Daily Review: PayPal Moves to Bank the Unbanked

With an increased competition in its core competence industry, PayPal, as any other ‘big FinTech’ representative, has to find ways to reinvent itself. Throughout its history, the company has made over a dozen on acquisitions to deepen its roots in businesses’ and individuals’ lives, improve its talent pool, and increase footprint and reach.

The time has come for the company to make a move into traditional banking with a FinTech twist – focusing on the unbanked. In this sphere, PayPal will find a different kind of competition, since neo-banking is not lacking in interest and investments. In fact, MEDICI’s March 2018 FinTech Funding data shows the emergence of neo-banks in the funding race. Ranked second in terms of FinTech segments with the highest funding in March, startups in the neo-banking space raised $586.7 million across five high-value deals across the globe, with the leading players such as N26 ($160 million) and Atom Bank ($207 million) wooing the investors and raising some large deals. What most interesting is the fact that $586.7 million was raised across just four large deals, with Solaris Bank ($69.7 million) and Brazil’s NuBank ($150 million) being the other two players that raised funding.

In other words, neither payments nor banking is a blue ocean for PayPal to thrive in without obstacles. Time will tell if the company can be as successful in traditional banking as it is in P2P payments and e-commerce.

Pick #1. PayPal, Safaricom & TransferTo Announce Collaboration in Kenya

PayPal and Safaricom collaborated to enable Kenyans to move money between their M-PESA and PayPal accounts. The new service makes it possible for Kenyan consumers with an M-PESA account to shop with online businesses across the world. With the new service, Kenyan businesses and freelancers can now sell to global customers more easily, and collect their payment and move their money to their M-PESA wallet. TransferTo operates a global Cross-Border Mobile Payments Network for emerging markets and is the technology partner underpinning this collaboration.

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Pick #2. PayPal to Rollout Banking Products for the ‘Unbanked’ in the Weeks Ahead

PayPal is expanding into traditional banking through partnerships with smaller banks to offer consumers debit cards connected to their PayPal accounts, along with direct deposits for paychecks and other services.

The company says its new products are targeted specifically at the unbanked and will launch in the first half of 2018.

We’re trying to bring more of those people into the digital economy. For folks who don’t have bank accounts, for folks who don’t have credit and debit cards, we want to give them something so they’re not turning to prepaid cards, check cashiers, and payday lenders. – Bill Ready, EVP & COO, PayPal

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Pick #3. China Now Has the Most Valuable AI Startup in the World

SenseTime, a firm that specializes in systems that analyze faces and images on an enormous scale, has raised $600 million from Alibaba Group and other investors at a valuation of >$3 billion, becoming the world’s most valuable artificial intelligence startup.

SenseTime is a contributor to the world’s biggest system of surveillance: if you’ve ever been photographed with a Chinese-made phone or walked the streets of a Chinese city, chances are your face has been digitally crunched by SenseTime software built into more than 100 million mobile devices.

The latest financing will bankroll investments in parallel fields such as autonomous driving and augmented reality, cover the growing cost of AI talent and shore up its computing power. It’s developing a service code-named Viper to parse data from thousands of live camera feeds.

The company turned profitable in 2017 and wants to grow its workforce by a third to 2,000 by the end of this year.

For the past three years, the average revenue growth has been 400%. – Xu Li, SenseTime Co-founder.

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