Money On My Mind #1: Super-PayPal, Brex Bank, Aviva/Raisin, IKEA Bank, RIP Pingit
Money On My Mind #1: Super-PayPal, Brex Bank, Aviva/Raisin, IKEA Bank, RIP Pingit
Welcome to the first edition of ‘Money On My Mind’!
The aim, as always, is to ‘educate, inform, and entertain’.
It is a weekly email covering my view on the most important and interesting news stories in Fintech from the previous week.
I will also be including a section ‘Number of the Week’ highlighting an interesting Fintech fact that I learned that week and also ‘Fintech to Watch’ highlighting a new fintech startup that I have come across recently.
Thank you for deciding to read and please feel free to share with friends and colleagues that might find the content useful.
#1: PayPal wants to create a super app
PayPal has been one of the winners through the pandemic.
It’s customer base grew ~25% in 2020, to 377m (along with 30m merchants), as the pandemic forced commerce online and they had the extra benefit from unveiling of crypto-trading services.
PayPal has seen its market value quadruple since March 2020 lows and is now valued at $340bn+, passing the market cap of Mastercard.
Next stop - ‘Super’ app
PayPal CEO, Dan Schulman, laid out his grand ambition during a recent investor day presentation.
Schulman highlighted that most consumers have far too many apps to manage their daily lives, and that PayPal could be a platform that could integrate several, wide-ranging capabilities. “That’s really the promise of a super-app, where you can live a lot of your digital life on one app and then be able to manage all of your transactions in one place, track them all, and have personalized, customized recommendations,” he told MarketWatch.
PayPal plans to focus on connecting 3rd party providers within it’s app to offer payments, shopping, and financial services (checking, savings, investment, crypto, rewards) with these added benefits:
AI-powered money management: With all your data in one place, PayPal can help you make budgeting and investing decisions
‘Contextual Commerce’: With a purchase track record, PayPal can partner with merchants to give personalized offers and deals
There can only be One
The fintech super app playing field is starting to get very crowded as everyone chases the WeChat model:
Challenger banks: Revolut has made the one app to rule them all approach their intention. US competitors such as Chime and Varo are following the same approach. Tinkoff in Russia is leading the way in the market there.
Tech companies: Apple has a the iPhone & Watch for making in-store payments and has rolled out the Apple Card
Google just re-launched its Google Pay app, also with the intention of being a super app (with benefit of pulling receipt data from Gmail)
Amazon already has a considerable lending book through it’s SME lending business & is adding further products
Square is already a super app competitor in its own right (valued at over $110bn) & is adding additional products/features
Shopping apps — Affirm, Klarna, Shopify — are well-known brands that have tons of data and consumer cards out there & are looking to rollout additional products
It makes sense, given the large customer bases of these companies, to just start rolling out additional products to monetize further. However, there are already at least 10+ companies pursuing this super-app strategy so it will be hard to tell who the winners are going to be at this stage.
#2: Brex Bank
Add Brex, the US startup offering corporate credit cards to startups, to the list of FinTech companies looking to become a bank. It has applied for a bank charter to allow it to offer other credit and deposit products to it’s customers. Smart move by Brex, and they have brought in some big names to run this entity, but it is a very competitive space with the likes of Shopify and Square dominating.
#3: Aviva and Raisin join forces
Aviva has agreed a partnership with deposit platform Raisin to offer the firm's 15m customers selection of fixed-term savings accounts with competitive rates. Strong strategic move by Aviva to offer a simple digital savings solution to it’s large customer base
Ikea took a 49% stake in Ikano Bank, forming a strategic partnership to build financial products for its customers. No specifics on what products will be launched just yet but you would have to assume it is along the lines of cards and savings, with possibly some point of sale lending thrown in.
#5 RIP Pingit
Barclays announced this week that it was shutting down Pingit, it’s mobile payments app. I worked in Barclays in 2012 when it was first launched and it was a very innovative solution at the time. It attracted 1.2m customers in it’s first year, and even had disposable cups with a contactless payment chip in the base! Add Pingit to the long list of in-house innovations that have been shut down in the past 2 years.
Number of the Week: $115bn
This is the latest valuation of Stripe, according to sources and based on secondary market transactions. At $115bn, that would make Stripe the most valuable venture-backed start-up in the US, according to CB Insights
Given the number of listings on the US stock market (IPO’s or SPACs), it does beg the question as to whether Stripe is planning to IPO any time soon.
My view - there is still a lot of growth to be maximized in Stripe. International expansion and acquisitions seem to be the focus at present (see the PayStack and PayMongo deals) and it is easier to fund these deals from private fundraising than on the public market.
*Also, this week’s appointment of Mark Carney (former Governor of the Bank of England) to the Stripe Board was a very strong appointment will carry huge weight with the internationalization play
Fintech to Watch: Yatta
Yatta is an Irish based Insuretech startup that connects global insurers to digital only consumers.
Their software addresses the gap between the demands of modern consumers and the existing digital offerings of Insurers, ultimately helping customers navigate the complexities of financial planning and decision making.
Check out their profile & short video here
This newsletter has been written by Eoin Fitzgerald
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