Daily Review: Monoline Businesses Will Have a Hard Time Succeeding in the Long Term

The consolidation of resources (financial, talent, technology, and ideas) in the financial services industry is gradually balancing the market and relationships between startups, tech corporations, and institutions. It will also bring it to the original structure, where a very limited number of companies control the majority of the market. One of the ways businesses can warrant long-term potential is by expanding the portfolio of their services.

The pattern is very similar to the history of centralization in institutional banking, except that the new partnerships and product/solution portfolio expansions 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).

Pick #1. Online Lender Kabbage to Launch Payment Services by Year-End

President Kathryn Petralia said on Monday that Kabbage plans to launch payment processing services by year-end, helping it to diversify and compete more directly with industry leaders PayPal and Square. Kabbage will offer tools to enable clients, mostly brick-and-mortar businesses, to accept card payments in-store and online.

The monoline businesses have a hard time succeeding long term, Petralia said, adding that Kabbage hopes the move would deepen its relationship with customers.

We have seen a huge pain point around cash flow management, she added, citing high monthly fees and lengthy contracts of payment services by other providers.

In August, Kabbage raised $250 million from Softbank Group to help it add lending products and other types of financial services. Kabbage also sells its lending technology to large banks looking to offer credit online.

PayPal made a strong push into small business lending in August when it acquired online lender Swift Financial. Last week, it announced a deal to acquire Swedish payments company iZettle for $2.2 billion, expanding into payments terminals.

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Pick #2. First InsurTech Insurance Company of the Italian Market Founded by Andrea Battista and Matteo Carbone

Archimede, the new Special Purpose Acquisition Company (SPAC), founded by Andrea Battista, Matteo Carbone, and Giampiero Rosmarini, deliberated the next formal startup of the listing process on the Alternative Investment Market of the Italian Stock Exchange targeting €30–47 million funding.

Archimede is promoted by:

  • Andrea Battista, a well-known insurance manager with a start in McKinsey. He was the CEO at Eurovita Assicurazion between 2014 and 2017, and before that, the Country Manager & CEO of Aviva Group in Italy. He has previously served as the C-level manager in several positions in the Cattolica Assicurazioni Group.

  • Matteo Carbone, one of the top international InsurTech Influencers who has published a bestseller dedicated to InsurTech called All the Insurance Players Will Be InsurTech. He is the Founder & Director of the IoT Insurance Observatory and has spent 11 years in Bain & Company.

  • Giampiero Rosmarini, known professional and banking expert.

The objective of the project is to set up the first company on the Italian market which, leveraging on the specific successful managerial and entrepreneurial track-record of the management team, generates:

  • a strengthening and profitable growth in the reference segment of the insurance company deriving from the business combination;

  • an independent non-life bancassurance platform;

  • a distinctive service capacity for innovative insurance distribution networks;

  • a full employment of InsurTech innovation in all insurance processes.

The company signed a non-binding letter of intent for the implementation of the business combination with Net Insurance Group – an Italian market operator in insurance coverages for loans on salary products – as a basis for the entire project. The understanding is subject to the following signing of a binding agreement and to the obtaining of the foreseen regulatory approvals.

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Pick #3. Stripe Co-Founder John Collison Says Europe Becoming More Competitive

Europe has become increasingly competitive with Silicon Valley when it comes to creating successful technology companies, said John Collison, Co-founder & President of payments company Stripe.

Collison said it’s no longer true that startups have to be in Northern California’s tech-centric region to raise sizable amounts of venture capital funding. He cautioned that Silicon Valley still had an unrivaled depth of talent compared with other regions.

I am not enthusiastic about having a small number of very large companies that will make it harder for newer entrants to come along, he said.

Collison shares a concern that Europe’s new data privacy law – GDPR – may have unintended consequences that will wind up hurting small tech startups while only making things easier for the large US tech businesses that were in many ways the target of the new rules.

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Pick #4. Samsung Will Open AI Research Center in Cambridge, England

Samsung will open a new AI center in Cambridge, England, as the company seeks to benefit from cutting-edge academic research into the technology.

Andrew Blake, a pioneering researcher in the development of systems that enable computers to interpret visual data, and a former director of Microsoft’s Cambridge Research Lab, will head the new Samsung AI center.

The center may hire as many as 150 AI experts, bringing the total number of people Samsung has working on research and development in the UK to 400 in the near future.

The new Cambridge lab would focus on areas such as getting computers to recognize human emotions and ways to improve how people communicate and interact with increasingly intelligent machines.

Samsung’s CEO Hyun-suk Kim said the company would be looking at uses of AI that help provide users of devices, such as the Korean manufacturer’s phones, with more personalized services that better understood human behavior.

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