Venmo, behind you: incumbents are taking on P2P startups
It was only a matter of time, really. Though peer-to-peer payments have primarily been the focus of fintech startups, incumbents are delving into this market via clearXchange, a white label P2P payment platform for financial institutions.
Instead of developing a P2P payment product in-house, 5 of America’s top banks (including Chase and Bank of America) have signed up to the clearXchange network. So far, customers can only send money to other of the bank’s customers via the platform, but eventually they’ll be able to send to family and friends who bank elsewhere.
Chase’s Jamie Dimon famously said that he expects to win at payments; Chase’s integration of clearXchange into its existing banking apps is one indication of just how they’re planning to do that.
Turning non-customers into customers with mobile apps
It’s tough to market a bank - especially when so many millennials have lost faith in financial institutions. A new marketing tack that banks are testing out is a line of mobile services aimed at non-customers. The idea is that these mobile apps will cultivate more frequent, deeper engagements with non-customers, which will eventually lead to converting them into customers.
Whether this mastermind marketing plan will yield the desired results remains to be seen. In the meantime, ZEO, TCF Bank’s suite of services offered to all humans (customers and non), has been a big hit with existing customers - this in itself could entice more non-customers to the platform and to the bank itself.
Roboadvisors are a game changer, but at what cost?
This week, Betterment became the first independent roboadvisor to surpass $5 billion in assets under management. Well done, Betterment, but beware: this is also the week in which a report on the just how unprofitable roboadvisors are went live.
The report by UK asset manager Alan Miller was (wrongly, we think) largely ignored by the media, but its findings demonstrate that roboadvisors’ business models are extremely problematic: it can take up to 11 years for a roboadvisor account to become profitable, and a UK robo spends an estimated £2,794 over the life of an account.
This might not be a big deal for incumbents who have spun off or acquired a robo, but for smaller robo independents, these costs could be a long-term death sentence.
Regulation technology is coming into its own
Whether you’re an established incumbent or a hopeful startup, the double whammy of state and federal financial regulations can be overwhelming. Luckily, there’s tech for that: meet regulation tech (better known by its stage name, regtech).
Though it might not be the sexiest technology, regtech helps companies of all sizes from across the finance industry jump through flaming bureaucratic hoops, such as registration requirements, license fees, training requirements, and staffing rules. Tradestreaming’s Gidon Belmaker lays down the regulation challenges finance companies are facing and pinpoints the top 10 regtech companies that are steadily gaining momentum.
Globalization is speeding along multi currency solutions
Brexit aside, globalization has allowed more people than ever before to spend and shop in foreign currencies. This trend has obviously led to an increased demand for online and mobile money exchange solutions, and the UK fintech mavens haven’t disappointed:
Revolut, launched in 2013, is a multi currency payments platform that enables you to exchange, send, and spend your money while avoiding foreign banking fees without using a bank. The Revolut app, combined with a prepaid MasterCard, lets users load money from the bank account in their domestic currency and spend it in 90 different currencies across the globe - including bitcoin - at the interbank rate. Revolut just raised over $8 million from big-name investors and also has raised more than $11.7 million through pledges via a crowdfunding campaign.
Perhaps following a frustrating experience of returning from, say, London, with 20 pounds and nothing to do with them, WeSwap, a P2P platform, is touting cheaper travel money for all with its app that enables travelers to directly swap currencies with one another. The company is fresh off a $10 million funding round, and its CEO is confident that English fintech can prevail in spite of the Brexit referendum.