FinTech Zapping - 28th September

FinTech Whispers

??Russia's Yandex agrees $5.5bn Tinkoff acquisition

Russian internet giant (one of the few local search engines with higher market share than Google in its home market) has agreed to acquire one of the first successful Digital Banks, Tinkoff. In recent years Tinkoff has introduced several new services with the objective to become a superapp, which makes this acquisition even more interesting…would this be the first of many similar transactions in the challenger/neobank space?

??Transferwise achieves third consecutive year in green

In the FinTech space more than often players struggle to achieve profitability levels (the “theory” says at least until their 7/8 year in business), and lately there has been a lot of questioning on FinTech’s strategy mainly driven to attract funds and increase valuation, rather than building a strong business models (there is a lot more behind this situation). Transferwise revolutionized the world of cross border payments, by bringing transparency and efficiency to a pretty obscure process. The company launched with no freemium offering, with a clear focus on reaching profitability levels...interesting to note that results are up to March 2020, we will need to wait a bit longer to see how covid has affected the business

??Affirm Raises $500M Series G Round

If last week we talked about Klarna raising a massive funding round, this is time for its US counterpart. eCommerce defer payment solutions seems to be picking up, partly because of the expected growth trajectories of the industry. The US company already powers ePOS financing for global brands like Wallmart, Expedia or Shopify, and it’s working on opening new revenue sources by launching new products (e.g. savings account). In July there were rumors that Goldman Sachs was advising on a more than possible IPO …

??Solarisbank partners with Samsung Electronics and Visa to launch Samsung Pay in Germany

Samsung one of the largest technological companies in the world is diving into the FI space in a different way than its peers. In May they announced the launch of Samsung Pay in the US with SoFi as an FI partner, and for their EU roll out (Germany as first country) they have chosen Solaris Bank. The German fintech (a Finleap product – one of the greatest fintech venture builders in EU btw) has been selected thanks in part for its product simplicity, connectivity to third party banks allowing future Samsung Pay users to connect its card to practically any German bank. A product novelty also, as Samsung card will be connected to Solaris’ new installment product Splitpay allowing users to defer payments over €100.

??Cadre Cash: Real Estate Investment Platform Offers Cash Savings Account with 3% Reward

Every day we are seeing how FinTech companies are moving vertically to launch new products and create additional revenue streams, all while strengthen touch points with clients. Part of the FinTech success is their capability to re-envision their business strategy and their timings on go to market. The Real Estate investment platform has introduced a new an annualized reward of 3% on their Cadre Cash savings deposits.

FinTech Reflection - Boom in eCommerce boosting FinTech Payment players

Covid has caused a global health crisis changing many things, and one of them being a shift in customer behaviors towards digital channels. The current situation has accelerated ecommerce adoption (by an estimate of 5 years), as retailers have seen an opportunity to balance physical stores losses by transitioning to online channels while pure ecommerce players are consolidating market positions.

This shift has provoked a surge in Payment ecommerce solutions, especially notorious in Payment Service Providers (e.g. Stripe, Adyen, Checkout.com or Rapyd) and POS financing (e.g. Klarna, Affirm, Afterpay). Since the Covid outbreak these segments are attracting lots of interests by private investors that have seen short term positive growth as in indication of good investment in the long run. We have seen how private FinTechs have raised in the last year massive funding rounds (e.g. Stripe raised $600M in Q2`20; Klarna raised $680M in Q3'20)

To have the complete picture we will need to look at public markets, good thing that two of the biggest players in the PSP and POS financing spaces are publicly traded. Adyen and Afterpay have been performing extraordinary well after the March crash, and market confidence seems to be strengthen more and more everyday. In early September, the first one reported revenues lower than analysts' expectations which drove a small decline in price shares, but the truth is that despite a shrink in POS physical business and contraction of travel industry Adyen has surpassed revenues in H1'20 compared to previous year. On the other hand Afterpay has recently announced an strategic partnership with Worldpay to bring more efficiency to its business while expanding internationally. Lately we have seen an increase in confidence on POS financing solutions, becoming an integrated part of the online offering helping merchants increase sales. These solutions have evolved quite a lot, to the point that they are integrated as a part of checkout journey practically not affecting on timings of complexity when processing orders. The question here lies on whether POS financing solutions would ever become as ubiquitous and convenience to use as credit cards.

FinTechs serving the eCommerce and Online Business space are a different breed of Startups. These players are characterized by having a clear business model, heavily relying on its technological stack and reaching profitability at the core of its business strategy.