TFU | Feb. 17 – 23

Leading Off

It was a huge week for acquisitions: LendingClub became the first fintech firm to purchase a bank, buying Radius for $185M, Morgan Stanley acquired E-Trade for $13B, Intuit is reportedly buying Credit Karma for about $7B, and Ally purchased CardWorks for $2.65B. In other news, Sweden is testing an “e-krona” CBDC; Shopify joined the Libra Association; Yodlee may not be properly anonymizing consumer financial data; and MUFG invested $700M in Grab.

In the News

LendingClub acquires Radius Bank.  The online lender becomes the first fintech firm to acquire a bank, purchasing the Boston-based institution for $185 million in cash and stock. By finally gaining the bank charter it has reportedly pursued for years, LendingClub will have “access to a stable and cheaper source of funding” and eliminate the costs of working with its current bank partner, Web Bank.

Morgan Stanley acquires E-Trade.  The investment banking giant will buy the online brokerage for $13 billion in an all-stock deal, “the biggest takeover by a U.S. bank since the financial crisis,” with the combined firm representing $3.1 trillion in client assets. “[This is a] growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy,” said Morgan Stanley Chairman and CEO James Gorman.

Coinbase approved as Visa Principal Member.  The cryptocurrency exchange is the first “pure-play crypto company” to become a Principal Member of the Visa network, which allows financial firms to issue certain types of payment cards backed by Visa.  Coinbase noted that membership will help the firm grow its Coinbase Card offering and “evolve and enrich the cryptocurrency payment experience.”

Intuit to acquire Credit Karma for ~$7B.  The maker of TurboTax is reportedly nearing an agreement to purchase the personal-finance and credit advisory service for approximately $7 billion, according to the Wall Street Journal. The deal would be a combination of cash and stock and would represent the largest acquisition in Intuit’s history, expanding its reach into digital consumer financial services.

Ally Financial to acquire Cardworks for $2.65B.  The auto financing firm will acquire the non-prime credit card and consumer finance company for $2.65 billion, pending regulatory approval. The deal will help expand Ally’s existing product offerings, enabling it to add an “established credit card platform, full-spectrum servicing and recovery operation and a nationwide merchant acquiring business.” 

Could LendingClub deal could spur further mergers?  The American Banker reflects on LendingClub’s $185M acquisition of Radius Bank, noting that the deal will likely result in more fintechs scouting for banks to buy, despite wanting to wait and see how the LendingClub-Radius regulatory approval process plays out.

Sweden tests the world’s first CBDC.  The Swedish central bank began testing the “e-krona,” a digital version of its national currency, becoming the first central bank digital currency (CBDC) to reach the pilot phase. The banks’ goal for the pilot is to “show how an e-krona could be used by the general public”; and it has not made any decisions about a wider roll-out.

Shopify joins Libra Association.  The e-commerce company announced it will become a member of the struggling Libra Association, the non-profit behind the Facebook-backed Libra cryptocurrency. The addition of Shopify is positive news for the Libra project, following months of regulatory scrutiny, bad publicity, and the departure of several founding-member organizations like eBay, Visa, and Mastercard.

Yodlee’s brokered personal financial data may not be anonymous.  According to a leaked confidential Yodlee document, the supposedly anonymized data sold by America’s largest financial data broker could be unmasked to identify individuals. The report comes as the Federal Trade Commission considers investigating Yodlee parent Envestnet for selling consumers’ data without their consent.

MUFG to invest $700M in Grab.  The Japanese bank will invest $700 million in the Singaporian ride-hailing company, which has been rapidly developing a complementary financial services business. The companies plan to jointly develop an app for services like lending and insurance, relying on MUFG to oversee the offerings and on Grab’s user data to tailor the offerings to specific customers.

Tech takes on real estate.  “Prop techs” like Zillow and Redfin are beginning to disrupt the real estate marketplace, long the “world’s biggest asset market,” using technology to overcome traditional barriers to entry like high illiquidity and burdensome broker fees. Prop tech platforms offer lower fees and algorithm-driven instant buying that bolsters liquidity.  

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