Payments get bigger, faster
Of all the moving pieces and parts of financial technology, payments is more than likely the most mature. That’s because the technology is here today and there’s an associated revenue model with most forms of payments. Given that backdrop, we’re seeing stadiums and sports teams, like the San Francisco 49ers, develop their own apps. Done right, these apps are growing in-seat orders and increasing the size of the average sale.
Even if it’s from a defensive posture, banks want in on this business. The thinking is, better that account holders use banking apps to conduct peer-to-peer payments than having them use a third party app, which could eventually poach them to a bank-like account at some point. So, most of the largest US banks are rolling out real-time p2p payments that will eventually work to move money between banks. clearXchange is the payment network behind this activity and it’s expanding to thousands of other financial institutions and payers via a hookup with Fiserv’s NOW Network.
The credit card companies aren’t taking this lying down, either. They’re worried that ACH-enabled bank-to-bank payments are gathering steam and cutting into payments that used to be their domain. For example, to help foreign students studying in the U.S., Mastercard has partnered with Plastiq to enable payments to be made via a credit card no matter how the receiving party prefers to receive it. Startups also recognize that the path to digital payments is cut through hybrid solutions and they’re working on some pretty cool stuff.
The future of fintech, today
Tradestreaming published its fintech manifesto this week, laying the ground for where we think we’re headed. Let’s all agree to drop the word disruptive from our vocabulary and we can move on. There’s a lot to be excited about in fintech, but today’s environment feels bubbly. We’re starting to see some of the fissures in the new structures we’re building while we remake the financial services of old. Technology’s impact on financial services and how the modern financial system evolves will take years and decades.
The nature of the corporation is already changing. Many startups have higher aspirations for their businesses than just a single bottom line. This is reflected in the interest around B corps and it’s also reflected in how some fintech firms are creating corporate giving programs as part of larger Corporate Social Responsibility plans.
Risk is back on
During quiet periods like August, we sometimes lose connection to the fact that everything is being hacked all the time. It’s got people asking why the blockchain is so darn hackable. Banks of old protected our cash and valuables. The new systems? Less so.
There’s a bull market in cybersecurity and the thinking goes that companies that are helping to protect the digital form of our assets should benefit. Kensho, a financial data, analytics and automation firm, has created a dynamic stock index of firms with cybersecurity at their heart. Its KCYBER Index has returned 65% annually since launching in 2013. Who wants the ETF? That said, not one of these top 27 fintech unicorns is a security play.
So happy together!
For some ludicrous reason, the media got all excited with the prospect that fintech was going to, um, in some way, um, disrupt financial incumbents. If our fintech manifesto didn’t dispel of the notion that David can indeed defeat financial Goliath, we now have UBS for support. The bank published a study on how a growing number of financial institutions are partnering with fintech upstarts, building products and services together.
Certainly, there will be more collaboration in the future. The UK is encouraging this will happen by rolling out legislation that would mandate the sharing of core banking data with fintech firms. Beginning in 2018, British banks will have to share customers’ data with third parties who can then show how much could be saved by using other lenders.
New financial products get launched
Crowdfunding payment app, Tilt, launched P2P payments functionality, bringing it a lot closer to head-on competition with Venmo. Square Capital, the lending service from the business payments firm, is opening itself up a bit. Now, vendors who don’t actually use Square but are on a partner network can apply for short term loans from the firm.
Business Insider is getting serious about fintech by expanding its subscription business overseas. BI Intelligence now has 5,000 paid subscribers globally across six verticals and it’s launched a new fintech product not from New York City, but the UK. “London is the fintech capital of the world, and we have this great footprint with Business Insider here already.”