FinTech Zapping - 14th December

FinTech Whispers

??Argentina FinTech Ualá Debuts Mobile POS For SMBs

FinTech LatAm space is growing rapidly (SPOILER ALERT: stay tune as we are working on a report to address the exciting opportunities across the region) fueled by some of its best FinTech ambassadors, in this case we are talking about Ualá an Argentinian neobank backed by Goldman Sachs and Soft Bank (among other investors) that is growing fast, expanding to other countries and also nurturing its product catalog while opening new revenue streams. The move to POS solutions seems pretty smart, on an economy that is going through a deep transformation that is in need for digital and affordable solutions for merchants and SMBs. Ualá has moved fast to position in its local market, where it is not only competing with banks and other FinTech peers but also with non FI players targeting the FI space

??Is Stripe Treasury ‘game over’ for banking as a service?

If you are a daily reader of FinTech or Digital in FI news, it’s more likely that every week you’ll read news or articles around Stripe. The most valued FinTech in the world is evolving into a global multipurpose technological finance solution. Another move to reassure the ongoing belief that embedded finance solutions will be next big thing across the FI space. Stripe has partnered with Goldman Sachs, Barclays, Citi and Evolve Bank to launch its Treasury service solution. The question lies on whether Stripe’s solution will fulfill all needs from a treasury perspective, not only for SMEs but also for larger players with more ad-hoc needs

??Affirm Acquires Canadian Buy-Now-Pay-Later Provider PayBright CAD $340 Million

Another move by the US BNPL player to consolidate as leading provider of POS financing in North America. It's been a busy last half of the year for BNPL solutions, first we witness a surge in demand for POS financing as a result of a boost in ecommerce activity, followed by a lot of excitement after Klarna and Affirm raised massive funding rounds ($650M and $550M respectively), and then the ongoing speculation on the morality of this type of financing. If you want to learn a bit more on Affirm’s story please check the following article – LINK

??Paris-based Luko raises €50 million to become the European home insurance leader

Huge boost for InsurTechs across EU, with Luko a Paris based InsurTech that is focused on providing re-imaging insurance products for both renters and homeowners raising $50M in a Series B round. The French startup was founded in 2016 and it now has over 100k policyholders, thanks to its pricing strategy (claiming to save between 15-25% compared to traditional home insurers), digital and flexible policy (users can choose on the type and coverage level) and a faster claim management process (up to 2x faster that regular insurers).

??Revolut lets businesses accept online payments

A couple weeks back Revolut launched its latest product, this time to add some muscle to its SME offering by including an online payment acceptance engine. The surge in e-commerce activity has led a lot of players to step into the acquiring world. In this case Revolut is adding another capability for its SMBs customers, a good option for those players that want to offer an online checkout solution for the first time. Smart move by the UK challenger, that is focusing to grow its SME business, a revenue led offering that in the near future will represent a good part of its earnings

FinTech Reflection – FinTechs across the Market Curve

 You have probably observed a great number of articles referencing to players moving horizontal/vertically to increase their product catalog, in an attempt to open new revenue streams while exploiting their capabilities to further prove its market fit and ability to grow in ancillary segments.

 Well a few weeks back I read a great article by Sequoia titled “The Market Curve” – LINK – a really interesting angle on how different startups pitch their Market projections. While the article discusses tips on how to improve these assumptions in order to convince investors, I though the graph could be used as an illustration of how FinTechs are moving up and down the ladder to capture more customers and increase their revenues.

 Therefore, I am going to twist a little bit the graph and for a better representation I am summarizing the overall market segments in three buckets: 1) enterprise or corporate 2) SMBs 3) Customer/retail.

Among all 3 dimensions there is a general trend or strategy to move to the closest segment, since there are some commonalities that can be extended in a cost-effective way. As players move into other segments there is some convergence, white spaces that each company is trying to capture by leveraging on their economies of scale and thanks to a flexible technology that allows them to deploy products/services faster without the need to highly invest time and resources to do so.

Enterprise

In the case of players targeting enterprises or corporates, there is a clear move to commercial or SMBs market. A space traditionally underserved by institutions that is gathering lots of attention in recent years, thanks to the need for digital solutions that can be easy to plug in and affordable for SMEs. 

SMBs

In the middle we can find SMB focused players, where we will see the biggest disruption, with companies moving up to serve larger players but also others that have encapsulated its offering and technology to open it to mass affluent market. It really depends on the clusters that we look into, for example in the SME lending space there are companies that offering their services to retail customers, as a move to open new revenue streams while exploring new business segments. On the other hand if we look at the Acquiring space we can find companies like Stripe that are targeting both the SMB and Enterprise world, but also Square developing its retail strategy while also upgrading their offering to target the Corporate world and still working to extend its vast customer base of SMEs.

Consumer

While on this segment we can find a lot of companies evolving their offering beyond its core but not necessarily targeting at other segments (e.g. Betterment launched its current account, Affirm launching savings account), of course we can also find players that have upgraded their capabilities and adjust their offering to jump into the next segment and serve SMEs. Here the first example that comes to our mind is Neobanks, and it is a natural transition to include a business offering. We can also look how players in the cross-border payment space, started offering their services for retail customers and evolve its offering to businesses and beyond in some cases. Following this last thought an interesting move that might not be reflected on the graph, is when players encapsulate their technology and offer it as a service beyond the SME space. We have several examples of players which were launched with a retail offering, and are now serving the business and corporate world (e.g. Transferwise, Scalable Capital) 

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Something that stands out is that in order to grow and evolve FinTechs are moving beyond its core, targeting and accessing new markets looking for new revenue streams that would help them grow and create a sustainable businesses