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| January 3 · Issue #32 · View online |
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Happy 2019 everyone! Put some quick thoughts below on what’s top of mind for me on fintech as we head into the new year. 1) Neobanks - Gradually, then suddenly
- Neobanks started to get some more mainstream attention in 2018, and I believe that in 2019 companies such as Chime, Acorns, MoneyLion, Empower, Aspiration, etc will continue to scale.
- By the end of 2019, large FI’s will be caught by surprise at the amount of scale that these neobanks will achieve and will start thinking about M&A for user, product, and talent acquisition.
2) Global competition heats up
- Related to thought number one, 2019 will see later stage fintech companies compete on a global stage
- UK + EU based companies such as Revolut, Monzo, N26, and EToro have all announced plans to launch in the US
- Meanwhile US based companies such as Robinhood, Coinbase, Acorns have already launched small beachheads in countries such as Australia + UK
- A lot of these companies have requisite amount of significant capital to launch internationally and scale quickly, will be particularly interesting to see how it affects the US neobank market
3) Bitcoin price remains (relatively) constant
- ¯_(ツ)_/¯ seems as though most retail investors have been burned, so at this point it’s mostly hodler or institutional investors
- would not be surprised if we still see more massive rises + dips driven by algo’s chasing signal
4) Enterprise blockchain still isn’t really a thing
- I’ve blogged about this before, but I’m still super bearish on “enterprise blockchain” - I have yet to see a great use case that’s actually easily implementable by a large enterprise
- Getting an enterprise to buy and deploy a simple database is hard enough…
5) AI moves into overhyped enterprise technology
- Honestly more of a personal wish due to a lot of personal experiences this year with my banks…
- The point isn’t to completely automate personal banking, the point is make it easier for consumers to get their needs met in a de-risked manner
- When it’s something that should take 1-2 minutes, give me an AI but if it’s something more involved, please stop making me click through 500 options, that’s not using AI!!
6) Beginnings of a new credit model
- A ton of companies are starting to investigate / build really interesting new credit models based off data separate from a pure credit score.
- Companies to look at include Square, Petal, Brigit, Dave, Even, Earnin, Credit Karma, etc
- I find CK to be really interesting as they’ve been able to use their scale to convince large US lenders to share underwriting models…
- (Slowly) moving away from a delayed, pull based model to a real time, consumer-consent push model.
7) Winter is (finally) coming? Raise up.
- Growth stage companies will continue to raise “mega-rounds” and stay private longer
- I actually think this is not a bad outcome, allows fintech companies to focus more on long term value creation vs chasing endless growth (although of course they will still need to grow…)
8) Larger tech companies offering more “fintech” products
- Everything is fintech if you look closely. I don’t expect large tech companies to be launching competing fintech products any time soon, but increasingly they are starting to offer more products that look like fintech.
- Examples include Uber Cash, Amazon Pay + Cash + Lending, Facebook’s stablecoin for WhatApp India, etc
- Privacy topics from 2018 will prevent many of these companies from launching new finance products quickly - public fintech companies to watch IMO are Amazon, Square, PayPal, and FiServ.
9) M&A activity driven by banking core providers - Hot take - I think we’ll see FiServ ($29B market cap) acquire a “newer-age” banking core provider like a Q2 holdings ($2B market cap), or a large bank acquiring a smaller core banking provider to jumpstart a new application
10) All of the large fintech unicorns stay private
- Pretty self explanatory - it seems as though most unicorn fintech companies still have a healthy amount of funding (at least off the number of ads that I see still…), so no need to IPO for 2019
- Unicorn companies will find other ways to provide liquidity to employees while still staying private ala Uber’s secondary offerings, etc.
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@ * Robo advisor consolidation
* Real estate fintech heats up (even more)
* Major bank data breach
* Interesting identity & reputation/credit scoring concepts are born
* Bitcoin price goes up and down
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@ +2 US fintech unicorns
-2 US challenger banks (1 M&A and 1 wind down)
Venmo has 4 consequitive quarters of declining revenue
AmazonPay makes a big move
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Experts Predict the Five Big Fintech Trends of 2019
Matt Harris, managing director at Bain Capital Ventures: “In terms of 2019 IPOs, it will be interesting to see if Credit Karma decides to go public. They certainly have the scale and profitability.” Matt Harris: “I’m skeptical that big tech will be more aggressive in fintech in 2019 … privacy concerns will make that hard for many of them. Amazon is the notable exception. Never bet against them!” Vanessa Colella, head of Citi Ventures at Citigroup Inc.: “I do not think we’ll see any major mergers, acquisitions or IPOs in fintech specifically. Stripe has done some incredible work and has the potential to be one to watch for the IPO track, but ultimately we expect to see continued growth in the private market.” Good fintech 2019 trend roundup of VC’s + industry analysts, included some of my favorite takes above.
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FinTech Insider by 11:FS: Ep. 282. Insights: Our Fintech Predictions 2019
To be honest haven’t had a chance to listen to this yet, but it’s on my list…
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Nyca Partners’ Hans Morris hunts for great fintech investments amid volatility
“I think we’re likely to have a war for deposits with too many different types of firms competing for deposits. Just look at the United States last year. All of the deposit growth we saw was explained by Bank of America, Wells Fargo and JP Morgan Chase. Everyone else shrank. But if you have Monzo and Revolut come to the U.S. and you look at Acorns, MoneyLion, Chime and 15 other prepaid models or fully chartered bank models, they’re all going to have a pretty slick interface, and they’re all going to be out there competing for deposits.” Good interview of Hans Morris on what he thinks is interesting.
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2019 looks to continue another lights-out year for fintech startups
2019 Prediction: Total aggregate value for fintech liquidity events will exceed $10 billion in one year for the first time ever. 2019 Prediction: Total aggregate value for fintech unicorns will cross $90 billion and the total number of fintech unicorns will begin to close in on 30. Interesting metrics + fintech index driven predictions from Matrix.
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7 (realistic) predictions about fintech in 2019 | American Banker
Smaller banks’ digital capability won’t reach that of the big banks, but open banking and other disruptive technology will help narrow the gap Data breaches won’t let up, but we will see crucial developments in authentication and combating fraud Always helpful to see what American Banker has to say about fintech, they tend to have a more traditional banking bias.
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