Ant, the Biggest IPO Ever, Gets Squashed Last-Minute; HSBC to Launch TransferWise Rival; WhatsApp to Go Live with Payments Service in India

Hey ?? fellow FinTech enthusiasts! Hope you are all keeping well and safe during these unprecedented times. We shall fight and win this ????

P.S. Before we dive into what happened in FinTech last week, check out my Connecting the Dots Newsletter, where you will get much more. Every Friday????

Last week (2-6 November) was another interesting week in FinTech. World’s biggest IPO (aka the Ant ?? ) has been put on hold; HSBC is aiming to fight TransferWise & Revolut; WhatsApp to launch payments in India, and more!

Without further ado, let us dive into what has happened in the financial technology sector this week. Let’s connect the dots.

Ant, the Biggest IPO Ever, Gets Squashed Last-minute

The Shanghai Stock Exchange has suspended Ant Group’s blockbuster IPO over regulatory concerns.

Ant Group, the Chinese FinTech giant that was supposed to go public in Shanghai and Hong Kong, was halted over regulatory concerns.

Alipay has over 1B users, making it the biggest financial app in the world. That's 3X the number of Paypal users and 3X the US population. Ant was on track to raise over $34B in its IPO, which would make it the largest ever.

THE TAKEAWAY

Politics is definitely a market risk... It’s not clear why regulators squashed Ant, but the Chinese government's controlling-ness is likely behind it. Alibaba saw its stock drop 8% because it owns 33% of Ant. It is interesting to note that in its own IPO papers, Alibaba said that changes in the Chinese government's policies could hurt its biz.

HSBC to Launch Transferwise Rival

HSBC is taking on the likes of Transferwise & Revolut with the launch of Global Money Account, a free mobile-based service that customers can use to hold, manage and send funds in various currencies to HSBC customers in over 20 markets around the clock in real-time without incurring any fees.

Global Money Account is launching in the US first, and will be rolled out to other markets in 2021. Customers can get instant access in just five clicks via their existing banking app.

The ambition for Global Money is to provide HSBC’s customers with one global account for all of their financial needs so that if they move from one market to another, they don’t need to open a new account, they just take their existing account with them. This should allow them to pay bills in multiple markets, make cross border transfers and spend like a local wherever they are

The launch of the service marks a growing trend by banks to claw back business lost to trend-setting FinTechs like Transferwise and Revolut, which offer similar borderless accounts to consumers. Banco Santander for instance has launched a standalone service, PagoFX, for the UK retail market and sole traders.

THE TAKEAWAY

Banks strike back… Well, not really… While it’s great that HSBC’s customers will be able to transfer funds instantly and free of charge between themselves, it’s definitely not new or something exciting. This was always the proposition of Revolut, TransferWise, N26 and the likes (and that made their customers tick!). On the other hand, sending money out of your HSBC account to anywhere in the world, in any currency, with reasonable fees - now that would be a serious move. But maybe it’s too much and too early to ask for a 350+ years old bank…

WhatsApp to Go Live with Payments Service in India

Facebook-owned WhatsApp has finally gotten the greenlight to launch its payments service in India.

The National Payments Corporation of India (NPCI) has given WhatsApp approval to go live on the country's United Payments Interface (UPI). WhatsApp can expand its UPI userbase gradually, starting with 20 million users.

WhatsApp began testing P2P payments in India in 2018 but has, until now, struggled to secure clearance for a full launch.

WhatsApp has teamed with five Indian financial institutions - ICICI Bank, HDFC Bank, Axis Bank, the State Bank of India, and Jio Payments Bank - to take the service nationwide.

The NPCI decision comes shortly after the Competition Commission of India dismissed a case accusing WhatsApp of abusing its dominate market position in messaging to move into the country's payments space.

Earlier this year, the firm launched payments in Brazil only to be shut down by the central bank within ten days over competition issues.

THE TAKEAWAY

Sending money as easily as sending a text… The company has hundreds of millions of users in India and it has been trying hard to diversify its revenue and jump into payments. Yet, WhatsApp is facing a crowded payments market with stiff competition from Google Pay, Walmart's PhonePe and local outfit Paytm. Get your popcorn ready, this should be interesting! ??

PayPal Recorded its Strongest Total Payment Volume Growth in Company History

PayPal recorded its strongest total payment volume growth in company history and continued to rapidly attract users in Q3 2020.

The company racked up $247 billion in total payments volume in Q3 2020, surging 36% year over year (YoY)—the strongest growth performance in company history, according to its earnings release.

Meanwhile, its net new account growth dropped from its astronomical 137% YoY growth in Q2 to 55% YoY growth in Q3, but that still allowed it to add a whopping 15.2 million accounts and significantly outperform its 7% YoY growth from Q3 2019. A coronavirus pandemic-driven uptick in ecommerce and digital payments is behind PayPal's success—and with holiday shopping fast approaching, its performance should reach even greater heights in Q4.

THE TAKEAWAY

With its stock up more than 100% YTD, PayPal continues to show strong performance. Further, the FinTech giant has added a number of offerings that should help it drive engagement from its rapidly growing user base - recent addition of crypto capabilities, Venmo-branded credit card, launch of buy now, pay later (BNPL) business, among others. These and other developments will definitely boost the company's engagement and revenues, especially now that its user base has ballooned.

Starbucks' and Dunkin's Rewards Programs and M-Ordering Businesses Both Grew in Q3

Starbucks and Dunkin' revealed that mobile ordering is playing an increasingly important role in their businesses.

The two chains revealed in recent earnings calls that mobile ordering is playing an increasingly important role in their businesses as they try to recover from the coronavirus pandemic.

Mobile ordering accounted for more of Starbucks' orders in its fiscal Q4 than in the prior quarter, even though it's reopened more in-store seating. Mobile order transactions accounted for 24% of the chain's US sales in its fiscal Q4 2020. That's up from 22% in the previous quarter, in contrast to the combined drive-thru and mobile order US sales share, which fell from 90% to 75% in the same time frame. This suggests that mobile ordering will keep gaining popularity even as consumers return to stores, especially since the firm is adding support for credit and debit cards, mobile wallets, and cash for its rewards program that enables mobile ordering.

On the other hand, on-the-go mobile ordering still represents a small share of Dunkin's transactions, but it's on the rise. Mobile ordering accounted for 8% of Dunkin's transactions in Q3 2020. That's up from 7% in Q2 2020, and could continue to climb as the pandemic stretches on and pushes consumers to limit their time spent in stores. And Dunkin' is now in position to take advantage of this trend since all consumers can use its mobile ordering capabilities instead of just DD Perks members as of September 2019.

THE TAKEAWAY

Both firms' rewards programs are bringing in more members, which will be key to driving mobile ordering growth going forward. Starbucks Rewards now counts 19.3M active members in the US, up 10% YoY, while Dunkin's DD Perks claims 5.4M active users, up more than 55% annually. This is a brilliant example how firms should be driving mobile payments adoption with added value at the core.

Extra Reads & Quick Bites for Curious Minds??:

• Central Bank Digital Currency (CBDC) – building together the future of money (and humanity) — must read
• Conductor, a Brazil-based card issuer and banking-as-a-service platform has raised $150M
• Spanish banks lead development of blockchain-based digital ID model
• PayPal will Bring Buy Now, Pay Later To Venmo
• Denmark’s Nets Merging With Italy’s Payments Giant Nexi
• US bank satisfaction ratings hit record high among small businesses
• The pandemic is spurring FinTech regulation across the globe

Quote of the Week/??Food for Thought??

What is Ant - a tech company or actually a bank? ??

Graph of the Week

Global FinTech funding steadily rose in Q3 2020 ????

Week in Brief

The Shanghai Stock Exchange has suspended Ant Group’s blockbuster IPO over regulatory concerns.

HSBC is taking on the likes of Transferwise & Revolut with the launch of Global Money Account, a free mobile-based service that customers can use to hold, manage and send funds in various currencies to HSBC customers in over 20 markets around the clock in real-time without incurring any fees.

Facebook-owned WhatsApp has finally gotten the greenlight to launch its payments service in India.

PayPal recorded its strongest total payment volume growth in company history and continued to rapidly attract users in Q3 2020.

Starbucks and Dunkin' revealed that mobile ordering is playing an increasingly important role in their businesses.

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading company's expansion into Europe , I'm an active member of FinTech community and a TechFin evangelist.

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