To the moon for Lunar?

April 05, 2022

Also this week:

  • 🚀 Giants moving into (open) banking

  • 📊Which charts to use?

  • 🤔 Why? Why? Why?

🌖 To the moon for Lunar?

Two weeks ago, we wrote about Lunar raising more money for acquisitions. This week they announced that their first move was buying Instabank for NOK 1.29 billion.

Who is Instabank?

Instabank is a traditional consumer loan bank established in Norway, Sweden, Finland, and Germany. Their products range from credit cards to conventional consumer loans and refinance expensive debts based on a mortgage.

Why is Instabank interesting for Lunar?

Their refinancing product has the potential to become Lunar's alternative to a mortgage product in Norway. Competitive mortgage rates are essential if they want to be a serious actor in Norway. It is hard to compete in the Norwegian market without a mortgage product and support for eFaktura, no matter how many fancy features you have. Revolut has undoubtedly experienced this the hard way.

Instabank also opens a new market for Lunar: Finland has relatively many customers but relatively small loans. Norway, however, has the most customers and the most prominent lending volume (about 2,5 billion NOK)

Why is Instabank a strange choice?

Lunar markets itself as "Norway's new bank" and uses the tagline: "With Lunar, getting control of your money has never been easier." Buying a consumer loan bank doesn't seem on brand: After all, 75% of Instabanks portfolio are consumer loans with high-interest rates.

Digging more into Instabank also shows that their IT department is more or less non-existent, indicating that most of their services are just bought directly from Bankqsoft. If this acquisition is a way to fill Lunar's missing piece of the private market puzzle by supporting mortgage loans, it certainly is a strange use of money. With an existing banking license in Norway, I'm sure Lunar could launch their own mortgage solution faster than using time merging with another company and their current technology stack. Nontheless, it will be interesting to follow Lunar going forward!

🚀 Giants moving into (open) banking

Speaking of strategies for Nordic fintech companies: Klarna has released Klarna Kosma, an open banking sub-brand and business unit. The company has created a dedicated unit devoted to open banking in the past year, adding connectivity to 15 000 banks. This makes Klarna the largest bank aggregator globally. Klarna has used open banking to help power its growth for several years but will increasingly focus on selling this platform to third parties.

Adyen, the Dutch payments giant which handles transactions for eBay, Etsy, and Amazon, is moving into providing banking services for businesses. Their new products will include:

  • Multi-currency bank accounts.

  • Corporate credit cards.

  • Short-term cash advances based on pending payment transactions.

  • Instant business loans.

This move is the first major strategic expansion for Adyen since it went public in 2018. This new product lineup makes them compete directly with Block (formerly Square) and Stripe.

As some payment giants are expanding into other fields, the payment company Fast, backed by Stripe, seems to implode. Fast has, in record time, burned through ~$100M of funding (roughly 1,5M NOK a day). Suddenly, it makes sense why their CEO titles himself the world's fastest CEO. Fast's strategy has been to sign up small merchants. That might have been the wrong bet considering their competitor Bolt(that launched at the same time) has generated roughly 50 times of Fasts revenue by landing large customers.

📊Which charts to use?

Norman Nielsen group has dug more into which charts you should use depending on context. Researchers have found that bar charts, line charts, and scatter plots are the easiest to understand. Surprisingly enough for designers, Pie charts tend to be much more challenging for people to process. But remember: Just because something is trickier to read, that doesn't mean you can't ever use them.

🤔 Why? Why? Why?

Morgan Housel has written about why forecasting is complex: it's easy to skip the question, "And then what?"

You can keep asking, why? forever. And when do so you get these crazy connections, like a terrorist attack leading to student debt a decade later.

That's it for this week 👋

Remember, if you’re enjoying this content, please do tell all your (fintech) friends to hit the subscribe button! If you have some feedback you can always just hit reply!

Marius Hauken, partner Stacc X