News From The FinTech Front: January Edition
Breaking Banks Europe
European Fintech at large with a special eye on innovation and a zest of inspiring stories along the way.
As the first month of 2022 is over it’s now time to analyze the top news in fintech of the beginning of the year
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We have done it in our last episode of Breaking Banks Europe hosted by Francesca Aliverti with two exceptional guests:?
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Let’s see the main news discussed in the last episode
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New funding rounds for digital banks
Digital banks are continuing to achieve great funding rounds. The last example is Qonto’s 486 million euros’ series D with a valuation of 4.4 billion euros. This round follows the rounds of Q4 2021 achieved by N26, Revolut, and others.
As these digital banks are not profitable yet it seems investors are trading profitability for growth.
According to our guest Gustavo Vinacua, analyzing success cases of challenger banks that are profitable, a success key factor can be the high frequency of interaction, as proven by cases like WeBank (a WeChat company) and Rakuten.
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Can inflation become an opportunity for fintech companies?
The inflationary environment is known to be a risk for customers’ pockets. To fight it the traditional personal finance strategy includes an increase of investments to get returns higher than the inflation rate. Can it be an opportunity for fintech companies?
Our guest Chris Gledhill does not see a direct link between inflation and fintech space even if inflation can stimulate investments. Gustavo Vinacua sees instead this environment as an opportunity for circular economy business models as inflation is not only about investments but also about reducing the need for resources that become more expensive.
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Buy now, pay later (BNPL) has redefined the relationship consumers have with credit
The growth of “Buy now, pay later” services are growing as proven by the success of fintech startups with this business model like Klarna and Afterpay. Banks and traditional lending companies have to change their perspective.
According to our guests we have to wait and see what will happen in the “later” part of the business model as BNPL companies have to face a credit risk with less robust credit score checks. B2B BNPL making credit more accessible especially for SMEs.
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Visa acquisition strategy: Plaid, Tink and the last one CurrencyCloud.
Visa recently acquired Plaid, Tink and CurrencyCloud making a shift towards paytech. Visa and Mastercard play the role of incumbents in the payment ecosystem. This puts on them a new challenge as trends like account-to-account payment are reducing transaction fees. Sustainability and carbon footprint will also be a key topic in paytech.?
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Is the crypto world crashing?
While Central banks are considering introducing CBDC (Central Bank Digital Currency), cryptocurrencies had a significant drop in the last week and regulators are getting more strict.?
According to Chris individual investors risk being misled by the massive advertising into cryptocurrencies. Gustavo preferred to talk about some opportunities coming from this technology as stablecoins can help, for example, farmers’ access to finance or make more efficient carbon-credits trading systems.
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Author: Elias Secchi (FTS Group)