Amazon and Better.com are unlikely pairings

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welcome to The exchange! If you received this in your inbox, thank you for signing up and your declaration of confidence. If you are reading this as a post on our site, please register here so that you can receive it directly in the future. Each week, I’ll take a look at the hottest fintech news from the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there, and it’s my job to stay on top of it—and make sense of it—so you can stay up to date. — Mary Ann

Last week my good friend and very talented journalist (and Equity podcast co-host) Natasha Mascarenhas and I reported it Amazon had entered into an agreement with a disputed online loan Better.com to offer a new benefit to employees. Specifically, Better.com announced the launch of Equity Unlocker, a program that allows employees to use their earned equity as collateral for a down payment when trying to buy homes. Amazon employees in Florida, New York and Washington State will be the first to try the tool. Unique to the program, according to Better.com, is that employees will have the option to finance their homes without actually selling their stock, only needing to pledge earned equity.

The news, quite frankly, came as a shock to those of us who have been following the goings-on at Better.com. For those unfamiliar, the fintech company has had its fair share of struggles that have cast doubt on its future. Last May, TechCrunch reported on a filing that revealed that Better.com had increased to a loss of more than $300 million in 2021 after a rapid decline in business caused mainly by a slowdown in the housing market and an increase in mortgage interest rates. In the first quarter of 2022 alone, Better.com recorded a staggering net loss of $327.7 million, according to an SEC filing.

The company’s reputation also took a big hit over the way it carried out a series of rounds of mass layoffs, which also resulted in an exodus of executives. Better.com also made headlines last July when it appeared to still be moving forward with its SPAC filing despite the lackluster performance of debut blank check combinations.

So why would Amazon want to be associated with, and connect its own employees to, a company that appears to be far from growing and has a less-than-stellar reputation? Well, we asked Amazon just that (not in the exact words, of course). And the spokesperson told me a lot about how the company wanted to provide all kinds of wellness benefits to its employees, and this fit the bill. But he never specifically answered, “Why Better.com?” The fintech itself noted that it has been an Amazon Web Services customer since 2015, and the loan origination system is powered entirely by the software. A very quick Google search by TC senior reporter Rebecca Szkutak turned up at least two other online mortgage lenders who are also AWS customers, so the retail giant surely had other options.

Beyond that, the idea of ​​giving employees the option to use earned equity toward the purchase of a home just doesn’t seem very appealing. What if the shares fall in value? How does it even work? Who even has enough earned equity to use as collateral? On top of that, Better.com says it will charge a 0.25% to 2.5% higher interest rate for employees who choose to buy a home this way. Mortgage interest rates are already high enough these days – and hover around 6%. Turning on another 2.5% pushes some into the 8% range. Needless to say, we’re all very curious to see how this ends, and I plan to check back in a few months.

Meanwhile, speaking of Better.com’s SPAC filing, HousingWire reported last week that the “blank check firm Aurora Acquisition Corp. extended the deadline to complete its merger with struggling digital mortgage lender Better.com for a third time. The deadline for the merger is now September. The decision was made during Aurora’s shareholder meeting on February 24, filings with the US Securities and Exchange Commission (SEC) showed.

The notion that Better.com, which has had so many setbacks and so much negative publicity, could actually go public in an environment where even companies that are growing and can share positive financial metrics is hesitant is pretty hard to believe. I, for one, am very curious as to how the company stays afloat.

To hear the Equity team’s thoughts on the Amazon/Better.com partnership (and much more!), listen to the podcast here. And while you’re at it, stay tuned for my one-on-one conversation with Index Ventures partner and fintech leader Mark Goldberg. We had a blast discussing all things fintech and Mark didn’t hold back! Oh, and ICYMI, I also spoke with Hans Tung, managing partner of GGV a few weeks back. You can catch the super interesting conversation here.

Weekly news

Reports Romain Dillet: “The all-in-one fintech app Revolut has released its 2021 annual report. While 2021 ended more than a year ago, this report includes some significant numbers as the company nearly tripled its revenue between 2020 and 2021. Due to this explosive growth trajectory, the UK digital bank reached profitability for the first time . Revolut’s financial success starts at the top of the funnel. By the end of 2021, Revolut had more than 16 million customers, representing a 46% increase compared to 2020.”

Last week we wrote about Klarna’s momentum in the US This week, the Swedish payments giant revealed that despite a large ($1 billion) operating loss in 2022, it expects to return to profitability this year. In this piece, Alex Wilhelm asks: “How much progress is Klarna making towards profitability?” He wrote: “The former startup has had a publicly difficult quarter. From seeing the sharp fall in value to layoffs, the news surrounding Klarna has been negative for a while. Now that we have the company’s financial data, we can take a more detailed look at how it performed amid all the noise.”

Reports Aisha Malik: “DoorDash launches its first ever credit card with chase. The DoorDash Rewards Mastercard will give cardholders the opportunity to earn cash back on delivery and all other purchases made with the card… The launch of the new credit card indicates that DoorDash is looking for ways to increase customer loyalty and keep its platform at the forefront of users’ minds. The move also gives DoorDash the opportunity to offer additional benefits to users while opening up new revenue streams.”

Reports Carly Page: “Hatch Banka digital-first bank that provides infrastructure for fintech companies that offer their own branded credit cards confirmed that hackers exploited a zero-day vulnerability in the company’s internal file transfer software that gave access to thousands of customer numbers.

London-based Wise, formerly known as TransferWise, launched two new products in the US — Wise Business Cards and Sending Money with a Link. It also revealed a new brand look that it says “takes inspiration from its now 16 million customers worldwide.” The company also told me via email that since its public listing on the LSE in July 2021, it has grown its global customer base by nearly 6 million.

Amsterdam-based Payment Abundance Adyen claims it has become the first to embed the Click to Pay experience into its online payment flow globally. Via email, a spokesperson told me: “When purchasing online, the majority of ‘guest shoppers’ enter their card details manually to make a purchase. According to the spokesperson, the Click to Pay feature “is a new way to pay online on which combats the risk of abandonment at the checkout stage” with benefits such as simplifying checkout, being more secure (the primary account number is not entered at checkout and the buyer receives a one-time password), and being universal in that it can be used across both devices and browsers .More here.

Report PYMNTS.com: “San Francisco-based financial services platform Modern treasury is introducing a product called ‘Global ACH’ which it bills as ‘a new payment service’ enabling cheaper cross-border transfers than alternatives such as SWIFT by using local payment rails. To launch Global ACH, Modern Treasury is partnering with Silicon Valley Bank…Modern Treasury said Global ACH “provides a number of advantages over current cross-border payment options” in that it is less expensive than SWIFT and other third-party options.”

After we covered Stripe’s Tap to Pay news last week, PayPal contacted us to tell us that it had launched Tap to Pay on Android in the UK, the Netherlands and Sweden in May 2022. It has since launched in several European markets. Here’s the release announcing our UK launch on 5 May 2022. It’s also working with Apple on Tap to Pay, which Ivan Mehta reported on in November.

Did you know there is a neobank targeting doctors? Panacea Financial describes itself as a “bank built for doctors, by doctors.” Via email, a company spokesperson told me, “One young doctor’s car accident and another’s hope to refinance his $300,000+ student loans led to the creation of Panacea to help other doctors with similar needs and more.”

Other news

Greenlight offers new workplace financial benefits designed for families

Public.com Announces Higher Yield “Treasury Accounts Now Available to Everyone”

Robinhood Wallet is now available to all iOS customers globally

Wealthfront introduces stock investing

Step launches equity investments for teenagers and young adults

Mexican BNPL startup Kueski achieves 10 million loans disbursed to more than 1.8 million consumers

ChatGPT teaches fintech

First Fidelity Bank enters BaaS space with Episode Six partnership

Image credit: DoorDash

Financing and M&A

See TechCrunch

Insurtech giant Equisoft lands $125 million in investments, eyes acquisitions

Born of drone technology, Insuretech Flock raises $38 million in Series B to push commercial drivers toward safety

Pagos raises $34 million as demand for ‘payment information’ grows

Spade transforms credit card transactions into clear, actionable data

Beware, Stripe is said to be raising new funds at much lower valuations

And other places

Highway Benefits raises $3.1 million in seed funding

SoftBank leads Series A for Chilean startup Rankmi, which is merging with Mexican payroll provider Osmos

TTV Capital closes $250 million Fund VI to invest in early-stage fintechs

Fintechs hiring

The good news is that I have been inundated with DMs and emails from people telling me that their fintech company is hiring. The bad news is that I can’t include everyone in this week’s newsletter. So if you got in touch and don’t see your business here, check out upcoming issues of The Interchange. I’m working my way down the list!

• Corporate expense management (and completely external) company Air basewhich secured $150 million in debt financing from Goldman Sachs last July, is hiring across about 18 roles.
• Wealth frontwhich last year received $69.7 million from UBS in a deal worth $1.4 billion after a planned merger fell apart, has 17 open positions in engineering, design, marketing, finance and more.
• SmartAsseta marketplace that connects consumers to financial advisors and raised $110 million in a Series D funding round in June 2021 at a unicorn valuation, is hiring across multiple external roles.
• Alternative investment platform iCapital, which has over $150 billion AUM, says it is hiring for 100 roles.
• Fintech-focused communications agency KCD PR is hiring and has several vacancies with plans to add 3-5+ roles in 2023.

Thinking of coming to Disrupt this year? We would love to have you! But FYI, this is the last chance for super-early-bird tickets. That’s it for this week! I’m off to enjoy the 70-something degree weather here in Austin while I can. Hope you all have a wonderful weekend – see you next time. xoxoxo, Mary Ann