From the NYC LendIt office, the end of 2021 feels all too familiar.
The first full calendar year of the pandemic came and went and landed most of us right back where we started.
Again, a wave of cases from some new strain puts many of us into the waiting game, stuck at home until the test results come back negative.
As the days wind down, the news runs dry from the fintech industry, marking the most welcome change from 2020: Fintech and crypto are household words, and good news from the industry has been non-stop up until the recent holiday hibernation.
In 2020, LendIt was covering PPP and the shutdown of small businesses. Today we cover exploding valuations that are just now taking their first pullback in months.
In 2021, firms who had stayed alive through the initial pandemic became giants: fintechs became banks, banks became super apps, and super apps became some of the most successful public companies in the world.
Nubank went live on the N.Y. stock exchange, right as LatAm fintech professionals woke up in Miami after two days of LendIt’s first in-person show for two years.
The IPO, priced at more than $40 billion, showed what we already knew: every company is a fintech company or should make friends with fintech fast. If these trends hold, innovations to overdraft fees, digital payments through blockchain, payroll access may hit the mainstream.
Not mentioned is the BNPL boom at the end of the summer, which saw every competitive tech or finance firm throwing billions into deals with fintechs that offer the new, softer credit check consumer loans.
Innovation on the horizon
Those already in the fintech space are building something new, breaking into cryptocurrency and blockchain to imagine Web3.
In 2021, the term metaverse was coined (at least for most of us), and billionaires struggled to signal they were on board with whatever the new online world will become. So Facebook is Meta, Square gained a third dimension as Block, and sports arenas now have crypto advertising.
Regulators woke up to a two trillion blockchain-related industry that proved it is going nowhere but up. For the first time, governments worldwide realized they had work to do, either in stemming or supporting the growth in the blockchain space (hopefully a bit of both.)
At the beginning of the year, retail investors roared over meme stocks like Gamestop and AMC Theaters, and it should have been a clear sign of things to come.
Soon, NFTs exploded, a significant first step toward digital ownership taken seriously by millions of retail investors—big names like Addidas and the NBA have sold millions of their editions.
This year we covered all that and more, and to prepare for whatever this next time around the sun may hold, here are the top ten stories we covered from this past year.
1. Brazil’s Nubank raises $2.6 billion in NYSE IPO
“First, they ignore you. Then they laugh at you. Then they fight you. Then you win,” CEO and Co-Founder David Velez Wrote back in October.
On Dec. 8, his Brazillian fintech neo bank hit the NYSE, pricing higher than many traditional public finances companies. The first fintech firm out of Latam to price on the American public markets raised $2.6 billion in their IPO. It was a hallmark moment for an entire continent brimming with fresh innovation.
At its $40 billion valuations, NuBank is the most valuable LatAm bank overall, with 48 million customers and counting across Brazil, Columbia, and Mexico.
Many fintech industry vets at LendIt’s Lat Am conference had excitedly awaited the launch for months to test the international appetite for LatAm fintech.
2. SEC-approved Bitcoin futures ETF goes live
Pitched as the first federal acceptance of a stable, secure investment option in crypto, the SEC approved the ProShares Bitcoin Futures trust in late October.
Since its launch, the fund’s performance has been down, right alongside the coin it tracks. It was a first of its kind in the U.S. Like our neighbor up north, other countries have already enabled institutional investors to access bitcoin directly through ETFs, but the regulatory market in the U.S. has not been that welcoming.
While the ETF was approved, a direct exposure product is still in no man’s land, and regulators publically spat with CoinBase Brian Armstrong for offering stable coin staking products that very week.
But dipping its toe in the water, the U.S. has had its first bitcoin-related fund despite many proposed like the GrayScale Investments Bitcoin Spot ETF.
3. Another one Buys Now Pays Later: Goldman acquires GreenSky
A third in the trilogy of top BNPL stories, the giant Goldman Sachs announced early in October the planned purchase of consumer and home loan platform GreenSky for $2.24 billion.
The news came after Apple changed its plans and booted Goldman from their BNPL offering outside the U.S. Goldman was already in the BNPL game but cemented its position with an undervalued fintech giant with a $9 billion loan portfolio.
Goldman also sought a place in the booming home improvement business, a blowout year for consumers stuck inside with nothing to do. Noah Buhayar, a reporter from Bloomberg, estimated the home renovation market had ballooned to over $400 billion in 2021 alone and was poised to reach a trillion by 2030.
4. Amazon to partner with Affirm on future BNPL options
Buy Now Pay Later (BNPL) blew up in August, and everyone wanted a piece. At the end of the Sumer, possibly the biggest deal in the space between Amazon and BNPL Affirm was nearly late the party.
The news of an exclusive BNPL option on the Amazon site came after the Afterpay purchase by Square and deals through Apple and Paypal to offer the new hot payment vehicle to their platforms.
Affirms tech instantly reached 150 million U.S. Prime members and catapulted the Affirm Stock 46% at the exact moment. The firm joined the ranks of other public fintech giants at an $11 billion valuation and rising, founded by PayPal “mafia” alumnus Max Lavchin.
5. The First All-Fintech Megadeal: Square is Buying Afterpay
One of many BNPL stories, Jack Dorsey’s Square, now renamed Block, announced the planned purchase of the BNPL firm Afterpay for a whopping $29 billion. In the Australian market, Afterpay had become such a successful brand that one in seven adults had an account, and it’s used as a verb like “Uber” or Band-Aid. The deal brought BNPL options to the millions of Square merchant terminals worldwide, but the real market is in online payments. Square CFO Amrita Ahuja said that e-commerce payments would hit $10 trillion by 2024. The Square answer is Cash App, a product with over 70 million users, and now BNPL.
6. We Have Reached a Tipping Point on Overdraft Fees
In July, Peter wrote about the end of overdraft fees: a feature that has turned into the only credit offering available to millions of Americans stuck in a vicious debt cycle.
This year, fintechs offering alternatives like early wage access, subscription accounts for overdraft protection, and more prooved the industry is hungry for a sure solution. Ren ton pointed to Aaron Klein from the Brookings Institution, who wrote earlier this year that most large, traditional banks get a large portion from “servicing” overdraft fees. It may become more than just a fintech alternative: Recently, regulators at the CFPB under Rohit Chopra have spoken out against overdraft like a dangerous “addiction.”
The practice made up $15.5 billion of cash flow in 2019, and in response, fintechs like Varo, Chime, Dave, and Oppurtun, to name a few, have offered better options, and more are sure to come.
7. LendingClub Receives Final Approval for its Acquisition of Radius Bank
LendingClub, the one-time P2P lending giant, become one of the first fintechs to buy a bank at the beginning of the year.
The company closed on Radius Bank for a price of $185 million and proved buying was at least faster than building a new bank under the current regulatory environment.
WebBank was cut off as the primary originator of LendingClubs loans with the change. LendingClub, like many fintechs large and small in 2021, realized the next step to service its customers was to offer debit services and more.
The deal seemed to pay off. With costs cut, the firm’s share price soared 390% in the past year, up to a five-year high of almost $50 a share.
8. SoFi Starts Trading on Nasdaq as a Public Company
Halfway through the year, consumer finance platform SoFi went public through a SCAC merger, part of a trend that brought many fintech firms public in 2021.
LendIt’s Peter Renton wrote about the history of Sofi, from its student loan p2p lending origin through its record-setting $1 billion equity round in 2015.
The first of many digital banks to go public, Sofi had demonstrated how difficult it was for fintechs to become a federally chartered bank.
Even after reviewing an OCC charter, Sofi struggled to get approval from the FDIC and Fed Reserve and sought to buy a community bank in California that already had approval.
9. Congress needs to make crypto regs: Stablecoin report
As regulators woke up to the new crypto world, they rushed to create federal guidelines and laws to reign it in.
In what will be known as the “Crypto Sprint,” a joint task force from the OCC, FDIC, SEC, and more came together to research, learn, and prepose legislation from lawmakers.
The Presidents Working Group on Financial Markets, chaired by President Biden’s top financial executors, wrote a report on one of the most promising crypto concepts for bank settlement and liquidity.
The stable coin report argued for more laws to help regulators get a hold on the new financial concept, a currency pinned to a backing, like Circles Treasury bill backed coin, or Facebooks still unminted Diem coin.
Meanwhile, a federal reserve research project to implement stable coin tech in the bank settlement process is still underway. Dubbed Project Hamilton, the U.S. joins other countries like the U.K., searching for the next upgrade to the digital dollar.
10. Tom Brady, Tiger Woods join growing surge of NFTs
Back in September, everything was about NFTs. Tom Brady was selling his own alongside autographed digital cards from Tiger Woods and other sports legends on Autograph.
During the NFL season, Brady and others started appearing in ads, and NFT designers as young as 12 made millions selling pictures on Opensea.io.
Since the surge, big tech companies like Facebook and Square joined the fray as metaverse firms, and Coinbase announced its upcoming competing NFT platform. I even tried my hand at minting NFTs with a guide for how to make your own.
That’s all, folks
When 2021 began with a dark, cold winter shutdown for most of us, 2022 will either usher the east winds after the storm or the eye before the second tidal surge. Either way, the industry will be there.
To grow and change as the world did, LendIt rose to the occasion, revamping the news section to help raise questions and follow fintech trends for a growing, thriving audience.
Thank you to everyone who enjoys the insight we capture from industry voices year-round. We hope to see you healthy and in-person at a LendIt event soon. Stay healthy, stay safe, and Happy holidays!
