How Fintech Outfits Are Streamlining Clients’ Financial Lives

By Duncan Ferris

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WonderFi is leading the way in the DeFi ecosystem with its innovative business model - find out more about this exciting company.

WonderFi Technologies (TSX: WNDR) (OTCQB: WONDF) operates as a software company. It has developed a platform that integrates with the entire decentralized finance (DeFi) ecosystem, with the business serving customers around the world.

WonderFi Technologies’ most recent earnings showed that it achieved revenue of CA$2.9m for the three-month period ended 30 June 2022, which demonstrates a substantial improvement over the past 12 months.

The young company's thesis is that the future of cryptocurrency will be on both decentralized and centralized (licensed) platforms, leading the company to build and acquire businesses and products in both lanes.

WonderFi Technologies has acquired leading Canadian licensed crypto asset trading platform, Coinberry in its most recent quarter. Additionally, March saw it bring Bitbuy under its umbrella, a move that made the business one of the largest crypto exchange businesses in Canada by number of registered users and daily trading volume.

While both of these acquisitions have expanded the company’s customer base, they have also provided it with the ability to spread beyond the Canadian borders. This lets the already growing business target expansions into other high growth markets.

 Famed Canadian entrepreneur and businessman Kevin O'Leary, a strategic investor in WonderFi Technologies recently appeared on Logan Paul's Impaulsive podcast and said he believed that the company “will eventually become a giant holding company for all these licensed exchanges around the world”. 

Upstart Holdings (NASDAQ: UPST), which is headed by Dave Girouard, operates as a holding company. The business, through its subsidiaries, provides a cloud-based artificial intelligence (AI) lending platform to improve access to credit while reducing the risk and costs of lending for bank partners.

The company’s latest earnings update showed the business’ second quarter revenues increased by 18% compared to the same period last year, climbing to $228.2m. The rise came on the back of a 38% increase in fee revenue.

However, Upstart Holdings still described the period as “disappointing” as it swung to a net loss of $29.9m from a profit of $37.3m after operating expenses skyrocketed.

The business is facing other difficulties too, with a shareholder lawsuit asserting that the business’ AI model was incapable of properly adapting to changes in macroeconomic conditions. The lawsuit alleges that Upstart Holdings had failed to properly inform investors of the shortcomings.

Even so, Upstart Holdings appears to be backing its technology. The company claims it has the financial flexibility “to survive and thrive through a variety of market conditions and to achieve our ambitious long-term goals”.

Additionally, the business said in early August that its AI model is well calibrated to current market conditions and has created a significant opportunity to generate outsize returns on its platform.

Max Levchin’s Affirm Holdings Inc (NASDAQ: AFRM) designs and develops software. The company offers an online platform which provides lending and consumer credit services, as well as enables customers to buy what they want and pay over time. The business serves customers in the United States. 

The company’s most recent earnings showed that quarterly revenue increased from $261.8m to $364.1m as its merchant and virtual card networks both achieved significant growth.

Affirm Holdings Inc has recently warned that the buy-now-pay-later sector could face funding difficulties as the cost of living crisis puts it under increasing pressure.

However, it has also asserted confidence that consumers are increasingly willing to turn towards flexible and transparent payment methods in order to continue spending even while they deal with growing bills.

It noted that the 4 July weekend saw the number of Affirm Holdings Inc transactions more than double year over year, with transactions relating to concert tickets, flights and bridal apparel notably increasing across the period.

Affirm Holdings Inc Chief Revenue Officer, Geoff Kott, commented:

“In recent months, paying over time with no late or hidden fees has become even more compelling for consumers looking to manage their finances amidst rising costs. We’ve seen this first-hand at Affirm Holdings Inc as consumers seek to increase their purchasing power in a flexible and responsible way. With a wide breadth of merchants spanning from home and consumer electronics to apparel and travel, we enable our consumers to do just that.”

MercadoLibre (NASDAQ: MELI) is headed by Stelleo Passos Tolda and operates an online trading site for the Latin American markets. The company's website allows businesses and individuals to list items, conduct sales, and purchases online in either a fixed-price and auction format.

The business offers classified advertisements for motor vehicles, vessels, aircraft, and real estate, as well as online payment services.

MercadoLibre’s most recent earnings showed that its revenues increased from $1.7bn to $2.6bn in the three months ended 30 June 2022. Net income also more than doubled, rising from $68m to $123m amid growth from the company’s fintech business.

The company’s payments processing and acquiring business delivered a total payment volume of over $30bn, growing 72% in on a USD basis and 84% on an FX-neutral basis.

Though it has wide-ranging ecommerce interests, the success and profitability of its fintech operations appears to have convinced MercadoLibre to make further investments in this segment of its business. 

Previous investments that the company has made in this arena include blockchain projects such as Paxos, a leading regulated blockchain infrastructure platform that powers the Mercado Pago cryptocurrency experience in Brazil.

MercadoLibre says it has taken multiple steps to engage in the dynamic ecosystem of digital assets and blockchain technology and aims to be a “core participant” in the changes that it can bring to consumers.

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