June 18, 2017
The constant introduction of new services, products, and changes in FinTech has a funny way of being simultaneously exciting and sobering, depending on your vantage point. From the outside, it’s fascinating to watch whole new companies, economies, and ideas spring to life across the globe. ICOs, tokens, and other blockchain-based solutions are bringing (some) clarity to the future of financial services but we’re a long way off from full-scale adoption. Meanwhile, the pressure is building on incumbent financial services companies to figure out their near-term strategy; however, the last several weeks have made us wonder if the industry's new focus on partnerships is creating a blind spot to more potent challengers.
"Blockchain payments startup Circle is now offering no-cost cross-border transactions to its users
Are no-fee payments sustainable? was one of the first comments about this story on my feed. In short, of course, they are! If your business can make money elsewhere and it makes sense to provide cross-border payments free of charge, why not? Nonetheless, it’s certainly a good question to ask. It’s also an indication that financial services are just starting to feel the pain of the internet (and blockchain) revolution. We’re at the very beginning of understanding what financial services mean with secure, near-zero distribution cost with the ability to create digital scarcity. One thing is for certain: the old business models on which incumbents are built will not last and must be reimagined. Who knows, maybe in 20 years we’ll see a bank acquiring a grocery chain.
"Amazon Prime Reload has another advantage for the retailer, as well – it may encourage people to load large lump sums into their Amazon Balance.
Speaking of a new grocery chain owner, Amazon launched their 2% cash-back gift card, Prime Reload putting further pressure on revenue from payments. Now, instead of making interchange fees on every Amazon purchase card issuers will just have to be satisfied with the fee on each ‘reload.’ If you’re keeping score, Amazon now has a credit card (through Chase), a gift card, and is growing its merchant loan business. Why? Well, I think they’re showing us all they don’t need to be a bank. However, a $99 Prime membership to ensure that you continue to use Amazon for anything and everything in your life sounds like a pretty good business. Now, where’s my wand?
And in case you missed it, SoFi is hiding in plain sight. They’re applying for a bank charter.
See you next week!