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The Best of Finovate Global 2023: Digital Transformation, Financial Inclusion, AI and Automation

The Best of Finovate Global 2023: Digital Transformation, Financial Inclusion, AI and Automation
By David Penn Posted on
Categories: Finovate Global, FIS, Interview, Mambu, MasterCard, Nubank, WorldPay

Our final Finovate Global column of 2023 celebrates the conversations we’ve had this year with fintech innovators from around the world.

Stay tuned in 2024 for more interviews with some of the most interesting founders, entrepreneurs, and thought leaders in fintech and financial services.

“We developed BehaviorQuant because every financial decision is ultimately made by a person or a team. BehaviorQuant solves a core problem that underlies the entire investment industry: we don’t have systematic knowledge about the people and teams behind investment decisions. And that’s true for financial professionals and clients alike.” Dr. Thomas Oberlechner, founder and CEO of BehaviorQuant. Interview.

“Moniepoint solves the problem of fragmented, inaccessible, and low-quality financial services for businesses in emerging markets.  It is a full-service business banking platform seeking to provide all the digital financial services a typical business needs.” Tosin Eniolorunda, founder and CEO of Moniepoint. Interview.

“Eight hundred million voice conversations are recorded daily in Europe and many more worldwide. A tiny 1% of these conversations are checked for quality control, employee training, and business results improvement. Ender Turing is a conversations intelligence and automation platform to close 99% of the conversation gap for business growth.” Olena Iosifova, CEO of Ender Turing. Interview.

“Capital raising is broken. Private companies spend months and even years in the fundraising process, learning how to raise capital and repeating the same mistakes, approaching the wrong investors and often spamming them with irrelevant investment opportunities.” Ulyana Shtybel, CEO of Quoroom. Interview.

“At Refine intelligence, our mission is to help banks regain that superpower of really knowing their customers’ life stories, so their financial crime teams can quickly clear AML or scam alerts triggered by legitimate customer activity. We work with Risk, Financial Crime, BSA and AML teams. Fraud teams look at our technology to help with scam operations.” Uri Rivner, co-founder and CEO of Refine Intelligence. Interview.

“It was an honor to be ranked by CB Insights in its Fintech 250 list and, as one of only seven African start-ups featured, it speaks to the pioneering approach we are introducing to the world – revolutionizing payments and creating a financial services ecosystem for Africa.”

“As sub-Saharan Africa gains recognition on the global stage, we are seeing innovative and pioneering products emerge and rise in popularity amongst consumers, diversifying the products they can choose from.” Tayo Oviosu, founder and CEO of Paga. Interview.

Here is our look at fintech innovation around the world.

Asia-Pacific

Sub-Saharan Africa

Central and Eastern Europe

  • Berlin, Germany-based cloud banking platform Mambu to power the new Neobank Engine launched by Trigger Software.
  • Mintos, a multi-asset platform based in Latvia, announced addition of personalized ETFs to its product suite.
  • Hungary’s OTP Bank partnered with Intellect Global Consumer banking (iGCB), the consumer banking arm of Indian banking technology copany Intelltect Design Arena.

Middle East and Northern Africa

Central and Southern Asia

Latin America and the Caribbean

Photo by Markus Spiske

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Worldpay Adds More Cross-Border Payment Options with Alipay+

Worldpay Adds More Cross-Border Payment Options with Alipay+
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, FIS, WorldPay
  • FIS-owned Worldpay is integrating Alipay+ to broaden the payment acceptance tools it offers merchants.
  • The rollout will begin with AlipayHK, a standalone e-wallet that is limited to Hong Kong dollars.
  • “By tapping into Worldpay’s market leading footprint, together we can help more merchants globally accelerate their growth journeys and expansion into strategic markets,” said General Manager of Ant Group in Europe and the Middle East Guoming Cheng.

Worldpay revealed its latest partnership today. The FIS-owned electronic payment and banking company announced it will integrate Alipay+ as an option among its e-commerce and POS offerings.

To initiate the rollout, Worldpay will start by enabling its merchant clients to support Alipay’s AlipayHK e-wallet. AlipayHK will be available to Worldpay’s clients in phases. Alipay launched AlipayHK as a standalone app in 2017. The AlipayHK wallet differs from Alipay because, as the name suggests, it is limited to transactions that are made and settled in local Hong Kong dollars.

“To stay competitive, merchants must understand and offer the payment methods that their customers prefer. Local wallet providers are extending their dominance in several APAC markets,” said Worldpay from FIS General Manager for Global E-commerce, APAC Phil Pomford. “We’re thrilled to be collaborating with Ant Group to provide our global merchants access to the Alipay+ platform starting with the AlipayHK wallet.”

Developed by Ant Group, the wider Alipay+ brand provides global cross-border mobile payment tools that help merchants enable Alipay’s one billion active consumers to pay with apps they’re already using, including MPay, Kakao Pay, GCash, and more. Alipay+ also offers merchants digital marketing tools to better target and serve customers.

“The collaborative effort with Worldpay will empower merchants to sell globally and contribute to our mission of providing more open, digitalized, and inclusive financial services to global audiences,” said General Manager of Ant Group in Europe and the Middle East Guoming Cheng. “Alipay+’s suite of innovation solutions is connected with more than one billion consumers worldwide. By tapping into Worldpay’s market leading footprint, together we can help more merchants globally accelerate their growth journeys and expansion into strategic markets.”

Originally acquired in 1971, Worldpay now processes $130 million daily for more than one million merchants across the 146 countries. FIS acquired the company in 2019 for an estimated $34 billion. Earlier this year, FIS sold a majority stake in Worldpay to private equity firm GTCR.

Photo by Mikhail Nilov

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FIS Sells Majority Stake in Worldpay to Private Equity Firm GTCR

FIS Sells Majority Stake in Worldpay to Private Equity Firm GTCR
By David Penn Posted on
Categories: Alumni News, Daily news, FIS, Mergers & Acquisitions, WorldPay
  • Fintech giant FIS announced that it will sell a majority stake in Worldpay to private equity firm GTCR.
  • The move comes just over four years after FIS acquired Worldpay in a deal valued at $43 billion.
  • The transaction is the largest to date for GTCR and the biggest leveraged buyout of 2023.

Four years after acquiring payments company Worldpay, fintech titan FIS has announced plans to sell a majority stake in the firm. Private equity company GTCR is the purchaser, and will gain 55% of Worldpay, which is currently valued at $18.5 billion. Note that when FIS acquired the company in 2019, Worldpay was valued at $43 billion.

The sale is expected to close by the first quarter of 2023. Former Worldpay CEO Charles Drucker will be re-appointed as Chief Executive.

The transaction is the largest to date for the PE firm. The deal is also the largest leveraged buyout of the year. GTCR will finance half of the transaction with equity financing and the other half via borrowed capital. GTCR also has committed to an additional investment of as much as $1.25 billion in Worldpay to facilitate future acquisitions. According to Reuters, GTCR was able to outbid Advent International, a rival firm that was also interested in a major stake in Worldpay.

FIS will use the capital raised from the sale to retire debt and buy back shares from its current shareholders. The sale comes after months of strategic review and pressure from activist investors concerned with what they have referred to as “underinvestment,” “operational missteps,” and an overall “unsuccessful integration” of Worldpay into FIS. The acquisition will help Worldpay reduce its debt from $20 billion at the end of March to $10 billion when the deal closes next year. The strategic review, led by FIS CEO Stephanie Ferris, is designed to help the firm cut costs by $1.25 billion.

Sans Worldpay, FIS will continue to operate its core processing systems business for banks and FIs, as well as its capital markets division for investment firms. FIS’ capital markets business represents just under 25% of the company’s revenues. The company’s banking technology division provides 46% of revenues and its merchants business accounts representing approximately 30%.

Founded in 1968, FIS has been a Finovate alum since 2010. Worldpay is an alum of our developers conference, presenting its technology to FinDEVr audiences in 2015 and again in 2016.

Photo by Karolina Grabowska

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FIS Acquires Bond in Bid to Boost Embedded Finance Offerings

FIS Acquires Bond in Bid to Boost Embedded Finance Offerings
By David Penn Posted on
Categories: Alumni News, Daily news, FIS
  • A number of sources are reporting that FIS has acquired Bond Financial Technologies for an undisclosed sum.
  • The acquisition was first reported by Fintech Business Weekly’s Jason Mikula, who subsequently shared an internal note from FIS describing the acquisition.
  • Neither company has commented publicly about the acquisition reports.

Both FIS and Bond Financial Technologies are being discreet about the news. But a growing number of sources – from TechCrunch to Twitter – are reporting that FIS has acquired the embedded finance company for an undisclosed sum. The news broke on June 1 via a tweet from Fintech Business Weekly’s Jason Mikula. TechCrunch confirmed the story days later, citing unnamed sources. But neither FIS nor Bond has issued an official statement on the news. Mikula followed up his initial tweet with a tweet on Friday sharing an internal communication from FIS president of platform and enterprise products, Tarun Bhatnagar, that provided additional details.

What do we know? In his tweet, Bhatnagar said that FIS was “welcoming 30 Bond colleagues to the FIS team” and that Bond co-founder and CEO Roy Ng will stay on, reporting to Bhatnagar. Bhatnagar noted that the acquisition makes sense for FIS insofar as it brings both banking-as-a-service and embedded finance talent and experience to the company. Bhatnagar added that the acquisition will “close a gap” when it comes to FIS’ embedded finance capabilities, and accelerate time-to-market for the company’s new embedded finance projects.

Founded in 2019, Bond has raised $49 million in funding according to Crunchbase. The company’s embedded finance platform enables program management teams to build, launch, and operate their own financial products. Account verification solutions, deposit accounts, virtual and physical cards, and money movement tools are among the products that Bond’s technology helps companies create. With modern APIs and a robust integration layer, Bond simplifies the process of building and launching new products without having to partner with multiple institutions and vendors. Bond also manages the programs so that companies do not need to worry about securing banking licenses or staffing their own compliance teams.

Earlier this year, Bond announced a partnership with College Ave Student Loans. The collaboration will enable the private student loan provider, one of the top three in the U.S., to develop financial solutions for students and their families. Ng praised the company for its refinancing program and loan products for undergraduates, graduates, and parents, alike. “We look forward to partnering with College Ave to help millions of young adults build a strong financial future,” Ng said.

CardRates published an extensive profile of Bond and its founders at the beginning of the year.

Photo by Leeloo Thefirst

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FIS Breaks Off Merchant Solutions, Plans to Restore Worldpay Brand

FIS Breaks Off Merchant Solutions, Plans to Restore Worldpay Brand
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, FIS, WorldPay
  • FIS is letting go of its Merchant Solutions business, along with the Worldpay brand, which it originally acquired for $34 billion in 2019.
  • The company states that Worldpay needs a different capital allocation strategy to enable the brand “to pursue more aggressive investment opportunities, including M&A.”
  • The spin-off is expected to take 12 months.

FIS acquired Worldpay for $34 billion in 2019, and after rumors of a break-up swirled last week, the Florida-based firm announced plans to let go of and restore the Worldpay brand. Specifically, FIS is spinning out the Merchant Solutions business it created from the Worldpay acquisition.

Jeffrey A. Goldstein, FIS Chairman of the Board, said that “… the spin-off of Worldpay will unlock shareholder value by improving both companies’ performance, enhancing client services, and simplifying operational management. We are confident that this is the right time for the separation of Worldpay.” Goldstein added that the Merchant Solutions business requires “increased investment in growth and a different capital allocation strategy” than FIS.

In its press release announcing the change, FIS explained that this different capital allocation strategy will enable Worldpay “to pursue more aggressive investment opportunities, including M&A.” The long-term goal of the spin-off is for Worldpay to expand geographic coverage of its eCommerce tools, strengthen its enterprise offerings, and shift toward software-led payments.

After the split, which is expected to be completed in the next 12 months, FIS and Worldpay will retain strong ties. As a result, FIS’ Merchant Solutions business will take on the Worldpay brand, which will be restored. Originally founded in 1971, Worldpay conducted $2 trillion in payments volume in 2022. Charles Drucker, who was Worldpay CEO from 2004 until the acquisition in 2019, will oversee the spin-off and will once again serve as the company’s CEO when the separation is finalized.

Founded in 1968, banking technology company FIS has acquired a total of 17 companies, two of which were purchased after the Worldpay acquisition in 2019. The company offers 450+ solutions and processes more than 110 million transactions each day. FIS is publicly listed on the NYSE and has a current market capitalization of almost $40 billion.

Photo by Monstera

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Finovate Global Germany: Ecolytiq Partners with Tatra Banka; Airbank Inks Deal with Klarna Kosma

Finovate Global Germany: Ecolytiq Partners with Tatra Banka; Airbank Inks Deal with Klarna Kosma
By David Penn Posted on
Categories: Crassula, ecolytiq, Finovate Global, FIS, MasterCard, PaySend, Salt Edge, WorldPay

This week’s edition of Finovate Global takes a look at recent fintech developments in Germany where green banking, embedded finance, and open banking are the themes at the top of this week’s fintech headlines.

First up, Berlin-based Sustainability-as-a-Service innovator ecolytiq announced that it was teaming up with Slovakian financial institution Tatra Banka. The climate engagement fintech will provide Tatra Banka with the technology the firm needs in order to launch new green banking functionality on its online banking brand, Blue Planet. The new feature, which will be made available to Tatra Banka’s more than 600,000 customers, will enable users to monitor the impact their transactions may have on the environment (for example, with CO2 emissions), provide users with ideas on how to reduce their environmental impact, and offer rewards for spending that is environmentally friendly.

Founded in 2020, ecolytiq demonstrated its technology at Finovate’s developer event, FinDEVr 2021, which was held as a part of FinovateSpring that year. Putting accurate data at the center of the ability to move toward greater environmental sustainability, ecolytiq demonstrated how its open knowledge graph and streaming technology keep its data relevant and current. More recently, the company announced a strategic partnership with exceet Card Group, makers of sustainable payment cards made from wood and, the following month, teamed up with French sustainable neobank Green-Got.

Peter Golha, a director at Tatra Banka said that the institution believed it had a a role to play in the transition toward a more environmentally sustainable economy. “Not only have we a chance to change our own trajectory, but also a chance to live the topic of sustainability alongside our clients,” Golha said.

Founded in 1990, Tatra Banka was the first private bank to be established in Slovakia. Winner of the TREND Bank of the Year award for two years in a row, Tatra Banka announced this spring that it had achieved its greatest profit to date, reporting $164 million (EUR 162.1) in consolidated profits for the financial year 2021.

Second, German financial management platform for businesses Airbank inked a deal with Klarna Kosma this week. Klarna Kosma is an open banking platform launched by Swedish e-commerce innovator Klarna this spring. Seen as a rival to fellow Finovate alum Tink and its open banking platform, Klarna Kosma offers financial institutions, fintechs, and merchants connectivity to more than 15,000 banks in 24 countries around the world via a single API. Kosma was made possible in many ways by Klarna’s acquisition of direct, bank-to-bank payments company SOFORT in 2014, and Klarna has been developing and expanding the service ever since.

“Over the past year, the demand for Open Banking services from financial institutions and fintech startups has reached a tipping point,” Klarna Kosma VP Wilko Klaassen said. “(This) is why we have built a dedicated business unit which brings together engineering, product management, sales and marketing all together in the same team to focus on this $15 billion, fast-growing market.”

Airbank will leverage its new relationship with Klarna Kosma to “accelerate” its expansion into European markets and beyond. Airbank enables businesses to consolidate their bank accounts in a single location, allowing them to more easily automate bill management, make payments, and manage their finances. Companies also can use Airbank’s platform to track their financial transactions and forecast future liquidity. The partnership with Klarna Kosma will make it possible for Airbank to securely access account information from thousands of banks around the world, expand more aggressively, and better serve its SME customers that have global requirements.

“By the end of this year, we will serve over 50 counties, making Airbank the most comprehensive global banking solution for SMEs in the industry, with the ability to connect bank accounts from almost anywhere in the world,” Airbank founder and CEO Christopher Zemina said. “We are delighted to have Klarna Kosma as an experienced and dynamic partner that shares our ambition to shape the future of B2B financial management.”

Lastly, early in the week we learned that Berlin-based embedded finance startup Monite had teamed up with Codat, a U.K. firm that offers a universal API to enable access to consented business data from banking, accounting, and ecommerce platforms. The partnership will enable both SaaS platforms and financial institutions to integrate invoicing and billing functionality into their apps. This will allow platforms and institutions to offer businesses a unified solution for managing their financial operations.

In a statement, the CEOs of both Monite and Codat praised the great variety of financial apps and platforms dedicated to serving SMEs. The challenge, according to both Monite CEO Ivan Maryasin and Codat CEO Pete Lord, is that the variety can be overwhelming for many small businesses. “What’s still missing are the ‘super apps’ that bring everything together,” Maryasin said. “It can be time-consuming to manage and get the most out of them all,” concurred Lord.

Founded in 2020, Monite has raised $7.8 million in funding for its technology that empowers financial institutions and platforms to offer financial services such as multi-banking, AP automation, invoicing, and more to their customers. London, U.K.-based Codat neared unicorn status last month upon raising $100 million in Series C funding. The investment took the company’s total funding to more than $176 million and gave Codat a valuation of $825 million. The round was led by JPMorgan Partners, and featured participation from Plaid and Shopify.

Founded in 2017, Codat began this year with the announcement of a partnership with Moody’s Analytics to enhance small business lending.

Here is our look at fintech innovation around the world.

Asia-Pacific

Sub-Saharan Africa

Central and Eastern Europe

  • Austrian fintech Helu.io, which specializes in providing financial solutions for SMEs, raised more than $10 million in Series A funding.
  • Rubicon, a fintech headquartered in Albania, announced an expanded partnership with Mastercard.
  • Latvia’s Crassula, a white label cloud banking software company, teamed up with Canadian open banking solutions provider Salt Edge.

Middle East and Northern Africa

Central and Southern Asia

Latin America and the Caribbean

Photo by XU CHEN

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FIS Launches Guaranteed Payments Solution for Protection Against Chargebacks

FIS Launches Guaranteed Payments Solution for Protection Against Chargebacks
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, FIS, Signifyd
  • FIS is launching its Guaranteed Payments solution this week that boosts merchants’ ecommerce transaction approval rates and guarantees protection against chargebacks.
  • FIS is partnering with ecommerce fraud prevention company Signifyd to reduce merchant chargebacks.
  • “With this solution, customer retention works hand in hand with fraud elimination to unlock incredible revenue growth opportunities,” said Signifyd CEO and Co-founder Raj Ramanand. 

Core banking expert FIS is launching a Guaranteed Payments solution this week. The new tool guarantees merchants increased ecommerce transaction approval rates and eliminates the financial liability of chargebacks resulting from fraudulent purchases.

Guaranteed Payments, which is available across the Signifyd Commerce Network and integrated into FIS’ Worldpay platform, facilitates increased merchant approval rates and provides guaranteed chargeback protection. The new technology combines machine learning and transaction intelligence to analyze aspects of a consumer’s purchase, including email address and payment credentials. Leveraging that information, Guaranteed Payments can instantly distinguish legitimate orders from fraudulent orders. The reduced fraud helps merchants optimize revenue and fulfill orders more quickly.

“Guaranteed Payments brings together two powerful sources of transaction intelligence—the Worldpay data stream produced from processing 40 billion orders annually and the Signifyd Commerce Network of thousands of merchants worldwide,” said FIS Chief Product Officer Vicky Bindra. She adds that the new tool can “combine fraud protection with increased approvals to enhance payment optimization and the overall user experience.”

Preventing chargebacks is at the heart of Signifyd’s technology. The California-based company helps identify fraudulent product orders using machine learning algorithms that sift through big data, including user behavior patterns, to reduce merchant chargebacks on fraudulent charges and save money on shipping goods on declined orders. In the event an order turns out to be fraudulent, Signifyd reimburses the merchant for the chargeback.

“Merchants using Signifyd experience a 5 to 9 percent increase in top line conversion on average,” said Signifyd CEO and Co-founder Raj Ramanand. “With this solution, customer retention works hand in hand with fraud elimination to unlock incredible revenue growth opportunities.”

FIS’ Guaranteed Payments is launching at a time when ecommerce activity and the fraud the comes along with it are at an all-time high. While the ecommerce market is predicted to grow 50% in the next two years, so is the fraud that comes along with it. In the past year, nine out of 10 merchants lost revenue due to payment fraud. False positives are hurting merchants, as well. Even though fraud currently accounts for about 1% of online transactions, merchants routinely reject as much as 9% of orders to avoid fraud, missing out on $443 billion in potential revenue.

Photo by RODNAE Productions

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FIS Partners with Treasury Prime to Bring Embedded Finance to Small and Mid-Sized Banks

FIS Partners with Treasury Prime to Bring Embedded Finance to Small and Mid-Sized Banks
By David Penn Posted on
Categories: Alumni News, Daily news, FIS
  • FIS has partnered with Treasury Prime to launch a new embedded finance offering.
  • The new solution will give FIS’ banking customers additional options for managing deposits, AP, and other critical bank processes.
  • The collaboration with Treasury Prime is FIS’ second big embedded finance play of the year, having acquired embedded finance solution provider Payrix in February.

FIS has launched a new embedded finance offering, built in partnership with Treasury Prime, to help community and regional banks take advantage of the most modern digital capabilities and create new distribution channels. The new API-based solution will give FIS’ banking customers and their business clients new options when it comes to managing deposits, accounts payable, and other key banking operations.

The new offering will also enable community and regional banks to potentially create new revenue streams by expanding their client base, especially among highly digitally-active consumers.

“Embedded finance is a growing trend in the market because it allows businesses to bring innovative ideas quickly to market by combining financial services with user experiences right at the point of need,” FIS Head of Payments Kelly Beatty explained.

A leading technology solutions provider for merchants, banks, and capital markets firms – and a Finovate alum since 2010 – FIS processes more than $75 billion in transaction value for than 20,000+ clients globally. Treasury Prime offers APIs that enable companies to embed a range of banking services onto their platforms to boost revenues, increase customer loyalty, and offer rewards. Writing about the partnership on the Treasury Prime blog, Vice President of Banking Jeff Nowicki noted that the collaboration will enable banks to focus on their core strengths “rather than trying to compete with fintechs.” The partnership will also create new opportunities for business lines or revenues “(in) the same way community banks have for ages added lenders or business banking teams to target specific segments.”

The technology already has been integrated by digital commercial bank Grasshopper. The firm, in partnership with Web 3 blockchain company HUMBL, will deploy FIS’ embedded finance services across both its consumer and commercial divisions.

“Our vision has been clear from the start,” Grasshopper Chief Digital Officer Chris Tremont said,. “We wanted to better serve the needs of fintechs, small and medium-sized businesses, and the venture community. This BaaS platform and sophisticated set of APIs allows us to leverage technology and provide an enhanced banking experience for our clients.”

2022 has been a year in which FIS has paid particular attention to opportunities in embedded finance. A Finovate alum since 2010, FIS began the year with an acquisition of embedded payments solution provider Payrix. The deal will bolster FIS’ e-commerce, embedded payments, and finance experiences for small and medium-sized merchants via SaaS-based platforms.

“The acquisition of Payrix is an excellent proof point of FIS’ ability to unlock the value of our broad portfolio of solutions as companies of all sizes rely on FIS as a destination for innovation to advance how the world pays, banks, and invests,” said FIS President Stephanie Ferris.

Photo by Laker

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Fintech Merger and Acquisition Activity Starts Strong in Q1 2022

Fintech Merger and Acquisition Activity Starts Strong in Q1 2022
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alkami Technology, Azimo, BeSmartee, FIS, Fiserv, HooYu, Mergers & Acquisitions, Mitek, MoneyGram, Plaid, Revolut, SecureKey, Segmint, Sezzle, StreetShares, Taulia, Trulioo, Wealthfront

While 2021 was a record year for fintech merger and acquisition (M&A) activity, 2022 is off to a great start.

According to FT Partners, there were 1,485 M&A deals in the fintech space totaling $348.5 billion in 2021. As Square’s $29 billion takeover of Afterpay demonstrated, last year’s massive volume is partially thanks to multiple large deals.

This quarter, only eight of the 21 deals initiated disclosed financial details. Of those, the deal volume added up to almost $5 billion.

January

February

March

While experts predict that 2022 M&A activity will likely see momentum from 2021, there are two aspects to watch out for this year. First, we will not see as many SPACs as we saw last year. This may decrease the number of companies choosing to exit this year. Second, fintech valuations are deflating after experiencing huge rises over the course of the past two years. While the loss in value won’t directly impact the number of M&A deals, it will decrease the deal volume.

Photo by Martin Lopez

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FIS On Ecommerce Trends & BNPL Market Predictions

FIS On Ecommerce Trends & BNPL Market Predictions
By Julie Muhn (@julieschicktanz) Posted on
Categories: FIS, Speaker series

What’s behind all of the buzz surrounding the recent buy now, pay later (BNPL) trend? We spoke with Jason Pavona, FIS General Manager for North American E-commerce, to get his thoughts on the matter.

As the General Manager for North America, Pavona leads FIS’s merchant acquiring commercial efforts in the United States and Canada along with driving the payments analytics business he founded and acquired by FIS.

In our interview below, we gleaned insights from FIS’s recent payments report and tapped Pavona’s expertise on BNPL, the uptick in ecommerce, and banks’ responses.

It’s widely understood that ecommerce grew in 2020. Do you anticipate that the growth curve will continue or level off?

Jason Pavona: We are seeing this growth continue for at least the next three years. Our recent Global Payments Report is forecasting that the global ecommerce market will grow by nearly 60 percent by 2024 to a total value of $7.3 trillion. The pandemic did accelerate this growth, as we saw two to three years of typical acceleration condensed into 2020, so some leveling off can be expected. However, this rapid growth was also driven by a push towards digital retail that was underway well before we had ever heard of COVID-19. Consumers are now more comfortable than ever making payments online — their inclination to the speed, ease, and flexibility of online shopping points to continued growth in the ecommerce market. While growth may slow down the line, we are not seeing signs of a plateau in that growth.

The report notes that Asia is leading when it comes to using mobile wallets at the point of sale. What’s holding back U.S. consumers from using mobile wallets at the point of sale?

Pavona: Payment innovation in Asia, and particularly China, has coincided with the rise of smartphones and powerful local super apps, helping the region leap ahead of the rest of the world in the use of mobile wallets. The pandemic helped to accelerate digitalization of the point of sale across the world and increase the usage of digital wallets, but buy-in from Asian governments in the innovation of payments has supported that development.

Mobile and digital wallets are rising in the U.S., with digital wallets accounting for a third of all online payments in 2020, but the U.S. does still have some catching up to do. We expect mobile wallets to become more ubiquitous as Americans become more used to the technology and begin using digital wallets in place of their physical credit cards.

Many Americans, however, are torn over going fully digital in their payments. FIS has found that while 55% of consumers prefer digital payments, 67% feel more comfortable using traditional payments methods.

There’s been a relatively large influx of third-party players in the BNPL space, but some banks have created their own BNPL offerings. Which do you see coming out on top?

Pavona: It is possible that banks are able to take some market share in the BNPL space, however this could be considered to be taking back market share from BNPL providers that have taken over the relationship with bank customers at the point of sale.

Third party BNPL providers are growing rapidly, and in order to compete banks need to forge stronger relationships with merchants at the point of sale – relationships companies like Affirm and Klarna already have. It may also be reasonable to expect banks, in response to third party financing, to adjust their consumer credit card offerings to gain a competitive edge and compete directly within their customer’s wallets, rather than at the point of sale.

Do you think BNPL payments will be a lasting trend or will consumers eventually default back to traditional credit?

Pavona: It is a bit early to say one way or another whether BNPL will be a lasting trend and how the leading providers will expand their product sets and relationships, though given the rapid growth of BNPL solutions across markets it’s not difficult to make a case for BNPL being here to stay. FIS expects BNPL to more than double its market share to 5% of all transactions by 2024, and comprise 4% of the global ecommerce market by 2024. While U.S. consumers may still be building trust in BNPL tools, some European countries have accepted them whole-heartedly. For example, BNPL purchases account for 20% of all online transactions in Sweden and Germany.

While we forecast several more years of strong BNPL growth at least, another question to consider is how BNPL will fare under heavier scrutiny from regulators. The U.K. and other countries have already begun discussing and introducing BNPL regulations and other countries like the U.S. could be soon to follow.

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Ten Finovate Alums Join FedNow Instant Payments Pilot Program

Ten Finovate Alums Join FedNow Instant Payments Pilot Program
By David Penn Posted on
Categories: ACI Worldwide, Alumni News, Capital One, Citi, Daily news, Finastra, Finzly, FIS, Fiserv, Green Dot, Jack Henry, List series, Temenos

More than two years in the making, the FedNow payments initiative – launched by the U.S. Federal Reserve to accelerate payments and transfers – is picking up speed. The project currently has more than 110 banks, financial services providers, and other organizations slated to participate, and among them are ten Finovate alums.

“We’re gratified by the industry’s tremendous interest and willingness to devote time and energy to help us develop the FedNow Service,” Esther George, executive sponsor of the Federal Reserve’s payments improvement initiatives, said. George, who is also President and CEO of the Federal Reserve Bank of Kansas City, added that the pilot has had to “adjust” to accommodate greater than expected interest.

The idea behind the service is to expand the reach of instant payment services offered by financial institutions and enable businesses and individuals to send and receive instant payments, with full access to their funds within seconds. The FedNow Service will leverage the Federal Reserve’s FedLine network, which connects to more than 10,000 financial institutions directly or via their agents.

The pilot program is designed to review the technology’s features and functionality, assess the user experience, and greenlight the product for further testing and eventual general availability. Participating institutions will be retained, post-launch, to provide additional review and advice with regard to issues like adoption roadmap, industry readiness, and overall payments strategy.

“The FedNow Service marks a turning point in the industry’s move to making real-time payments a reality,” Booshan Rengachari, founder and CEO of Finzly, explained. Finzly is one of Finovate’s newest alums – most recently demoing its technology at FinovateWest Digital last fall – and is one of the participants in FedNow’s pilot program.

Rengachari further suggested that this “turning point” was a moment his company had anticipated. “We created our Payment Hub specifically to help FIs prepare and go to market faster with newer RTP networks,” he said. Finzly’s CEO added that this helps “address the challenges of offering single payment API for multiple payment networks without having to run disparate payment systems from multiple vendors.”

The 10 Finovate alums participating in the FedNow project are listed below.

Photo by Inge Wallumrød from Pexels

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FIS and The Clearing House Help Bring Real Time Payments to Small Banks

FIS and The Clearing House Help Bring Real Time Payments to Small Banks
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, FIS

Financial services company FIS announced this week it has partnered with The Clearing House (TCH) in an effort to bring real-time payment processing and settlement to small-to-mid-sized banks and credit unions.

FIS will help its core banking system clients quickly and cheaply connect to TCH’s RTP network, a payments infrastructure that enables instant payments settlement and immediate availability of funds for banks participating in the network.

“As a long-time partner with The Clearing House, we are excited to see the RTP network continue to grow and to be working with banks across the United States to take advantage of the speed, power and scalability of real-time payments,” said FIS EVP, Head of Financial Institutions Payment Solutions Royal Cole. “We’ve designed our new managed service to ease the process of connecting to this emerging platform for small-to-mid-sized banks and credit unions that lack the resources of their larger competitors.”

Among FIS bank clients already participating in TCH’s RTP network are St. Louis, Missouri-based First Bank; and Nano Banc, a relationship-based bank headquartered in Irvine, California.

FIS was founded in 1968 and made major news headlines last year when it acquired Worldpay for $34 billion.

The Clearing House launched its RTP scheme in 2017. Today the RTP network’s real-time payment capabilities are accessible to banks that hold 70% of U.S. demand deposit accounts (DDAs). The network currently reaches over half of all U.S. DDAs.

Photo by Alistair MacRobert on Unsplash

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