At Zenda, we support entrepreneurs who are creating essential software that revolutionizes the movement of money, goods and information across the Americas.
🤝 Have you seen or spoken with any interesting entrepreneurs? If so, please email us at team@zenda.vc.
📨 Make sure to forward this issue to anyone looking to stay in the flow on all things related to B2B fintech, supply chain & logistics and beyond!
👋 Hi founders, investors, and operators!
Happy New Year! We hope the holiday season was a time of rest and connection. As we venture into 2024, change and progress are already in full swing, despite being barely halfway through January. From ongoing supply chain challenges, including those at Suez and Panama Canals, to dissecting the implications of open banking and the 1033 rule in the U.S., there's plenty to catch up on.
The stakes are high in 2024. With upcoming elections later this year, fluctuating private and public market dynamics, and rapid AI advancements amidst changing regulations, the market is increasingly volatile and uncertain. This year, more than ever, presents a landscape of known unknowns.
While navigating through this cacophony will require a nuanced understanding of how these factors shape the landscape we operate in, we encourage founders to not get bogged down by all the noise and remain laser-focused on the job-to-be-done: listening and supporting your customers.
Focus is a precious, yet often underestimated resource. Prioritize wisely, listen intently and empathize deeply.
At Zenda, we remain laser-focused in helping our founders and are geared up for an exciting year ahead!
Onwards,
Esteban and Jeff
What We’re Following
The Biggest Banking And Financial Services Trends For 2024 (Forbes)
Our 2¢: As we dive into 2024, there's a lot brewing in the fintech space (much of which we can’t distill in one or let alone several issues). A few takes we fundamentally believe in include the following:
Data Utilization in Financial Services: There's a huge opportunity for automation and enhancing customer experiences in this data-rich industry. Applications of AI are particularly promising, as it can help e.g. streamline processes like customer onboarding in insurance and lending.
Regulatory Developments: Following a major regulatory change last summer involving the OCC, FDIC, and Federal Reserve, banks are now more focused on managing risks linked to their fintech partnerships. This shift has made regulatory technology increasingly vital for fintech companies, as it helps them stay compliant with evolving regulations.
Growth of Digital Payments: The surge in digital payments is reshaping both consumer expectations and the B2B payment landscape, which is still transitioning towards full digitization.
Growth of Embedded Finance: The emergence of 'payfac-as-a-service' models is revolutionizing the integration of payment solutions into platforms where consumers and businesses interact, steering us towards a more seamless and interconnected financial ecosystem.
Need for Enhanced Fraud Detection: With the increase in real-time and cross-border payments, there's an urgent need for sophisticated fraud detection tools to safeguard fast-evolving digital payment transactions.
Red Sea attacks: retailers rush to avoid delays to spring collections (Reuters)
Fleeting Thought: We're currently seeing significant supply chain disruptions due to various global events happening all at once. These include attacks in the Red Sea, drought at the Panama Canal, and Chinese factory closures during the Lunar New Year. These issues are causing major challenges for retailers, who are now considering alternatives to traditional maritime transport, such as rail and air, or rerouting ships. The Panama Canal's capacity has halved due to drought, and the Lunar New Year closure adds further delays. These events highlight the need for better inventory planning and flexible supply chain strategies.
1033: Letters from the Front Line (Workweek)
Bank groups voice concerns with CFPB’s open banking proposal (Payments Dive)
Our 2¢: Open banking is set to be a major focus in 2024. The Consumer Financial Protection Bureau's recent rule proposal under the Dodd-Frank Act is poised to promote open banking. This move aims to empower consumers by giving them greater control over their financial data while bolstering data security. However, there's ongoing debate within major banks, fintech companies, and merchants regarding how to effectively implement and ensure secure and efficient data sharing. We anticipate the finalization of this rule in the coming year, potentially leading to the entry of new players in the industry, with a strong emphasis on data quality, enrichment, and analytics.
Implications of High Inflation for Banking Outcomes and Deposit Flows: Observations from 2021 to 2022 and the 1970s (FDIC Quarterly)
Our 2¢: Studying the evolution of financial strategies reveals interesting trends. In the 1970s, banks struggled with fixed-rate loans amidst high inflation, leading to substantial losses. Fast forward to 2021, thanks to technological and financial advancements, banks adopted variable or adjustable-rate loans, allowing them to better manage inflation and interest rate changes. The future suggests a reduction in inflation and interest rates in the Americas, potentially boosting capital markets and consumer financial health. Despite a predicted fintech sector correction, growth is expected in B2B fintech, especially for companies that effectively integrate AI with credit underwriting models, adapting swiftly to market dynamics.
We're excited to announce that we’re hiring for a talented Analyst to join our investment team. In this role, our new team member will play a crucial part in shaping our firm's investment strategy, with a focus on sourcing opportunities, conducting due diligence, and supporting the firm’s initiatives. If you know someone in your network who might be a great fit or if you have any questions about the position, feel free to get in touch with the Zenda team.
You can find the job description and application link below. We look forward to hearing from you!
Our portfolio company Octane is now officially part of the Stripe family. The team at Octane set out to democratize consumption-based pricing by building the billing infrastructure needed to support it. Today, they’ve continued to see adoption of consumption-based pricing use cases with customers like Perplexity AI, Smartcar, AssemblyAI and more. Congratulations to Akash, Ahmed and the rest of the Octane team on the continued journey!
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