It may have been a very cold month, but the FinTech world is boiling! AS usually we bring you only the hottest news from all over the world and, as usually, China is trying to impact the global economy. Read on to find out how!
Weekly FinTech news digest: 12—18 January 2021
Remember how last week we talked about Chinese companies being banned in the US? Well, now quite the opposite is happening in China! But besides successes, we’ll also discuss failures of American companies. Want to know which? Below, you will find details about successes and failures of FinTechs world-wide, so dig in!
Walmart to join the FinTech bandwagon
Why share the profits, when you can take care of everything in-house
Walmart, the American retail giant, is already very active in the industry of financial services for its customers. The company offers an array of products and services, from consumer loans, through rewards programs to protection plans. Now however, Walmart is planning to enter the FinTech industry on a bigger scale by founding a startup in cooperation with a specialist investment company, Ribbit Capital. The newly created enterprise’s goal is to offer new services to Walamart’s retail customers parallelly to what is available right now.
David Bannister, the wholesale banking analyst at Aite, notices that while it is common to offer financial products with retail purchases, such as extended warranties as insurance policies, it is usually done through banks. Will Walmart change the way this business is conducted?
Learn more about creating new FinTech apps.
Visa and Plaid won’t be together, after all
A shady deal won’t happen and the competition is safe
As we mentioned before (FinTech Wire #3), Visa was planning to acquire Plaid, a PSD2 platform operator for $5.3 billion. Because Plaid is a huge company whose API connects over 11,000 institutions worldwide, the purchase would make Visa a hegemon in the financial industry. Obviously, such a merger looked suspicious to the Department of Justice and, in fact, this regulator decided to stop it from happening. Now, the biggest problem is that Visa spent the whole 2020 securing funds to buy Plaid organizing debt two huge offerings for $7.27 billion (average rate ~1.9%). Will the payment operator repurchase the shares?
Learn more about API development.
Digital Yuan, digital Ruble and now Digital Euro
Every country wants to have a digital currency
An official digital currency means a lot of potential benefits to the governments all around the globe and there is no question that they are going to become a standard one day, we only don’t know when it’s going to happen. Public consultations about the European form of digital money started 12 October 2020 and, so far, the European Central Bank has received over 8000 responses regarding this exciting topic. 41% of respondents are interested in the privacy aspect of it, as such a payment method, if not implemented correctly, can allow for increased invigilation. 17% of questions were about cybersecurity and 10% about the pan-european reach. We don’t know much more, because a thorough analysis of the raw data is not finished yet, however the The Eurosystem task force (consisting of ECB and representatives of 19 EU countries) will publish its full report in the spring. Stay tuned!
Learn more about digital revolution in banking.
PayPal celebrates being the first 100% foreign payment platform in China
Nobody expected it and nobody knows how it happened, but it’s real
Nobody expected that the Chinese government would let this happen, but it did. PayPal is now the first ever payment platform in this country controlled in 100% by foreign capital. The situation is especially interesting, because this particular market is very exclusive and dominated by local payment systems. What is even more interesting, the details of how it happened are confidential and PayPay Holding Inc refuses to comment on how it managed to purchase firstly 70% of shares in GoPay and then the missing 30%. Most importantly, though, buying a small player opened the American corporation a way to compete with Alipay and WeChat pay on Chinese ecommerces. Will it be able to keep their pace? Only time will tell.
Learn more about digital payment platforms.
Foreign restrictions force China to create its own alternative of SWIFT
A step towards self-isolation or independence, depending on who to ask
The Regional Comprehensive Economic Partnership, a free trade agreement between Asian and Pacific countries, including Australia is a great opportunity for the PRC to become independent from the global SWIFT system, says Liu Xiaochun, from the Shanghai Finance Institute. The economist notices that SWIFT is controlled by foreign countries, so it allows them to impose financial and trade sanctions on China. In this case, it would be best to create an alternative, in cooperation with the RCEP, and give the region more security by giving them the freedom to trade internationally with their own currencies: yuan, yen, Singapore dollar and Hong Kong dollar. Geopolitically, such a system would definitely secure China’s position in the region and in the world, but what about other countries involved in the initiative and the next step to the global yuan? Is Singapore in favor of such a situation? Can Hong-Kong oppose and will it be another step towards losing the last bit of independence? So many questions, so little answers!
Learn more about why China wants to be independent from SWIFT.
Goldman Sachs really wants to be a player in the retail industry
The Wall Street giant in your local auto dealership
When Goldman Sachs is determined to beat Barclays in a deal worth around $2.5 billion, you can be sure that something big is happening. This time, the bank bought GM’s credit card business and is going to become an issuing bank for the cards operated by Mastercard (for GM) later this year. This way, Goldman Sachs is telling the world that they want to enter the consumer market for real, as it’s the second time they cooperate with a retailer in such a way (the Wall Street giant is also the issuing partner for Apple’s credit card).
Learn more about FinTech innovations.
Remember to read FinTech Wire next week for more news!
So many events we talked about today can affect the industry, but in so few cases we can tell when. In order not to miss any surprising news, subscribe to Code & Pepper social media for fresh FinTech Wire each Tuesday!