This month we were invited to represent Australia as part of a fintech trade delegation to Singapore.
We also went along to the Money 20/20 fintech conference alongside other Australian fintechs including Zip Co (ASX: Z1P), Assembly Payments and Airwallex – who has just raised an impressive $100 million!
Here’s what we learned:
Major banks collaborating with fintech
Global banks and insurers are recognising the threat and opportunity that fintech creates for their own businesses. They’re responding by partnering with fintech scale-ups, incubating internal technology teams and investing directly into fintechs.
It’s all great news for consumers who should start to see better banking experiences as fintech moves from the peripheral of financial services into a must have for every bank. Expect an ongoing arms race between banks to offer best in breed fintech services to their clients before their competitors do.
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Barclays Bank launched its own venture unit in 2018 to partner and invest in fintechs that can develop new customer propositions around major areas of disruptive technologies.
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Westpac funded Reinventure, a venture fund that has invested into several Australian fintechs including Zip Co, Doshii, Hyper Anna, Valiant, Coinbase and Society One.
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Prudential is actively working with fintechs to create innovative insurance solutions for its clients.
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Citigroup has created Citi Ventures to partner, launch and scale new ventures that have the potential to disrupt and transform the financial services industry. It has already invested hundreds of millions into various fintechs and had successful exits, including Square.
Consumer businesses join the fintech revolution
While banks may be the natural partners for fintech, there are more non-financial businesses partnering or building fintech products. These include messaging apps, ride hailing businesses and airlines.
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In China, messaging app WeChat has become a payments behemoth in just a few years with WeChat Pay. It now boasts 1.08 billion monthly users! Its growth stemmed from creating a digital wallet version of sending ‘Red Packets’ to friends and family during Chinese New Year. In 4 years, the number of people sending red packets on WeChat has grown from 20 million to 688 million.
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Ant Financial, the payments arm of China’s Alibaba launched a money market fund called Yu’e Bao which you can access via a digital wallet. It was originally promoted to Alibaba vendors to invest income from selling goods on the Alibaba platform. In 2017 it reached US$165 billion in deposits, which surpassed JPMorgan’s money market fund to become the largest in the world.
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In Singapore, ride-hailing app Grab launched Grow with Grab which is offering financial services to small businesses and entrepreneurs. It teamed up with Credit Saison, a Japanese financial services company to lend across South East Asia.
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AirAsia founder Tony Fernandes has made a similar move by launching BigPay, a mobile app and card to send, receive and track money. It borrows from AirAsia’s challenger brand ethos.
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Apple just announced a joint venture with MasterCard and Goldman Sachs to launch Apple Card.
Expect to see more consumer facing businesses partnering with traditional financial services and fintech businesses to offer new and innovative products that are targeted to their core clients.
Bitcoin winter
Twelve months ago if you went to any fintech conference there would be standing room only for any blockchain or cryptocurrency talk. Everyone seemed to be making money hand over fist.
What a difference a year makes! This year the blockchain conference rooms were almost empty.
Is this a bad sign for blockchain and cryptocurrency enthusiasts? We don’t think so. Cryptocurrencies have now fallen in value between 80%-95% from their peaks in early 2018. It’s something we warned of in December 2017 when the world was feeling bitcoin FOMO.
Stockspot Founder and CEO, Chris Brycki debates a bitcoin millionaire at the peak of the frenzy in January 2018.
All markets move in cycles and the best time to be cautious is when every friend, family member and uber driver is jumping up and down with excitement.
“There is nothing more detrimental to one’s well-being than seeing a friend get rich”
Kindleberger
On the other hand, it often pays to be optimistic is when nobody else is. Warren Buffett (a bitcoin skeptic we should add) says to “buy when there’s blood in the streets”.
Big rises and falls are a normal part of the adoption cycle of any new technology. Amazon’s share price fell by 96% between 2000 and 2001. Since then it has risen by 4,000%. That’s not to say that bitcoin will follow the same path, but we also wouldn’t be writing off it’s future just yet.
P.S. Bitcoin isn’t part of the Stockspot portfolios however we wrote a series of blogs in late 2017 in response to a wave of client questions we were receiving at the time. They’re a good starting point if you want to learn more:
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