Weekly roundup #1: Ant Group one step away from IPO, PayPal to allow cryptocurrencies and how does fintech disrupts the money landscape
Hi there! I’m delighted and nervous to share my thoughts on the fintech news of the week. This turbulent year was full of headlines about covid digital payments surge, financial companies spurts and revolution on money scene. What makes fintech so cool?
Ant Group’s upcoming IPO is the talk of the town for a while now. This week Chinese regulators approved listing in Hong Kong. The approval for Shanghai was received in September, and now the Asian fintech giant is just one final step away from the IPO — formal approval from the China Securities Regulatory Commission (CSRC) is still needed.
Ant Group aims to raise $35B via the share sale in a joint listing in the semi-autonomous finance hub. The plan values Ant Group at about $250B.
The company runs Alipay, the dominant online payment system in China, where traditional payment options as cash and cards were replaced by digital equivalents. Ant Group said earlier this year that it would use the proceeds to expand cross-border payments and enhance its research-and-development capabilities.
Analysts refer to this upcoming IPO as to “blockbuster”, “monster”, “revolutionary”, and promising to beat Saudi Aramco’s record. But it’s not the money that strikes the most — it’s the tectonic shift from traditional financial and banking services to ubiquitous fintech embracement.
Let’s see how the conservative financial segment is being challenged. Or is traditional banking not that rigid? Maybe it simply gets a little more competition?
I would name inclusivity as #1 driver for fintech adoption. It’s a common assumption that traditional bank sets the requirements and policies for the customers that at times are difficult to meet or simply irrelevant to the needs of a customer. It could be flexible rates that depend on your occupation status, but how to make the services accessible for freelancers? Is it harder for a blogger to obtain a mortgage than for 9–6 office person? In many countries — it is. How about people who live in remote areas? How about financially disadvantaged people who still need financial products and want to invest or send money to their families?
#2 advantage is convenience. Usually, the design is very friendly, the terms and conditions are clear, customer service is very helpful. It’s simply easy to send money or to pay for something, to control your assets and spendings. There are two pathways that fintech companies follow: one core function in an app (like investments or lending) or super-app (lifestyle-services with a financial arm).
Ant Group, for example, not only supports money transfers and payments in both directions (for merchant and customer), but provides investment, insurance, lending products. And all of it is in one app, that can seamlessly take customers from grocery shopping to getting a loan, from tipping a waiter to buying a lipstick right at the moment of watching the video ad.
#3 pro is fintech’s ability to cover more lifestyle and business scenarios and its’ ability to adjust products to the customer’s needs faster. Here is the splendor of examples:
- Customization and adoption to customer’s preferences — loyalty programs, special deals, clasterization of the audience and so on,
- social commerce (you can buy right at the messengers and social networks),
- online to offline intersection and vice versa (the customer can shop both online and at the brick-and-mortar stores of the same brand and use all the loyalty options)
- Lifestyle services — you can have taxi service, food delivery, music, etc in one app that will be powered by fintech solution,
- Solutions at the border of a few industries — namely, InsurTech, but to be honest, it every -Tech that will be monetized.
Please, share your thoughts on fintech’s pros & cons. Traditional finance or fresh tech blood? And moreover, what do you think are the obstacles for further fintech embracement?
Anyways, the news from this week suggests that fintech is still at the frontier. A mild example — American Airlines launches e-wallet and mobile ID for its customers. E-wallet allows not only to store trip credits, but to use for “flight credit” as another payment option, as well as receive automatic refund if the ticket is canceled. Mobile ID technology will use the smartphone to verify the identity at the luggage drop. The interesting thing is the tokenization for those who use third-party app. The other app will issue digital token at the check-in and later this token can be used at the bag drop. So far, the mobile ID is implemented as the experiment, but I’m beyond interested to watch how it unfolds.
Lyft partners with Venmo in order to split the cost of the ride and in addition to one more payment option. Venmo already serves 60M users to pay for groceries and meals with friends and now extends the “running errands” options to the ride-hailing services. (Scroll up to 3rd fintech’s advantage of adjusting to customer needs and making life easier!)
Visa, the top global financial firm by market cap, introduces Tap to Phone in 15 markets as part of its goal to digitally-enable 50 million SMEs, this tool helps businesses access the digital economy, prevent revenue loss and boost cash flow by accepting contactless payments.
And to the biggest news of the week — PayPal to add cryptocurrencies. The company plans to allow U.S. customers to buy, hold and sell Bitcoin, Bitcoin Cash, Ethereum and Litecoin within their PayPal wallet in the coming weeks. In early 2021 PayPal customers will be able to use cryptocurrencies for shopping. Moreover, this act is described by the company as an encouragement for global use of virtual coins and preparation for new digital currencies that may be developed soon.
What news did catch your attention this week? Your comments and ideas are very welcome! Let’s talk the fintech!
