Daily Review: Consolidation of Power Is Underway in Finserv

The consolidation of resources (financial, talent, technology, and ideas) in the financial services industry is gradually balancing the market and relationships between startups and institutions. It will also bring it to the original structure, where a very limited number of companies control the majority of the market. The year 2018 saw a spike in very interesting partnerships, M&A, and acqui-hires.

The pattern is very similar to the history of centralization in institutional banking, except that the new partnerships have a different face and impact on the end user – useful for personal and professional lives integrations, business solutions that cover every pain points for newly baked entrepreneurs (Stripe Atlas), or industry-transforming mergers defining identity management of the future (Sprint and T-Mobile). Slowly but steadily, institutions are getting together with the best of breed in FinTech, making it even more difficult for emerging competition to gain footing.

If not through partnerships, institutions are also getting into niches they have been only observing and studying before.

Pick #1. Barclays & PayPal Announce Industry-Leading Partnership

Barclays partnered with PayPal to enable customers to manage and use their Barclays and PayPal accounts together with greater ease, for the first time. Consumers are expected to benefit from a raft of new features that will make it even easier to manage their PayPal account in Barclays’ digital channels and to use their Barclays products in their PayPal digital wallet to pay online, on mobile or through an app.

PayPal and Barclays will explore unique ways to connect Pingit and PayPal to improve how customers can move and manage their money. The partnership will also explore opportunities for US consumers to redeem Barclays reward points at businesses that accept PayPal worldwide.

PayPal’s small business customers will be able to choose to see a snapshot of their PayPal balance, recent transactions, and sales on the Barclays SmartBusiness Dashboard. Users will also be able to move seamlessly from the SmartBusiness Dashboard to their PayPal account for further insights.

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Pick #2. Western Union Adds WeChat Capability to GlobalPay for Students

Western Union has added WeChat Pay to its WU® GlobalPay for Students product, through its alliance with Geoswift, a payment company specializing in payment solutions in and out of China. The capability will enable academic institutions to offer Chinese students studying abroad a wider range of digital payment options including WeChat Pay, Alipay, UnionPay, and Tenpay.

Western Union launched its enhanced GlobalPay for Students platform in 2017 to enable academic institutions to more efficiently reconcile, refund and track payments from international students. In addition to online bank transfer and credit card payments, the platform offers users a wide range of online payment options in over 30 countries, including Geoswift (Alipay, UnionPay, and Tenpay), POLI Payments, India Net Banking, Trustly, and SOFORT.

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Pick #3. Japan Finance Giant SBI Holdings to Launch Crypto Exchange in Summer 2018

Japan’s SBI Holdings plans to launch its crypto exchange this summer. The exchange SBI Virtual Currencies will support coins such as Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Bitcoin Cash (BCH). BCH would be regarded as the settlement currency, as the scarcity of BTC makes it expensive and tiring as a settlement currency. XRP would be a remittance currency.

SBI Group first revealed its plans for SBI Virtual Currencies in October 2016. In December 2017, SBI announced it would partner with Bitcoin trading platform Huobi and would launch the exchange in early 2018. In March, SBI postponed the launch of the exchange for security improvement purposes. In March, SBI Holdings acquired 40% of Taiwanese cryptocurrency hardware wallet company CoolBitX. CoolBitX’s primary offering is its CoolWallet, which can communicate with other devices via Bluetooth.

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Pick #4. Financial Matchmaking Platform Rubique Raises Another Round of Funding

Rubique, India’s largest online financial matchmaking platform has raised an undisclosed amount funding led by Japan’s Recruit Group and Russian venture capital management company, Emery Capital. The funding round saw participation from Blacksoil & existing investor Kalaari Capital.

The funds from this round will enable Rubique to further strengthen its technological and analytical capabilities. The company also aims to expand its credit product offerings to deepen its reach to small enterprises and reach out to underserved micro enterprises. Since its inception, the company has facilitated loan disbursement worth approximately $400.5 million and over 82,000 credit card setups through its platform.

Rubique has recently closed 200K customers and has generated revenue of around $7.2 million, clocking revenue of around $525K month on month. With consistent growth, Rubique has been unit economics positive at the transactional level and will be aiming to break-even in 2019 & going for $15 million in revenue by 2021.

Rubique uses advanced technologies to analyze multiple data points to assess the creditworthiness of the customers and provide them the offers they are eligible for, thereby removing the manual efforts in the loan processing system. The company has recently built a data science team which leverages its rich customer data and bank credit policies to build a proprietary AI-based matchmaking and ranking algorithm that provides a customized list to each consumer based on his/her needs and profile.

Rubique envisions becoming the largest online financial matchmaking platform in India and aims for entire ecosystem’s growth including customers, financial institutions, and influencers. With a focus on maintaining its model asset-light, Rubique is planning to invest in data science & leverage insights generated to build stronger business propositions.