A tough week for Lunar and Klarna

May 30, 2022

Also:

  • 💳 Virtual cards coming to a browser near you

  • 📈 Pricing models for mutual funds

  • 🦴 The Boneyard Principle

😓 Tough week for Lunar and Klarna

The Financial Supervisory Authority of Norway has stopped Lunar Banks' acquisition of Instabank that we wrote about in April. The reason is Lunar's financial position and the bank's access to «financial resources.»

Lunar now plans to raise more money. Lunar is said to have informed the Authority of this capital raising on the 16th of May and will be included in a new application soon.

It is not known how much Lunar is planning to raise, but the environment is not the best at the moment. Klarna is also looking to take on new capital from existing backers at a 30% discount to its last valuation.

The raise was announced before it was known that Klarna is firing ~700 employees, around 10% of the company. Most of the people fired are within recruitment and talent acquisition. Within tech, 89 employees have lost their jobs. Out of those, there is an even spread between data analysis, quality process, and designers. Most of the layoffs are in Stockholm.

💳 Virtual cards coming to a browser near you

At its I/O event last week, Google announced it will enable virtual cards in Chrome as a "security upgrade" to its auto-fill feature. Online shoppers will be able to convert any card into a virtual card and shop online without sharing their card details directly with a merchant. At first, Google will only support Capital One cards, but there are plans to add Visa, Mastercard, and Amex.

Frankly, this is a genius move. Virtual cards have been around for a long time, but they have been a hassle. By embedding them directly in a browser, it lives right where the user needs them. I wonder how long it takes before Apple implements a similar solution for ApplePay, making Apple Pay a viable solution everywhere you see a credit card input.

Truth be told, Vipps could also implement a browser plugin doing the same: implementing a new virtual card every time it detects a card input in your browser. This would be an elegant solution to control the whole payment infrastructure without dealing with every merchant.

📈 Pricing models for mutual funds

The Financial Supervisory Authority of Norway has created a report about how the prices of mutual funds have changed since 2018. That year MiFID II was introduced, where the main change was that kickbacks for funds needed to be disclosed to the buyers.

Some of the key findings from the report:

  • The new models are more complex for users to understand.

  • It is harder to compare different actors.

  • Actively managed funds show a price decline.

  • Combination funds show marginal price decline.

  • Index funds show no price change, but the survey indicates a rise in prices when the new price models gradually impact customers' fund holdings.

  • The distributor link is responsible for the entire price decline in equity funds.

🦴 The Boneyard Principle

Why do some consumer social products finally make it big after a series of misses? Part of the magic often hides within UX details — particularly, those that help people make fewer decisions and take fewer risks. The more opinionated an app is about how it should be used, the easier it is for users to act without fear of rejection

UX details really matter: An example of this is TikTok which has exploded in usage, while the offering is the same that Vine had years before. The main difference? A way easier onboarding and a UX where users had to decide on virtually nothing — the app just learned from their behavior. This is an excellent breakdown of seemingly simple details that make or break a product:

That's it for this week 👋

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Marius Hauken, partner Stacc X