The card payments ecosystem and the 4-party model; Generative AI in Accounting: Jobs To Be Done (JTBD); How B2B payment processing works;
Hey Fintech Enthusiasts, in this edition of Fintech Wrap Up, we’re diving into the latest trends in fintech mergers and acquisitions, the transformative potential of asset tokenization, and the booming embedded finance market.
Insights & Reports:
Curated News:
TL;DR:
Have you noticed all the buzz around fintech M&A lately ? We’ve got the scoop on why, despite an average of $3.5 trillion in global acquisition activity per year over the last decade, a whopping 90% of these deals fail due to poor implementation. Fun fact: bank-fintech acquisitions make up less than 1% of all fintech transactions. Among the top 50 U.S. and top 15 international banks, only 94 out of 500 acquisitions since 2013 were fintechs, with payments and lending tech firms leading the charge. Most deals are small, like under $300 million , making them easier to integrate.
Switching gears, let’s talk about asset tokenization . This process, from deal structuring to secondary market trading, is pretty cool. It involves creating a digital twin of a physical asset on the blockchain , boosting liquidity and simplifying ownership records. Imagine owning a piece of real estate as a token!
Now, onto B2B payment processing . These transactions are between businesses and often involve big sums and long payment terms. The shift to electronic invoicing is speeding things up, and security measures like encryption are crucial for protecting data. Compliance with regulations like AML and KYC is also a big deal to avoid legal headaches.
Generative AI is making waves in accounting too. It’s automating data collection, enhancing research accuracy, and helping accountants provide ongoing financial advice. This means more time for accountants to focus on value-added services.
Ever wondered how card payments work? The four-party mode l, involving the merchant, cardholder, issuer bank, and acquirer bank, is key. Marqeta is shaking things up with innovative transaction authorizations and API integrations that make the process smoother and more efficient.
Embedded finance is another hot topic. This market is projected to hit $320 billion in revenue by 2030 . It’s all about integrating financial services into everyday interactions, making transactions seamless. Stripe and Adyen have already crossed the trillion-dollar mark in payment volumes, and the growth in embedded lending and insurance is impressive too.
In our curated news, Goldman Sachs is rolling out a generative AI tool for code generation, Point72 Ventures is making some big changes to its fintech team, and Rainforest has raised $20M to challenge Stripe with embedded payments for SaaS providers.
Stay tuned for more insights and updates!
Insights & Reports?
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Unveiling fintech M&A deal details
Have you noticed or read any news on fintech M&A, lately? In this post, we will learn the details of fintech M&A deal details
Mergers and acquisitions in general are common — the last 10 years saw an average of $3.5 trillion per year in acquisition activity worldwide and in 2022, an average year, 50,000 deals were completed. However, deal volume is not correlated with success, as 90% of M&A transactions fail long-term due to poor implementation and post-deal strategy complications, according to the Harvard Business Review.
Despite the synergies, banks have often been a lower priority for fintech boards and executives looking to exit compared to the public markets, private equity, enterprise technology, and other fintechs. Overall, out of all fintech transactions in the market, bank-fintech acquisitions account for less than 1% of deals.
Among the approximately 500 whole-company acquisitions undertaken by the top 50 US and top 15 International and Canadian banks since 2013, only 94 or less than 20% were fintech acquisitions. The top acquirers were US based, ranging from across Global Systemically Important Banks (GSIBs) to regional banks and other institutions. Most of the remaining 400-plus deals were acquisitions of traditional lines of business such as lending, wealth management, or investment banking.
The Asset Tokenization Process
1. Deal Structuring
The initial stage entails the asset owner or issuer specifying the asset they intend to tokenize; this selection can span a diverse array of assets, from real estate, art, and precious metals to intellectual property, stocks, and commodities. During this first phase, the specific structure for tokenization is also defined, which may vary as the regulatory and legislative requirements may be different depending on whether the asset is classified as a security, a commodity or other. This is the stage at which the vital decisions about the token's legal wrapper are made
2. Digitization
During the Digitization phase, the tangible asset is first immobilized by transferring it to a controlled structure or location, usually under the care of a qualified custodian or a certified trust company. Following this, a digital "twin" of the asset is written on the blockchain as a token using a specific tokenization standard. Central to this process is the creation of a digital Register of Members (ROM) for the chosen asset, which details the current individuals invested in the token. The ROM is then uploaded to the blockchain, serving as a comprehensive ownership record
Curated News
Goldman Sachs Deploys Its First Generative AI Tool Across the Firm
Goldman Sachs will finish rolling out its first generative artificial intelligence tool—for code generation—to thousands of developers across the company by the end of the month.
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The ability to trade digital twins of physical assets on the blockchain could revolutionize the way we think about ownership and liquidity. How do you see this impacting traditional asset markets in the next few years?
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4 个月Who else is geeked about fintech?! Sam Boboev This Fintech Wrap Up is ! Asset tokenization - imagine owning a slice of a building like a stock? Embedded finance is everywhere these days - super convenient!