Are you subscribed to too many streaming services?

And how much do you actually spend on home delivery?

An emerging breed of AI-driven fintechs can tell you all of this and more, just by looking at your account and credit card statements.

It’s because of open bankthe consumer data rights (CDR) framework that gives you the power ask your bank to share your financial data with fintechs willing to help you analyze your expenses.

CDR is already used for purposes as diverse as avoid bill payment failures and COVID contact tracing – but with Australia’s open banking regime attracting new entrants like Israeli personal financial management (PFM) company Personetics, the possibilities are growing rapidly.

CDR is “a massive accelerator for our business” and “the most compelling reason why we want to double down in Australia,” said Mandeep Sandhu, Personetics Country Director for Australia.

Personetics, whose AI-powered software helps conventional banks operate more like data-driven neobanks, has sold its platform to more than 80 traditional banks, including Santander, UOB and Metro Bank.

With a venture capital war chest of $119 million ($85 million), it is now expanding to Australia through deals with MyStateBank and two other newly signed clients.

Personetics algorithms provide proactive advice on customers’ financial health, spending, and spending habits.

His auto-save features can determine when you have extra money in reserve and ask you to put it into a savings account or superannuation fund.

With the good permissionsthe platform can even transfer funds in your name.

Add other data sources and the possibilities quickly expand: the PFM platform could track your gas expenses, for example, and compare them with gas price tracking to see if you could save by filling up on days when prices are lower.

He could take an inventory of your streaming services and other subscriptionstracking your spending and, optionally, comparing it to your usage to let you know which services you can safely cancel.

The sky is the limit for “hyper-personalization” services that only become viable with access to real-time relevant data, Sandhu said.

“CDR is a major public service that will help grow the industry and help customers do business with an institution – and there is nothing like it in the world.”

Data drives industry innovation

Amid rising inflation, many workers are struggling to make ends meet and are changing their financial behavior accordingly.

A recent PwC investigation found that 65% of employees changed their spending behavior in the past 12 months, with 53% reducing the cost of essential items and 43% saving more than in the past.

As many as 87% of respondents said they wanted help making financial decisions.

This could see strong adoption of CDR-driven services that will facilitate the sharing of financial data – and will soon be extended to the energy sector to help consumers make more informed choices of service provider.

CDR will then extend to telecommunications, the government recently announced, with “open finance” – an ecosystem comprising the non-banking elements of the financial services industry, such as pension and insurance providers – to follow.

The Australian government’s sector-by-sector approach is “super smart”, according to Sandhu.

“Proactive sector-by-sector research allows you to understand how people are spending,” he explained.

“You can build a real profile around that – and, more importantly for you as a customer, you want control over that information and how you use it.”

Australian banks and fintechs have invested heavily in data tools to make them more responsive and flexible.

Judo Bank, for its part, recently implemented a major cloud-based CRM system within months, while Commonwealth Bank invested in open banking fintech Payble, and Bendigo and Adelaide Bank bought Melbourne-based fintech Feroci – all to deliver new data-driven insights.

Deeply-established Australian banks could suffer if they can’t keep up with fintechs, with Accenture to predict that easier bank switching could threaten 29% of banks’ traditional retail products – but increase revenue by 10% for successful institutions rethink their business models.

Five months before the emergence of Covid-19, board members of Pune-headquartered Bajaj Finance sat down to give final shape to its five-year strategic plan. It was a routine affair; the atmosphere was sanguine. The consumer finance company had created something of a record by raising $1.2 billion in capital, to fuel its massive growth opportunity. Over the past decade and a half, the company’s revenues, assets under management and earnings have grown at a staggering compound annual growth rate (CAGR) of over 30%. “Given the rapidly changing landscape, natural evolution has fundamentally forced us to go digital end-to-end,” says Rajeev Jain, Managing Director of the firm Rs 1.81-lakh crore (asset size ).

It didn’t take long for the board to give its approval to create a super one-stop-shop financial services app with an ecosystem of shopping and e-commerce. “The thought process was to be available 24/7 to our over 42.6 million customers, to have two-way engagement, and to give them everything they need when they want it. “, explains Jain, who stimulates a culture of start-ups. Most observers believe that this omnichannel network transformation exercise, which is currently underway, was the result of the pandemic, but it actually started earlier. However, the pandemic sent the plan back to the drawing board for an overhaul. “Nothing can make you think harder than a crisis. This is the learning for us to exploit the new opportunities that emerge in a [Covid-19] crisis situation,” says Jain, 51, who played a key role in transforming a small Bajaj Finance into one of the fastest growing NBFCs in India. The Covid-19 crisis has prompted Jain – and other professional CEOs – to think more deeply and broadly about new digital initiatives in light of changing consumer behavior. But more on that later.

Jain, who typically starts his day at 7 a.m., was instrumental in building the company’s zero-rate consumer durables finance product, now known as Buy Now, Pay More. later”, a great success, so great that it was instantly replicated by competitors, including major banks. In part, the experience and wisdom of two stalwarts – the late Rahul Bajaj and former banker Nanoo Pamnani – helped the business, but it was Jain’s execution skills, which he honed in corporate multinationals like GE, American Express and AIG, which drove the product. strategy. “Once a larger strategy is in place, he rolls up his sleeves to get the job done,” says a professional who worked with Jain earlier.

Jain’s biggest challenge as CEO probably came when Covid-19-induced lockdowns forced people and employees to stay home. “If you create a crisis, you cannot solve this crisis; but if you didn’t create this crisis, it gives you a much greater moral right to resolve this crisis,” he told his leadership teams. “It was a crisis that all of us as COOs looked at from this philosophical lens and worked to resolve and even profit from it.”

The company’s growth journey has in some ways been cut short by the raging pandemic waves, but it has also shown remarkable resilience. In BT-PwC’s Top India CEO Ranking data, the three-year CAGR of Bajaj Finance’s total revenue was calculated at 22.99% and after-tax profit at 16.73%. Asset quality was also in check, with net NPAs at 0.91% of loans as of March 31, 2021. This exceptional performance, which includes the first pandemic year, led the four-member jury to award Jain the highest Champion Award. Champions’.

When Jain joined the business in 2007, it was a small captive auto finance company. Today it is a giant by comparison: FY21 self-generated revenue was Rs 23,563 crore, and market cap is now Rs 4 crore, higher than Axis Bank and Kotak Mahindra Bank. What is the recipe behind this success? At a fundamental level, four key elements have remained consistent and common from the start: people, a great attitude, patient capital, and planning. “People start businesses in the service sector. You must have a positive attitude. You need patient capital to build a long-term business, as well as ongoing strategic planning,” says Jain.

One-click financial supermarket

The company, which was at the forefront of digitization for the past decade, is transitioning from a digitized business to a digital business. “Digitized means some [part] of the process was digital, but the whole process was not,” says Jain. In fact, he started using point-of-sale cloud computing in 2007. Today, 60% of his workload runs on the cloud. The company also claims to be one of the biggest customers of major Salesforce software as a service (SaaS) in India. Initially, Bajaj Finance’s plan was to create a super app for existing clients, but after Covid-19, the plan was extended to create a global app. As part of this new ecosystem, it is developing five proprietary marketplaces – EMI Store, Insurance Marketplace, Mutual Funds (MF), Brokerage and Healthcare – which will allow customers to review, compare and purchase a multitude of financial products and services in electronics, insurance, investments and healthcare categories. The omnichannel strategy would make it easier for customers to switch between online and offline channels, which would make the new model more profitable.

The company is taking its EMI store to the next level. Of the 120,000 merchants it works with in the physical world (such as Croma, Vijay Sales, etc.), 12,000 are already on board its digital app. It has nearly 78,000 SKUs and 35,000 merchants on its existing web marketplace platforms. “Merchants will be able to bring in a logistics partner to collect products and deliver them to customers,” says Jain. It also introduced an aggregator model with 900 insurance products across a dozen insurance companies. Customers have the option of using a Bajaj EMI card or UPI wallet to pay the premium. The MF Market or Investment Market offers a host of MF products for you to review, compare and buy. The company’s brokerage app offers loans for stocks. And the fifth vertical, BFL Health, has built a doctor portal that allows visitors to browse hospitals and scan some 100,000 doctors. “Execution is the key to this digital transformation journey. If the company is unable to make meaningful progress in reshaping its business towards the digital economy, this could (negatively) impact its outlook,” says Siji Philip, Principal Research Analyst at Axis Securities.

Payments ecosystem

The biggest inclusion in the super app is the payments ecosystem. He has developed a wallet application called “Bajaj Pay”, which offers payment options via UPI, EMI card or credit card. This checkout element will serve as a front-line engagement tool for customers on a daily basis. Jain says the payment offer is linked to a unique reward system, offering something called “Triple Reward”, which means a customer can choose between cashback, Bajaj coins or vouchers. It also creates a Bajaj Pay payment solution for its 120,000 partner merchants. There are plans to launch point-of-sale (POS) card reading machines, QR codes and a payment gateway business. Jain is betting big on payments, where companies like Paytm and BharatPe have built a huge network. “Payments will be the primary hook or engagement tool for both customers on the one hand and merchants on the other,” predicts Jain.

While fintech companies are building a lending model on top of payments, Jain is doing the opposite. He explains that the company is a licensed consumer finance company with a full line of products. “To reduce friction in the financial services industry, you have to manufacture. If I don’t manufacture, I can’t understand the nuances of the business, and in doing so, I can’t reduce friction,” says Jain. The whole transformation plan is already underway. It has now been 18 months since Bajaj launched Phase 1 where it plans to move all existing consumers to the new digital platform in a phased manner. As part of Phase II, which will launch in the next eight to nine months, the new-to-Bajaj customer journey will emerge. The app’s features will also increase from 55 to 117. “So far, the company’s consumer durables financing [business] was the precursor to its customer acquisition engine. However, with the recently launched payment portal, the efficiency of customer acquisition increases, along with reduced costs and minimal risk,” says Philip of Axis Securities.

Upcoming challenges

Shweta Daptardar, Vice President of Elara Securities India, said developing new markets and applications will result in increased cross-selling initiatives, greater customer retention and improved customer acquisition rate. . “All of this should result in better business traction,” says Daptardar. Jain envisions higher engagement rates with customers, which are likely to increase significantly. “A significantly superior customer experience should naturally lead to much higher revenue per customer. This can lead to higher growth and lower operating costs,” he says. The company will eventually have three ecosystems integrations of apps, web and physical products to deliver anything and everything.” It’s really what we call the ubiquitous financial services model,” says Jain.

But there will also be challenges along the way. After the debacles of IL&FS and Dewan Housing Finance, the Reserve Bank of India suggested strict bank-like regulation for large NBFCs. Based on the draft RBI guidelines, Bajaj Finance is likely to be placed in the upper layer of regulation, which means a higher minimum capital requirement and a more cautious eye.

What if you became a bank? Well, this has its own pros and cons. “The company would benefit from stable liability management supported by current and savings accounts (CASA), but spreads and returns on assets (RoA) will suffer because becoming a bank would mean meeting the reserve ratio of liquidity and legal liquidity ratio requirements,” says Daptardar. of Elara Securities. There are also priority sector regulations for the deployment of capital. Philip of Axis Securities believes that “at the appropriate time, the company may apply for a universal banking license or seek inorganic acquisitions in the space if regulations allow.” Jain certainly has a game plan in mind. He believes that all of Bajaj Finance’s current business initiatives and moves are already moving in the direction of a bank. “If the new ubiquitous financial services model is to become a bank eventually,” says Jain, “it will create a distinctly differentiated bank.

The fintech industry has grown tremendously amid the accelerated pace of digitalization caused by the pandemic. And its applications are expected to continue to grow with continued technological advancements and enhanced security measures. However, not all fintech companies are well positioned to benefit from industry tailwinds. Shares of Robinhood Markets (HOOD), SoFi Technologies (SOFI) and PagSeguro Digital (PAGS) appear overvalued at their current price levels. So we think it might be wise to avoid them now. Let’s talk.

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Fintech is short for financial technology. Technology has brought about significant changes in the functioning of the financial sector. And the COVID-19 pandemic has accelerated the use of fintech due to the convenience it offers in performing financial transactions.

Fintech companies have seized the opportunity by responding to ever-increasing consumer demand for payment simplicity, money management and easy access to credit. The popularity of fintech companies has forced traditional financial institutions to make technology investments to compete. The fintech industry is now expected to see a further boost on emerging trends, such as buy-it-now-pay-later (BNPL), neo-banks, and platform as a service (PaaS). According to a report by Kenneth Research, the global fintech market is set to reach $305.70 billion by 2023growing at a CAGR of 22.2%.

Although the fintech industry is expected to see significant growth, fundamentally weak stocks in this space, Robinhood Markets, Inc. (HOOD), SoFi Technologies, Inc. (SOFI) and PagSeguro Digital Ltd. (PAG), are trading at high valuations. Therefore, we think it might be wise to avoid these actions.

Robinhood Markets, Inc. (HOOD)

Based in Menlo Park, California, Well-known financial services platform provider HOOD is focused on developing cash management application including stocks, ETFs, options and cryptocurrency. The company’s platform allows trading in US-listed stocks, exchange-traded funds (ETFs), options, US certificates of deposit (ADRs), and cryptocurrencies.

HOOD’s operating expenses increased 162% year-over-year to $783.14 million for the fourth quarter ended December 31, 2021. The company’s net loss was $423. $.26 million, compared to $13.02 million in net profit the previous year. Also, his Adjusted EBITDA the loss amounted to $86.84 million, compared to adjusted EBITDA of $79.19 million in the same period last year.

In terms of forward P/S and P/B, HOOD’s respective 5.52x and 1.44x are above the industry averages of 3.20x and 1.14x. The company’s EPS is expected to remain negative this year and next. Additionally, analysts expect its revenue for the quarter ending June 30, 2022 to decline 22.9% year-over-year to $402.33 million. Over the past six months, the stock price has fallen 74.1% to close the last trading session at $11.49.

HOOD’s weak fundamentals are reflected in its POWR Rankings. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an F rating for stability, feeling and quality and a D rating for value. It is ranked No. 161 out of 165 stocks in the F-rated Software app industry. Click here to see other Growth and Momentum ratings.

Click here to view our Software Industry Report for 2022

SoFi Technologies, Inc. (SOFI)

San Francisco-based digital financial services company SOFI operates across lending, financial services and technology platform segments. Its loans segment offers student loans, personal loans and home loans. On the other hand, its financial services segment provides cash management and investment services through SoFi Money, SoFi Invest, SoFi Credit Card and SoFi Relay. And its technology platform segment offers the advantages of Galileo and Apex.

For its fourth fiscal quarter, ended December 31, 2021, SOFI’s non-interest expense increased 52.5% year-over-year to $395.06 million. The company’s net loss rose 34.3% year over year to $111.01 million. And its adjusted EBITDA was down 61.1% year over year to $4.59 million.

In terms of forward P/S and P/B, SOFI’s respective 6.38x and 2.20x are above the industry averages of 3.20x and 1.14x. The company’s EPS is expected to remain negative this year and next. Over the past nine months, the stock price has fallen 50.1% to close the last trading session at $11.58.

SOFI’s POWR ratings reflect this bleak outlook. It has an overall F rating, which equates to a strong sell.

It has an F rating for value and stability and a D rating for sentiment and quality. In category D Financial Services (Corporate) industry, it is ranked #110 out of 113 stocks. To see SOFI’s additional ratings for growth and momentum, Click here.

PagSeguro Digital Ltd. (PAG)

Based in Sao Paulo, Brazil, PAGS is a fintech company that offers several digital payment solutions to micro-merchants, small and medium enterprises. Its end-to-end digital ecosystem helps its customers accept payments and manage their businesses.

PAGS’s cost of sales and services for the nine months ended September 30, 2021 increased 50.5% year-on-year to reach 3.94 billion reais ($0.76 billion). The company’s net profit fell 5.6% year-on-year to R$865.01 million ($168 million). And its EPS was R$2.6019, down 6.3% year-on-year.

In terms of futures price/cash flow, PAGS’s 23.53x is above the industry average of 18.86x. Over the past year, the stock price has fallen 74.5% to close the last trading session at $15.30.

PAGS’ weak outlook is reflected in its POWR ratings. It has an overall F rating, which equates to a strong sell in our rating system.

It has a D rating for value, stability, sentiment, and quality. It is ranked #112 in the Financial Services (Corporate) industry. Click here to see other PAGS ratings for growth and momentum.

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Shares of HOOD rose $0.02 (+0.17%) in premarket trading on Thursday. Year-to-date, HOOD is down -35.30%, compared to a -7.80% rise in the benchmark S&P 500 over the same period.

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About the Author: Dipanjan Banchur

Ever since he was in elementary school, Dipanjan had been interested in the stock market. This enabled him to obtain a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan is particularly interested in reading and analyzing emerging trends in financial markets.

Continued…

The post office 3 Overvalued Fintech Stocks to Avoid in March appeared first on StockNews.com

Tinkoff announces that it has selected BPC’s SaaS Cloud Payment Services for its planned expansion into the Philippines. The project is an extension of an existing partnership between the two companies and demonstrates BPC’s proven technical expertise in digital banking and payments.

In addition to BPC’s award-winning technology, Tinkoff chose the company over its competitors for a number of reasons, citing in particular BPC’s extensive local knowledge and experience in the Philippines and throughout Asia.

Under the terms of the new agreement, BPC’s next-generation payment processing company, Radar Payments, will manage the end-to-end payment experience for potential Tinkoff customers in the Philippines. This includes the production of virtual and physical cards, as well as the issuance and management of debit cards, credit cards, SmartVista ACS for 3DS secure services and fraud prevention.

BPC will support Tinkoff in the adoption of SaaS cloud payment in the Philippines, a trend that has emerged globally for many reasons, including greater flexibility in accessing banking services, as well as cost savings and security. Banks are tapping into the expertise of payment processors to focus on customer relationships, while neobanks and fintechs are bringing new offers to new markets faster than ever, using ready-to-connect payment rails in various geographical areas.

The Philippines is one of Southeast Asia’s fastest growing markets and ripe for transformation. The Central Bank recently granted new banking licenses to foster healthy competition and improve financial accessibility and inclusion.

BPC has been active in the Philippines for over 15 years serving banks, neobanks, rural banks and transport operators contributing to better financial inclusion using next-generation technology. The company has built a solid reputation for understanding and mastering the local banking and payment context and behaviors, key criteria that appealed to Tinkoff during its selection. Tinkoff also chose BPC for its ability to support their ambitious growth both in terms of customers and expected transaction volume. While launching a new bank in an old economy could

have taken years between licensing and deployment, new economy players are looking for partners to match their ambition to deploy efficiently and quickly, while ensuring a sustainable business model.

Launched in 2006 as an agencyless credit card issuer, Tinkoff has grown to become one of the largest and most profitable digital banks in the world, serving more than 20 million customers. Tinkoff provides financial and lifestyle services through its digital ecosystem. This includes Tinkoff Bank, which offers a full range of banking and payment services, as well as cinema, theatre, travel bookings and more through the Tinkoff Super App, the first Super App launched in Europe. The Tinkoff ecosystem also includes brokerage Tinkoff Investments, Tinkoff Acquiring, Tinkoff Business, a fintech ecosystem for SMEs and large enterprises, and other business sectors.

With a focus on lifestyle banking, the Tinkoff ecosystem enables customers to make purchases, invest their savings, earn loyalty program rewards, book travel, buy movie tickets, make restaurant reservations and access other services.

George Chesakov, Head of International Expansion at Tinkoff, commented, “Tinkoff is excited to enter the Philippine market. We are confident that our technology and experience will help us create the right products, thereby boosting financial inclusion in the country. With BPC’s payment processing business, we have a partner with whom we have a long-standing relationship that aligns with our SaaS Cloud vision. Additionally, we appreciate BPC’s strong local knowledge of the Philippine banking industry, which should help us start operating in this market sooner.

Evgenia Loginova, CEO of Radar Payments by BPC, said, “We couldn’t be prouder to continue our journey of serving Tinkoff and its future customers in Asia. Success depends on how quickly new services are rolled out in the digital banking industry, especially in the Philippine market, which will welcome a number of new market players in 2022.”

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But Robinhood isn’t the only financial app available. A host of others are available to help young savers and investors get started, giving them an inexpensive way to diversify their portfolios. Here is an overview of some of them.

Tassels

What you can do: The Acorns app combines personal checking, investment, and retirement accounts in one app. The automated investment account offers a choice of different portfolios with diversified holdings designed for long-term investment. Users can invest small change from daily purchases and make daily, weekly or monthly recurring investments. Additionally, users can automatically invest a percentage of their salary. The company also offers advice on family financial literacy, investment accounts for children and a donation function for extended family members. Users can earn bonus investments from purchases made at any of Acorns’ 15,000 partner stores.

What you cannot do: Acorns does not offer day trading or access to options or margin trading. At this time, clients cannot invest in individual stocks. But in the coming months, the company plans to expand its investment offerings to also allow clients to trade stocks and certain other investments. Acorns plans to recommend that clients invest 90% of their money in the diversified portfolios it offers and 10% in stocks. Cryptocurrency is not currently available, but the plan is to include it when wallets are customizable.

Costs: Acorns is a subscription business with no hidden fees or transaction fees. Currently, customers are offered two subscription levels. Acorns Personal, for $3 a month, bundles investing, retirement, and checking, plus ways to earn more money and build financial literacy. Acorns Family, which costs $5 a month, offers all the features included in Acorns Personal, plus investment accounts for kids, family financial literacy, and gifts.

M1Finance

What you can do: M1 Finance app users can buy whole shares or fractions of over 6,000 stocks and exchange-traded funds to create a personalized investment plan. They can also choose from more than 80 wallets created by M1. Portfolios can be automatically rebalanced as investors deposit and withdraw money. M1 also offers a checking account and a debit card, and users can borrow from their investment account for up to 35% of the account value. Account holders must be over 18, but custodial accounts are available.

what you can’t do: Options trading is not offered. Users also cannot buy mutual funds or crypto, although there are plans to offer these features at some point. For Basic account holders, trades are processed once a day beginning when the New York Stock Exchange opens at 9:30 a.m. ET and ending when all orders have been filled.

Costs: The basic trading and savings account is free. M1 does not charge management fees or commissions. There are various fees for certain services, such as wire transfers or paper statements. The platform also offers a premium subscription for $125 per year which includes perks such as an afternoon trading window, custodial accounts, cash back on debits and checks, better payment rates. borrowing and credit card access from the platform.

Stash

What you can do: Stash is a subscription-based platform that offers budgeting tools, direct deposit, checking account, and managed investment portfolio with crypto exposure and other products based on around 3,500 investments. Fractional shares in single stocks and ETFs can be purchased. Users of the Visa Stash debit card, issued by Green Dot Bank, can get a percentage of their in-stock purchases back. When the transaction involves a participating trader listed on the platform, the shares issued are in that trader’s company; otherwise, it is a stock or ETF of the card user’s choice.

what you can’t do: The platform does not allow real-time trading; stock trade orders and other investments are executed during four trading windows throughout the day when the market is open. Users cannot talk to a financial advisor, buy options, trade on margin, or sell stocks.

Costs: A monthly fee of $1, $3 or $9 is required to access most services. For $1 a month you get the basic wealth building services. The $3 tier also comes with a retirement account. The $9 price tag offers additional features like double stock rewards and investment accounts for kids.

Store

What you can do: The Stockpile app offers to trade over 4,000 stocks and ETFs. Fractions of shares may be purchased. Children under 18 can have custodial accounts, although all of their trades must be approved by an adult. App users can link a basic checking account or fund their account using a debit card. There is no minimum balance.

What you cannot do: Options trading and margin trading are not available. Trades are processed once per day, at the end of the trading day. Users cannot buy stocks that trade below $3 per share, cryptocurrency, bulletin board stocks, pink sheet stocks, or certain foreign stocks.

Costs: There are no membership fees or commissions. Stockpile charges transaction fees for certain services such as domestic transfers, account transfers, paper checks and returned checks. The money comes from clients’ trading activity, specifically from its clearing house where it routes client orders, in accordance with regulatory documents.

Ms. Winokur Munk is a writer in West Orange, NJ. She can be contacted at reports@wsj.com.

Fintech has gone mainstream and is no longer a niche industry. There are now more than 26,000 fintech companies worldwide employing half a billion people, says Dominique Collett, chief investment officer at Rand Merchant Investments and head of AlphaCode, who shares his forecast for 2022.

The pandemic has dramatically changed consumer behavior, with 30% of banking consumers now using banking apps and 64% of consumers using one or more fintech platforms.

The future of fintech looks bright given the maturity and funding of the sector.

It is quite extraordinary to see how quickly consumers have embraced fintech; 96% of global consumers are familiar with at least one fintech service or company, taking it from niche to mainstream.

Highest funding ever

Over the past year, the second and third quarters have become the best funding quarters on record with $31 billion in the third quarter alone. A few years ago, $31 billion was funded for a full year.

During the third quarter, another 43 fintech unicorns were created, which brings us to 206 worldwide. At the end of 2020, there were 104, which means we have more than doubled the number of fintech unicorns in the world. The mega-towers saw Revolut raise $800 million and Chime $760 million.

Mergers and acquisitions (M&A) are still the primary way out of fintech investments rather than initial public offerings (IPOs) or special purpose acquisition companies (SPACs). More than 95% of fintechs still exit through mergers and acquisitions and these are largely payment companies, such as PayU, Visa and Mastercard.

Fintech in Africa

African fintech was one of the big stories of 2021, with the amount of African fintech funding rising to $2 billion from half a billion in 2020.

There have now also been mega-towers locally with Entersekt, Jumo, Yoco and Ozow raising significant funds from offshore investors. On the continent, Flutterwave and MFS Africa have raised hundreds of millions of dollars from major US investors.

South Africa is big and its fintech sector is hot as these companies are all based here, especially if they have significant operations and potential outside of South Africa.

A SPAC, Newcourt Acquisition Corp, was listed on NASDAQ by South African executives Michael Jordaan and Marc Balkin. It was massively oversubscribed and closed at $250 million. SPAC focuses on emerging market fintech, with a particular focus on Africa.

Investment Race

Africa is popular and fashionable now. It seems that venture capitalists have taken hold of the unbanked population in Africa.

A lot of money has been raised with emerging market mandates and these funds are due to be deployed soon. We are seeing extraordinary valuations for fintech companies and I suspect they are largely fueled by the sky-high fintech valuations around the world.

The money needs to be deployed in Africa and the market is not that mature. In reality, there aren’t many assets, so it started a bidding war.

Environmental orientation

Covid has also accelerated the adoption of digital financial processes. We’re likely to have another year of really aggressive venture capital funding and fintech growth.

The post-Covid theme following the COP summit is “building back better” with an increased focus on environmental, social and governance (ESG) practices. This plays directly into fintech and opens up many opportunities, such as parametric insurance.

Parametric insurance, often based on smart contracts, automatically pays out when the insured event occurs, reducing claims processing time. For example, if there was a flood and your flood sensors picked it up, your parametric insurance policy would be reimbursed instantly.

The massive impact of climate change is paving the way for exciting startups to innovate.

The well-being

Wellbeing is another big theme, as Covid has brought physical wellbeing and chronic disease management into the spotlight, as well as mental wellbeing. Vitality has always been the leader in this space encouraging people to change their behavior and now there are many insurance and banking startups, such as Paceline in the US, Sweatcoin in Europe and Betterfly in Latin America.

Rise of mobile network operators

Mobile Network Operators (MNOs) will also be trending in 2022 alongside Vodacom and MTN. Vodacom has promoted Vodapay aggressively, while MTN and Vodacom plan to list their fintech units separately.

I think 2022 could be the year MNOs go mainstream from a mobile money perspective. There will always be a challenge here in South Africa because we have such a competitive banking sector. However, the fact that MTN in Nigeria has obtained a mobile money license will be a game changer, giving MNOs the opportunity to dominate the payment space across Africa.

Buy now, pay later

Buy Now, Pay Later (BNPL) will also be a big theme in 2022 as it’s a great value proposition for customers: they don’t have to enter their credit card details online if they fear fraud. and this payment solution does not charge any interest. It’s also great for merchants as it will allow them to grow their e-commerce presence, especially in a post-Covid world.

It will be interesting to see how much companies focus on entering this space. I don’t know if Payflexes and Klarnas will maintain their hold on their core markets. I think they could be picked up by companies like Flutterwave in the rest of Africa.

Niche challenger banks

Niche challenger banks will also see more interest in 2022. A few years ago, it was challenger banks, like Monzo and Revolut, that offered a better user experience. Many banks have now caught up in terms of user experience and are now focusing on niche banks, such as Daylight in the US and Pride in Brazil which focus on the LGBTQI community and Monese in the UK which focuses on migrant communities.

In Africa, some players such as Kuda focus on the unbanked. I think we are going to go from launching a digital bank to finding a niche clientele to develop.

The Internet of Things

The Internet of Things (IoT) will also become mainstream in 2022. We could reach a tipping point around telematics. Locally, each insurance company offers a telematics program and customers are more willing to engage with it.

People are becoming more comfortable with the idea of ​​using devices that collect data and automatically send messages to their financial service providers. When it becomes widespread, it will give rise to all kinds of new businesses.

Cryptocurrency

Every year I predict this will be the year of crypto, even though prices have recently fallen. Luno’s logo now dominates the Cape Town skyline along with the logos of the other four major banks. AlphaCode was an early investor in Luno and it was our first exit when Luno sold to DCG. The platform has flourished with over 9 million customers in 40 countries.

• By Dominique Collett, Senior Investment Executive at Rand Merchant Investments and Head of AlphaCode

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Read: Employment sectors with the highest average salaries in South Africa

Digital banking provider Chime Financial Inc has asked Goldman Sachs Group Inc to help it prepare for an initial public offering in New York, according to people familiar with the matter.

The fintech startup will likely be valued at a substantial premium to its $25 billion valuation from an August funding round led by Sequoia Capital, the sources said, adding that Chime could target a valuation of nearly $40 billion.

“While Chime intends to be a publicly traded company one day, we have not made any decisions on underwriters and have no immediate plans for an IPO,” a holder said Friday. word of Chime in a press release.

However, when asked specifically if the company had given Goldman Sachs a lead role in planning its listing, the Chime spokesperson declined to comment. Goldman Sachs declined to comment.

Valued at $1.5 billion just three years ago, its hit list would highlight how Chime has managed to take market share from traditional banks with checking accounts that offer payday advances and no overdraft fees.

Chime has interviewed investment banks in recent weeks before deciding whether to give Goldman Sachs a lead role in its listing, the sources said. Other banks will be added to the list of underwriters ahead of its IPO, which could come as soon as this spring, the sources added.

The sources, who requested anonymity, warned that the timing and size of the offering are subject to market conditions.

Started by former Visa Inc executive Chris Britt and Comcast Corp alum Ryan King in 2012, Chime offers its services through partnerships with physical banks, including branded checking accounts with user-friendly features like only free overdrafts.

It makes money by collecting fees from payment processors like Visa each time a customer uses a Chime debit or credit card.

If Chime decides to go ahead with its IPO plans, the company may have to contend with volatile market conditions, which have led to some IPOs being withdrawn in recent weeks and weighing on listings. that took place last year.

Robinhood Markets Inc, another popular fintech startup, has lost more than half of its market value since its IPO in July, while shares of Brazilian digital bank Nu Holdings Ltd have fallen around 15% after its IPO in December.

Chime saw robust growth during the pandemic as consumers embraced digital banking, while the company offered popular products including no-fee overdrafts and faster access to stimulus checks.

The company doesn’t disclose user numbers, but research firm eMarketer estimated in June last year that Chime would have 13.1 million US account holders by the end of 2021, leading the US market. digital banks.

Chime competes with other digital banking services such as Revolut, Current and Varo.

(Reporting by Krystal Hu and David French in New York and Anirban Sen in Bengaluru; Editing by Matthew Lewis)

An independent Irish investigation shows the country’s biggest online betting companies continue to allow credit card betting through their apps, despite industry rules saying this shouldn’t happen.

One of the companies, BoyleSports, was also found to allow betting and withdrawals without account verification or photo ID, despite industry age rules requiring verification.

Another company, Paddy Power, said there is a “loophole” for credit card betting in Ireland as it does not have the same strict gambling laws as the UK. The briefing comes as a leading gambling addiction expert in Ireland claims the number of problem gamblers here could now be three times higher than official estimates of 40,000.

And former Paddy Power chairman Fintan Drury told the Irish Independent The pace of the government’s plans to appoint a gambling regulator to tackle issues such as credit card betting is “abysmal”.

Credit card gambling is described by experts as particularly dangerous and is severely restricted in countries like the UK, which has stricter gambling laws than Ireland.

The government has said here that it intends to restrict credit card betting by appointing a gambling regulator, which is expected next year.

“Credit card betting is a major problem,” said Barry Grant, CEO and Founder of Problem Gambling Ireland and an adviser specializing in gambling addiction.

“Most of the people we work with have access to many credit cards. And there are plenty of workarounds, with things like PayPal being related to credit cards. Many of the big betting companies here should answer to the UK gambling regulator, but we don’t have any here.

Asked how many people suffer from gambling addiction in Ireland, Mr Grant said the previously quoted figures of between 30,000 and 40,000, or 0.8% of the population, are “a long way off”.

“It’s maybe up to three times that figure, if you consider that across the border in the North it’s 2.3%,” he said.

“And there is another 5pc considered at risk.”

Most major betting companies in Ireland have signed up to the Irish Bookmakers Association’s voluntary Safer Gambling Code, which prohibits credit card gambling.

However, two of the biggest companies – Paddy Power and BoyleSports – have defended credit card betting as it goes through ‘third party’ payment apps such as Apple Pay, Google Pay or Revolut.

They said betting companies cannot see which Apple Pay, Google Pay or Revolut payments come from credit or debit cards.

This way, a spokesperson said the companies were not technically in breach of Safer Gambling Code rules.

However, Revolut has over 1.2 million users in Ireland, while industry figures show Apple Pay and Google Pay are now a common contactless payment method for credit card holders.

Online gambling is now a central part of betting company revenue, rising from 26% to 39% of the multi-billion dollar industry here, according to a recent industry report.

Nearly half of online betting is done from phones, with companies investing heavily in their apps.

Asked about the “loophole” in credit cards in Ireland that companies are using to justify accepting more bets, a spokesman for Deputy Justice Minister James Browne declined to comment specifically.

“The (Gaming Regulatory) Authority will have the discretion, based on its expertise, to react quickly and resolve all issues and concerns relating to payment methods and the associated risks,” he said. he said, referring to the regulator’s prerogative to include the credit card. payments within its attributions.

Last week the Irish Independent revealed that another betting app, LiveScore Bet, refused to delete a betting account despite six direct requests.

The company, which now exclusively streams hundreds of European football matches in its app for those who sign up, apologized for the incident.