The largest FinTech startups are repeating the history of institutional banking – the history of centralization – whether they want/realize it or not. The global consumer market is extremely limited for ~11K FinTech startups to have a sustainable future altogether. In the years ahead, the keys to survival will be scale and diversification, with both being reached through beneficial cross-industry partnerships. Only the ones able to score powerful partners will step into the next phase of development – institutionalization, which is a short track to becoming another financial institution and the very same type of organization tech entrepreneurs are now so passionate to call obsolete.
“Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.” – Franklin D. Roosevelt
Xero + Curve, Stripe + Alipay, Stripe + WeChat Pay, Mastercard + PayPal, Citi + Apple Pay, Qbera + Droom, and many more alliances will create an increasingly competitive environment, where the matter of forging the right business partnership will be able to break or make the future of a financial venture.
Pick #1. American Express Closer to Breaking into Elusive Chinese Market
American Express could become the first US card network to offer services in China.
“We have received indication from the [People’s Bank of China] that they will formally accept our application.” – Marina Norville, spokeswoman for American Express.
State-controlled UnionPay dominates the Chinese card market. American Express is working with Chinese mobile payments company Lianlian through a joint venture. The move follows a 2012 announcement that the credit card company will license its “Serve” commerce technology to Lianlian, and make an equity investment in an overseas subsidiary of the Chinese company.
Chinese authorities hope to use American Express’ progress as an example of Beijing opening up its markets when Trump administration advisors visit the country to negotiate on trade.
Pick #2. Barclays & PayPal Join Forces to Help Customers Enhance Their Digital Payments
Barclays partnered with PayPal to enable customers to manage and use their Barclays and PayPal accounts together with greater ease. The partnership is expected to benefit millions of consumer and small-business customers, and initially focus on enhancing products and services for consumers in the UK and the US.
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.
Pick #3. Roomi Announces Partnership With Lemonade So Users Can Easily Buy Renter Insurance
Roomi, the peer to peer marketplace making it safer and easier to find room rentals, sublets & roommates, has announced a partnership with the InsurTech company Lemonade.
Roomi is aiming at making every step of the renting experience safer and is extending their offerings to ensure users’ belongings are safely protected. Roomi has 1.1+ million registered users. With this partnership, Roomi allows Lemonade to offer renters insurance. Lemonade takes a flat fee, pays claims, and claims to give back what’s left to the charities.
Pick #4. Acorns Launches Retirement Account Product to Expand Beyond Retail Investing
Following Vault’s acquisition, Acorns has launched a retirement account product called ‘Acorns Later.’ The service is the first Acorns investment vehicle to get the same kind of tax advantages the swells get when they invest through products like Individual Retirement Accounts.
Based on the same premise as the Acorns app, the Acorns Later feature will automatically recommend a retirement account and portfolio to customers. Anyone can launch an account as long as they can put five dollars into it – then, like a regular Acorns account – customers set contributions to be withdrawn from an account daily, weekly or monthly.
Pick #5. Digital Banking Startup Revolut Raises $250M at a Valuation of $1.7B
Revolut has raised $250 million in Series C funding at $1.7 billion in post-money valuation. The round was led by DST Global, and a group of new and existing investors that includes Index Ventures and Ribbit Capital.
Revolut is now processing $1.8 billion through the platform each month and signing up between 6,000 and 8,000 new customers every day. It claims nearly 2 million customers in total, of which 250,000 are daily active users, roughly 400,000 are weekly active users, and 900,000 are monthly active users. The company says the target is 100 million customers in the next five years.
The Series C funding will be used to go beyond Europe and expand worldwide, starting with the US, Canada, Singapore, Hong Kong, and Australia this year. The company also expects to increase its workforce from 350 to around 800 employees in 2018.