Beyond this deal, UBS has also turned to technology to strengthen its leadership position. In fact, it spent roughly $4B on tech in 2022 alone.

Its commitment to technology can be broken down into 2 main objectives. The first is the digitization and expansion of its existing services to enhance the client experience. The second is diversifying its investment and trading products through the use of novel technologies like blockchain, cloud, and alternative investment platforms.

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BaaS providers use application programming interfaces (APIs) to enable banks, fintechs, and companies outside of financial services to offer banking and payment products to end users. BaaS is also referred to as embedded finance or embedded fintech.

The financial technology behemoth FIS — which provides core banking, payments acceptance, and other services to banks and retailers around the world — recently acquired BaaS provider Bond for an undisclosed amount. 

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That’s at least the thinking of General Atlantic and the other investors who’ve pumped $850M in funding into PhonePe, one of India’s leading fintechs, since the start of this year. The company’s mobile payments super app enables its 460M registered users to send money, pay bills, and shop online.

PhonePe is majority-owned by Walmart and now has a post-money valuation of $12.9B. But is that price justified? That’s the highest valuation of any fintech in the country and more than double the market capitalization of its public competitor Paytm.

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The market downturn, however, has led to workforce reductions at both companies: Klarna conducted several rounds of layoffs, while Stripe reduced its staff by 14%, citing over-hiring. Additionally, both have received significant valuation haircuts.

The 2021 funding surge and subsequent valuation correction signal a market reset for key payment players, particularly for those caught on the wrong foot after prioritizing growth at all costs. On the other hand, some payments firms have shown efficient capital growth and labor utilization, commanding high valuations despite working with smaller teams.

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There are mixed reports on ESG demand and performance. However, several prominent data providers still suggest a relatively healthy market and appetite for ESG among investors. 

For example, despite negative returns for Morningstar’s US Sustainability Index in 2022, it still outperformed the overall market. And according to Refinitiv Lipper, ESG equity funds saw net inflows in Q1’23, while non-ESG equity funds suffered more withdrawals than inflows. 

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Tech giants like Apple and Google have already introduced facial recognition for payments. The space has also seen major investments from Mastercard and Alipay.

Now, Starbucks is piloting Amazon One’s palm payment system to enhance speed and convenience at the point of sale. Convenience stores like Energy Mart and Yahoo Japan are also exploring the potential of biometric payments through Amazon One and facial recognition technologies. Meanwhile, JP Morgan is experimenting with biometric payments in collaboration with select retailers.

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This wasn’t the first time Apple has sent waves across the fintech landscape. Since Apple’s foray into the space almost a decade ago, the company has been gradually shaping itself into a fintech giant. 

While products like Apple Pay and Apple Card laid the foundation for Apple’s fintech strategy, it has relied heavily on partnerships to drive growth in the adoption and scope of its offerings. The company has inked deals with banks, buy now, pay later (BNPL) players, card issuers, payment gateways, and spend management platforms to reach further into the sector.

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1. Net losses are compounding 
2. Active users are at a fraction of previous peaks
3. Transaction-based revenues are up and down from one quarter to the next but aren’t growing over time

This is old news to the public markets, as Robinhood’s market capitalization is down 77% compared to its exit valuation at IPO in July 2021. 

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But more broadly, Nasdaq is a global capital markets tech company that builds and sells financial software to corporations, investors, and other marketplaces.

These offerings range from platforms focused on data management for environmental, social, and governance (ESG) initiatives to portfolio analytics for asset managers. 

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Over the last few years, the company has turned to fintech startups to help meet customer demand for secure, seamless, and customized banking experiences. Its recent investments and partnerships have targeted solutions that enhance its offerings to business banking and wealth management clients. 

For example, Wells Fargo and its primary investment arm, Wells Fargo Strategic Capital, have backed several cash and spend management automation fintechs to better address the needs of business clients. On the wealth management side, Wells Fargo’s partnerships have allowed it to embed AI and natural language processing (NLP) into its back-end processes, such as market intelligence research and user onboarding. 

The banking giant is also investing to amp up its core processes, focusing on quick cross-border transfers and virtual card offerings. 

Using CB Insights data, we uncovered 5 of Wells Fargo’s most important strategic priorities highlighted by its investments and partnerships since 2018. We then categorized companies by their business relationships with Wells Fargo across these priorities:

• Wealth management
• Fraud, risk, & compliance
• Payments
• Accounting & cash management automation
• Open finance & data aggregation

These designations are not exhaustive of Wells Fargo’s investment and partnership activity in the analyzed period.

Accounting & cash management automation

Wells Fargo has leveraged investments and partnerships to ramp up its cash management and automation offerings for its business banking clients.

After leading a $20M Series A round to US-based cash automation software startup Trovata in 2021, Wells Fargo rolled out Trovata as its strategic cash positioning and forecasting tool, making the solution available to its business and corporate clients. The bank’s other investments in this category include the accounts receivable (AR) automation software DadeSystems in 2020, and the accounting practice solution Canopy in 2018.

On the AR/AP side, Wells Fargo partnered with Bill.com in 2020 to launch Bill Manager, an automation solution that integrates into the bank’s digital banking platform and streamlines back-office financial operations for Wells Fargo’s SMB clients. 

Fraud, risk, & compliance

Wells Fargo has primarily backed companies that leverage AI to ensure fraud prevention and compliance. These include AI/ML-powered supervision and threat detection solutions ThetaLake and H2O.ai, and regulatory text-scanning solution Ascent AI. The deals reinforced Wells Fargo’s current fraud prevention strategy, which leverages FICO’s AI/ML-powered Falcon Fraud Manager solution.  

Digital ID verification and authentication is also a focus area for the bank. For example, Wells Fargo has invested in Arkose Labs, which offers a user authentication solution, and ID verification startup Socure. Wells Fargo also partnered with Socure to fight synthetic identity fraud, in which a made-up name, date of birth, mailing address, email account, and phone number are applied to a real person’s Social Security number.

Finally, while Wells Fargo doesn’t offer any crypto-based products, it made two repeat investments into the UK-based Elliptic, a crypto transaction monitoring software that aims to accelerate the institutional adoption of crypto.

Payments 

Most of Wells Fargo’s activity in this space focused on faster cross-border payment processing, followed by virtual card solutions.

In 2021, Wells Fargo made a $10M growth equity investment in the cross-border payment processing and financial messaging fintech Volante. Later in 2022, the bank partnered with Volante to modernize its payments strategy, and migrate to the new ISO 20022 financial messaging standards.

Within card payments, Wells Fargo made two investments in the virtual card issuer and virtual card-platform-as-service provider Extend, including an incubator/accelerator round in 2020. The same year, the bank launched its own one-time virtual card payment offering, called WellsOne, to ensure safe transactions for its commercial clients.

The banking giant also entered strategic partnerships with payments providers TransferMate and Bilt Rewards. In 2019, Wells Fargo partnered with TransferMate to speed up international payments for its business customers. Later in March 2022, the bank partnered with Bilt Rewards and Mastercard to issue the first credit card that helped users earn points on their rent payments. 

Overall, the bank’s investments and partnerships here focused on ensuring regulatory compliance, and high customer satisfaction.

Open finance & data aggregation 

As the broader banking industry shifted toward API-based data aggregation, Wells Fargo followed suit. In 2021, it joined the open finance platform Akoya’s Data Access Network, which allowed fintechs and data aggregators to access Wells Fargo’s data for mutual customers. As of 2020, Wells Fargo also became one of the joint owners of Akoya —  along with Fidelity, The Clearing House Payments Co, and 10 other banks.

The bank has also entered a number of data-sharing agreements with fintechs such as Expensify, Envestnet Yodlee, and Plaid in an effort to enhance Wells Fargo customers’ control over their financial data, and streamline their access to services offered by fintech companies. In 2020, the bank launched its own open API channel, Wells Fargo Gateway, which allowed corporate clients and partners to embed Wells Fargo products and services into their own digital experiences and offerings. 

Wealth management

Wells Fargo has invested heavily in wealth management solutions, targeting both alternative and traditional asset trading, as well as analytics and customer experience. CEO Charlie Sharf says that wealth management is a significant source of growth for the bank, and he aims to increase digital engagement for Wells Fargo’s 2.6M wealth management clients.

The bank invested in the institutional-grade digital asset trading solution Talos, along with alternative investment platforms Forge Global and iCapital. On the market intelligence side, Wells Fargo invested in the AI-powered research and insight engine AlphaSense in 2021, and the financial market analysis software Visible Alpha in 2018. Wells Fargo’s investments here signaled the banks’ prioritization of AI and NLP in equity research and insight generation

Following these investments, the banking giant has also expanded its own wealth management offerings. In early 2023, Wells Fargo announced the rollout of its net-worth management and financial planning mobile app tool LifeSync. The year before, in an effort to appeal to the new generation of investors, the bank redesigned its robo-advisor Intuitive Investor to be more intuitive, and lowered its required minimum deposit to $500, down from $5,000.

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Using CB Insights data, we highlight some of the key takeaways from our Q1’23 State of Fintech report, including:

1. Global fintech funding grows 55% QoQ in Q1’23; $6.5B is raised by Stripe alone. 
2. Early-stage deal share reaches 72%, a new high.
3. Unicorn births fall to 1 for the first time since 2016. 
4. Fintech M&A exits rebound, increasing 15% QoQ. 
5. Banking funding and deals hit lowest levels since Q2’17. 

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To meet this need, leading global payment network Visa has forged hundreds of strategic business partnerships, invested in dozens of companies, and made a few acquisitions over the last 2 years. 

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In an effort to boost growth, Santander has acquired, partnered with, and invested in fintech companies that enable better customer experiences, make it easier to access credit, and help businesses manage their finances. It has also launched new tech-forward payments and banking products (such as PagoNxt) and stepped into digital asset trading.

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Fintech was Sequoia Capital’s top investment category in 2022, representing nearly a quarter of the firm’s deals.

Using CB Insights data, we mapped how Sequoia Capital spread its 2022 fintech investments across categories like capital markets, personal finance, real estate, and more.

CB Insights clients can dig deeper into all 25 deals listed above as well as explore Sequoia Capital’s bets beyond fintech using this CB Insights platform search.

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But as the year progressed, the crypto winter coupled with macroeconomic pressures caused 3 straight quarters of declines in funding and deals.

Below, take a look at a few highlights from our 162-page, data-driven State of Blockchain 2022 Report. For deeper insights and all the private market data, download the full report.

2022 highlights across the blockchain ecosystem include:

• Blockchain venture funding grew 4% year-over-year (YoY) to reach $26.8B in 2022 thanks to a strong H1. ​
• The average deal size to blockchain startups fell 24% YoY to $16.2M in 2022, driven by a sharp drop in $100M+ mega-rounds throughout the year.
• The blockchain unicorn count stalled out at 79 at the end of 2022, with just 2 new unicorns in Q4’22.
• Web3 startups accounted for 56% of blockchain venture funding in 2022, up from 39% last year.
• Blockchain infrastructure & development had a record year for funding ($7.8B) and deals (235) in 2022, signaling investor confidence in blockchain’s future irrespective of cryptocurrency volatility.
• Venture funding to crypto exchanges & wallets fell 48% YoY in 2022, revealing a clear shift in investor sentiment away from centralized exchanges.

Download our 2022 State of Blockchain Report to dive into all these trends and more.

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In December 2021, Square changed its corporate name to Block, separating the corporate entity from its subsidiary businesses that it calls its “building blocks.” Those include Square, Cash App, Spiral, Tidal, and TBD.

Over the last 2 years, Block’s expansion activity through acquisitions, investments, and partnerships point to 2 clear goals for the evolution of the company and its subsidiaries: 

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As Affirm looks to enhance its core BNPL offering — and drive profitability and new growth — the company has forged hundreds of partnerships, invested in a handful of companies, and made 2 acquisitions over the last 3 years.

For example, the BNPL leader has deepened its partnerships with e-commerce platforms like Shopify and Amazon, reducing its reliance on Peloton — historically one of Affirm’s most important partners. Meanwhile, the company has grown its presence in new retail verticals and industries like travel. And its made strategic relationships, including the December 2020 acquisition of Canada-based BNPL provider PayBright, to expand beyond the US into Canada.

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