans to launch a global fintech hub in GIFT City, located in the state of Gujarat. The number of voice-initiated mobile searches is on the rise in India, giving Google the opportunity to innovate in this area with its products, including Google Pay. Google has earmarked $10 billion for India’s digitization fund on the heels of Modi’s visit.
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Private equity giant KKR and PayPal are making a deal in the buy now pay later market. KKR is scooping up as much as $44 billion of the payment company’s BNPL loans in Europe. The BNPL market segment is still in demand, particularly among Millennials and Gen Zers. But rising interest rates and inflation have taken a toll on consumers and resulted in tighter lending standards. Investors cheered the deal, from which PayPal should collect approximately $1.8 billion, sending PYPL shares up by nearly 2%.
JPMorgan continues to strengthen its fintech footprint. Most recently, the firm is making a strategic investment into Cleareye.AI, a fintech platform dedicated to automating trade finance. Cleareye plans to direct the proceeds toward innovation in AI products to strengthen JPMorgan’s digital offerings. The two companies first started collaborating back in Q3 2022.
Online broker Robinhood is making an acquisition of its own. The company is buying San Francisco-based X1, a credit card play. The cash deal, which has a price tag of $95 million, will bring Robinhood closer to a one-stop super money app. X1 is behind a no-fee and rewards-fueled credit card for consumers, which plays into Robinhood’s zero-fee trading model.
Banking-as-a-service (BaaS) community banks managed to grow their deposits in Q1 despite the fallout in the broader banking sector in the wake of SVB’s failure. According to S&P Global data, a cohort of almost four-dozen community banks with a focus on BaaS outperformed their non-BaaS banking peers in the period. They had a median net margin of over 4% vs. 3.4% for non-BaaS banks with less than $10 billion in total assets.
Meanwhile, BaaS banks saw median deposit growth and loan growth of 4.% and 3.4%, respectively, on a sequential basis. The broader community banking sector experienced median deposit and loan growth of a mere 0.2% and 1.2%, respectively.
London-based VC firm Illuminate Financial has attracted $235 million to its coffers for a B2B fintech fund that will invest in startups behind technology built for financial institutions. Among the backers are Wall Street firms JPMorgan and Citigroup as well as British bank Barclays.
Separately, U.K.-based open banking startup Volt has similarly closed a funding round. Volt’s fundraising tally was $60 million in a Series B round, the proceeds from which it will direct toward expanding its international footprint and product line. The company’s open banking footprint currently spans the U.K., Europe and Latin America.
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BlackRock is preparing to introduce a bitcoin ETF right in the middle of the U.S. regulatory crackdown on the crypto industry. So far, the U.S. SEC has yet to give the green light to a bitcoin ETF. The asset management giant filed an application for an iShares Bitcoin Trust with plans to rely on Coinbase Custody for custodial services.
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Card giant Mastercard has filed an application to build cryptocurrency and blockchain software solutions. Mastercard is no stranger to crypto and has already partnered with several of the industry’s major players. Now it is expanding its partner network in response to consumer demand for more payment options. Mastercard’s latest blockchain push is part of its Engage partner network that helps businesses introduce and scale Web3-related products.
Upstart: Shares of lending platform Upstart have shaved off nearly 20% from their value in the past week. Investors appear to have been spooked by the Fed’s promise to raise interest rates yet again before the year is over. However, if you look through a wider lens, UPST stock has more than doubled since early May. Analyst firm BTIG remains bullish on Upstart, saying now’s the time to buy because the bears are running out of steam.
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With inflation finally showing signs of easing in the U.S. economy, and the Fed hitting pause on interest rate hikes for now, a couple of new tailwinds have emerged. However, there are still plenty of headwinds, including the uncertainty from the war in Russia. Fortunately, fintech companies have gotten pretty good at navigating this choppy terrain until the clouds eventually clear.
The latest reading on the consumer will come on Friday, when personal spending data is revealed. So far, the consumer has been resilient despite the high inflation. Whether or not that continues will likely depend on what happens in the economy in the second half of the year, as economists have not yet ruled out the possibility of a recession.
