Week 26: Collapse and plattforms

June 29, 2020

This week: 💳 Wirecard - a collapsing giant 🤖 Authorized robotic advice 🅰 Font that forbids criticism 💰 The platform economy 🤓 Strategy for platforms

💳 Wirecard - a collapsing giant

The undoubtedly most substantial Fintech-news this week is that Wirecard somehow lost two Billion Euros. Or - more specifically - pretended they had two Billion Euros more than they had. Wirecard is therefore filing for insolvency, causing ripples into the Fintech-scene. This is a massive fall considering that Wirecard in 2018 was Europe's largest fintech.

The downfall of Wirecard is also causing trouble for EY, which audited Wirecard for a decade. For more than three years, they failed to request crucial account information from a Singapore bank where Wirecard claimed it had up to €1bn in cash. This is considered a routine audit procedure, and could have uncovered the vast fraud at the German payments group. EY are now facing a class-action lawsuit in Germany brought by Wirecard investors.

Wirecard worked as a middle man between banks/fintech and customers processing card transactions. It came by no surprise that all activities on the platform have been halted, causing trouble for Revolut, Curve, and other fintechs where their customers can't access their funds. Luckily for Curve, they are already in the process of bringing card processing in-house, causing the disruption to be minimal. A wise move considering they last week revealed that they are going to be the backbone of Samsung's European Pay card.. Creating another leg to stand on with a B2B branch is an exciting strategic change for Curve.

🤖 Authorized robotic advice

The world's first authorization for robotic advice is ready. Now the Norwegian Financial Industry Authorization schemes (FinAut), has created a standard that needs to be met for robot advisors to be authorized. The banks that have participated in the pilot are DNB, Kron, Nordnet, Sbanken, SRbank, and Storebrand.

🅰 Font that forbids criticism

Goldman Sachs releases its own font, Goldman Sans. Investing in custom typefaces is a powerful way to make a brand stand out. It's the reason why Google, Apple, IBM ++ are doing it. What is interesting about the Goldman Sans font, however, is that its unique license forbids criticism of Goldman Sachs with it. And that's not the worst part: the license can also be changed and revoked at any time by Goldman Sachs, turning anything that ever uses it into a legal time bomb. 😅

💰 The platform economy

The Norwegian Fintech-company Horde last week secured 12,4 million kroner in crowdfunding. Horde has an impressive 110 000 users using it's app displaying data from the Norwegian Debt register and comparing credit card benefits. Horde has so far not earned any money and won't reveal details about their plans for future products and services. They are developing a platform that banks and players can use to connect to, giving Horde revenue in the form of license agreements and commission on services and products delivered through the platform. The emission is valuing the company to 65 million NOK, about 590 NOK (55 EUR) per user it has onboarded so far without any revenue. 🤯

It is a short way from the top to the bottom. Hudya, The Norwegian Fintech company that bought Payr last year, went on the stock exchange in February, priced at half a billion kroner. Last week they filed for bankruptcy.

Hudya offered a platform to simplify the purchase, and compare, electricity-, insurance- and telephony- providers. Much like the field Horde seems to be targetting. Another actor in the same area is Renterader, which check if you pay too much for your mortgage. Last week, they secured 4,7 million NOK in funding. It will be interesting to see how this field pans out during the next year and if there is a market for this many comparison-platforms in one country.

🤓 Strategy for platforms

The best read this week is an analysis of our favorite design-editor, Figma, and how they are creating a platform – what all of the aforementioned companies are trying to do.

Platforms are emergent ecosystems, more akin to building a consumer social network than a traditional enterprise sales company. This is one of the core dilemmas of building platforms. They are complex organic systems that have to be carefully cultivated (gardening vs. engineering mindset) and it's hard to predict beforehand what direction they will go and the scale they will achieve.

🙏 Don’t keep it a secret!

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Marius Hauken, partner Stacc X