Amazon and Better.com’s unlikely pairing

Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of 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 in the know. — Mary Ann

Last week, my good friend and very talented journalist (and Equity podcast co-host) Natasha Mascarenhas and I reported that Amazon had struck a deal with embattled online mortgage lender Better.com to offer up a new benefit to employees. Specifically, Better.com announced it was launching Equity Unlocker, a program that allows employees to use their vested 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 about the program, according to Better.com, is that employees will have the ability to finance their homes without actually selling their shares, only needing to pledge vested equity.

The news, quite frankly, came as a bit of a shock to those of us who have been following the goings-on at Better.com. For the 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 swung to a loss of more than $300 million in 2021 after a rapid-fire decline in business brought on largely by a slowdown in the housing market and a surge in mortgage interest rates. Then 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 huge hit over the manner in which it conducted numerous rounds of mass layoffs, which also resulted in an executive exodus. Better.com also made headlines last July when it appeared to still be moving forward with its SPAC filing despite lackluster performance of blank-check combination debuts.

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 those exact words, of course). And the spokesperson told me lots of things about how the company wanted to provide all sorts of wellness benefits to its employees and this fit into that thesis. But he never specifically answered, “Why Better.com?” The fintech itself noted that it has been an Amazon Web Services customer since 2015 and its loan-origination system is powered entirely by the software. A very quick Google search on the part of TC senior reporter Rebecca Szkutak turned up at least two other online mortgage lenders who are also AWS customers, so surely the retail giant had other options.

Beyond that, the idea of giving employees the option to use vested equity toward the purchase of a home just doesn’t….seem very appealing. What if the shares drop in value? How does it even work? Who even has enough vested equity to use as collateral? On top of that, Better.com says it will charge 0.25% to 2.5% higher interest rates for employees who choose to purchase a home this way. Mortgage interest rates are already high enough these days — hovering around 6%. Tacking on another 2.5% pushes someone into the 8% range. Needless to say, we are all super curious to see how this ends up panning out and I plan to check back in about it in a few months.

Meanwhile, speaking of Better.com’s SPAC filing, HousingWire reported last week that “blank-check firm Aurora Acquisition Corp. extended the deadline to complete its merger with struggling digital mortgage lender Better.com for the third time. The deadline for the merger is now September. The decision was made during Aurora’s shareholder’s meeting held on February 24, filings with the U.S. 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 are hesitating is pretty difficult to believe. I, for one, am very curious as to how the company is staying 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, tune in to my one-on-one conversation with Index Ventures partner and fintech lead Mark Goldberg. We had a blast discussing everything 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 that super interesting convo here.

Weekly News

Reports Romain Dillet: “The all-in-one fintech app Revolut has released its annual report for 2021. While 2021 ended more than a year ago, this report includes some significant figures as the company nearly tripled its revenue between 2020 and 2021. Because of 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. At 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 U.S. 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 toward profitability?” He wrote: “The former startup has had a publicly difficult few quarters. From seeing its valuation cut sharply to layoffs, the news around Klarna has been negative for some time. 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 is launching its first-ever credit card with Chase. The DoorDash Rewards Mastercard will provide cardholders the opportunity to earn cash back on delivery and every other purchase made with the card…The launch of the new credit card indicates that DoorDash is looking for ways to drive customer loyalty and keep its platform at the forefront of its users’ minds. The move also gives DoorDash the ability to offer additional perks for users while opening up new revenue streams.”

Reports Carly Page: “Hatch Bank, a digital-first bank that provides infrastructure for fintech companies offering their own brand credit cards, confirmed hackers exploited a zero-day vulnerability in the company’s internal file transfer software that allowed access to thousands of customer Social Security numbers.”

London-based Wise, formerly called TransferWise, launched two new products in the U.S. — Wise Business cards and sending money with a link. It also revealed a new brand look that it says “draws inspiration from its now 16 million customers worldwide.” The company also told me via email that since publicly listing on the LSE in July 2021, it has grown its global customer base by nearly 6 million.

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

Reports 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’ that enables lower-cost cross-border transfers than options like SWIFT by utilizing 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’s less expensive than SWIFT and other third-party options.”

After we covered Stripe’s Tap to Pay news last week, PayPal reached out to let us know that it had launched Tap to Pay on Android in the U.K., The Netherlands and Sweden in May 2022. It’s since launched in additional European Markets. Here’s the release announcing our launch in the U.K. on May 5, 2022. It is also working with Apple on Tap to Pay, which Ivan Mehta reported on in November.

Did you know that 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 of refinancing 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 that higher yield “treasury accounts are now available to all”

Robinhood Wallet is now available to all iOS customers globally

Wealthfront introduces stock investing

Step launches stock investing for teens and young adults

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

ChatGPT learns fintech

First Fidelity Bank enters BaaS space with Episode Six partnership

Funding and M&A

Seen on TechCrunch

Insurtech giant Equisoft lands $125M investment, eyes acquisitions

Born of drone tech, insuretech Flock raises $38M Series B to nudge commercial drivers towards safety

Pagos raises $34M as the demand for ‘payment intelligence’ rises

Spade turns credit card transaction gibberish into clear, actionable data

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

And elsewhere

Highway Benefits raises $3.1M in seed funding 

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

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

Fintechs That Are Hiring

The good news is that I have been inundated with DMs and emails from people letting me know that their fintech company is hiring. The bad news is that there is no way I can include all of them in this week’s newsletter. So if you reached out and don’t see your company here, check out upcoming editions of The Interchange. I’m making my way down the list!

• Corporate spend management (and fully remote) company Airbase, which secured $150 million in debt financing from Goldman Sachs last July, is hiring across about 18 roles.
• Wealthfront, which last year landed $69.7 million from UBS in a deal valued at $1.4 billion after a planned merger fell apart, has 17 open positions across engineering, design, marketing, finance, and more.
• SmartAsset, a marketplace that connects consumers to financial advisors and raised $110 million in a Series D round of funding in June of 2021 at a unicorn valuation, is hiring across several remote roles.
• Alternative investments platform iCapital, which has over $150 billion AUM, says it’s hiring for 100 roles.
• Fintech-focused communications agency KCD PR is hiring and has several open positions with plans to add 3–5+ roles in 2023.

Thinking of coming to Disrupt this year? We’d love to have you! But FYI, this is your 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