2020 Saw Continued Digital Transformation across Financial Services Globally
- FinTech has played a pivotal role in reducing risks associated with the exchange of cash, helping Small & Medium Enterprises (SMEs) and enhancing financial inclusion across developing markets.
- Through its ability to offer limited contact, avoid proximity, and increase overall shopping time, contactless payments have witnessed a surge in utilization and new user activation.
- Still in nascent stages in some emerging markets, FinTech innovations in digital lending, crowdfunding, and capital raising platforms (like Judo Bank, LendingKart, and Setu), are steering financial inclusion by improving access to finance for underserved groups.
- Riding on the wave of innovation across the financial services space, businesses are harnessing new monetization opportunities by rebundling their portfolio and blurring lines across verticals.
Rebundling Portfolio
- Ant Financial
- Revolut
- Gusto
- XINJA
Original Offering
- Payment processing (Alipay)
- Challenger bank
- Third-party payroll software
- Challenger bank
New Monetization Opportunities
- Neo bank in Hong Kong
- Commission-free stock trading
- Saving and spending solution (Gusto Wallet)
- In-app trading for the U.S. customers
- Similarly, payment players are integrating new revenue streams with focus on
- Cross-border Capabilities: Worldremit acquired Sendwave, a cross-border money remittance platform, to add scale to key U.S.-African payments corridors.
- B2B efficiencies: Buckaroo acquired SISOW, a digital invoice management and payments service company, to enhance its product offerings and strengthen its position in the SME market.
- E-commerce/mobile capabilities: Shift4 Payments acquired 3dcart, an e-commerce software platform provider, to offer unified commerce solution to its customers.
- Incumbent financial services businesses are facing ever increasing competition from tech companies, led by FAMGA (Facebook, Amazon, Microsoft, Google, Apple) that are actively participating via patent approvals, partnerships, and investments.
Apple partnered with Goldman Sachs to ventures into consumer finance with Apple Card
Google Pay expanded its mobile payment services to support big banks, local credit unions, and small local area banks
- Amidst the digital transformation, both developing as well as tech-advanced markets across the globe are witnessing an increase in roll-out/usage of FinTech products across Digital Payments, Digital Banks, and WealthTech etc., further accelerated by many restrictions placed on physical locations by COVID-19.
Increase in Roll-out/Usage of FinTech Offerings across Emerging and Developed Markets
(*) Percentages represent proportion of regulatory authorities reporting increase in FinTech offerings across different categories
In our Q4 2020 edition of the TMT M&A Newsletter, we cover global TMT M&A activity, notable M&A transactions, key industry trends/drivers, as well as buyer activity/appetite. To read the full report, download the PDF below.
We are happy to answer your questions and discuss the insights we have gathered as one of the most prolific M&A advisers.
Footnotes
- CB Insights, "Fintech’s Headwinds & Tailwinds Amid The Covid-19 Pandemic”, (August 13, 2020);
- CB Insights, "The State Of Fintech Q3’20 Report: Investment & Sector Trends To Watch”, (Q3,2020);
- World Bank Group and University of Cambridge, "World Bank and CCAF (2020) The Global Covid-19 FinTech Regulatory Rapid Assessment Report”, (2020);
- Goldman Sachs, “Goldman Sachs Partners with Apple on a Game-Changing Credit Card”
