What to Expect in 2016 from the 15 Important #FinTech Happenings of 2015

Author


Aditya Khurjekar

CEO & Co-Founder at Let’s Talk Payments – The Destination for Global FinTech
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Unlike how the President of the International Olympic Committee declares every Olympics as the “greatest ever”, Amit Goel’s declaration of 2015 as the hottest year for FinTech is based on an objective assessment of measurable statistics. In this sequel, I will use my crystal ball to provide some “speculative insights” into how we can expect these 15 moments of 2015 to play out in 2016:

Acquisitions: After 2 strong years and the massive investment in the space, the pipeline for FinTech exits is full, so we should expect more acquisitions in 2016, and hopefully a few IPOs too. After all, the pent up steam from the unicorn club needs an outlet! The largest FI incumbents have also been watching and investing in young companies very diligently, so the quality of these acquisitions should also get better, based more on merit than dealmakers’ relationships.

1. Visa Announces Agreement to Acquire TrialPay:

This is aligned with the trend whereby the large e-commerce companies have a natural advantage when it comes to understanding consumer behavior, especially if you are large enough like Amazon or Alibaba or FlipKart, who are all trying to launch their own payment products. Amex has always been good at this; MasterCard has already made a couple of acquisitions, and chances are we may not see a big acquisition in this space because it seems hard to build scale in consumer data as a purely technology company without a product or service to go with it.

2. Early Warning Acquires Authentify:

We will see more of these in the authentication space in 2016 given the increasing complexity in establishing identity without compromising on the commerce experience. We should also expect more action from Early Warning and Authentify, especially with the other assets in the company’s portfolio, such as Payfone and clearXchange.

3. PayPal Buys Xoom, The Remittance Player:

PayPal has not been the easiest vehicle for cross-border remittances, and Xoom makes it easier to penetrate that hard segment. However, it may not be enough, neither to dominate in the space nor to innovate in it. There are the old fashioned players who will continue to get operationally efficient on one hand and the new blockchain based players on the other side, who will have a lower cost structure by design. Finally, there’s international business payments which continues to be the hardest.

4. Prosper Marketplace Acquires BillGuard:

The alternative lending space continues to grow by leaps and bounds, in every ecosystem around the world. We should expect Prosper to exit nicely in 2016, and other alternative lending companies to emulate the build-out of their supporting capabilities similar to this acquisition.

5. Visa Acquires Visa Europe, a Division of Visa Split off in 2008 pre-IPO:

This could very well be clever financial engineering, but more likely this is about the need for consolidation to counter the growing clout of China Union Pay and the Asian e-commerce players who are launching their own payment products.

6. ATM Leader Diebold Agrees to $1.8 Billion Takeover of Wincor Nixdorf:

This supposedly “anti-cashless” industry has plenty up its sleeve in terms of innovative experiences, cardless use cases and seamless integration opportunities with digital wallets. May there won’t be big acquisitions in the space like this one, but there’s certainly plenty of innovation to expect from it in 2016.

P2P Payments:

7. MasterCard Makes Sending and Receiving Money Faster, Easier & More Secure with MasterCard Send:

MasterCard is doing a lot of great things in the industry, but this does not seem to be one of them, and probably will not gain great traction in 2016. If this initiative is connected to mobile experiences, that would be a worthwhile strategy; if not, it’s hard to see the point.

8. Facebook Makes P2P Payments Available to Everyone in the US:

For all the excitement this generated what it was announced, it does not seem to have taken off at all. Maybe it will take a positive turn in 2016, but I wouldn’t put any money on it. Despite all our wishful thinking on this front, unfortunately there’s no evidence to support any rapid traction.

Year 2015 marked the launch of many “BrandX Pay” wallets:

9. Samsung launches its own mobile payment service Samsung Pay:

This is another sobering saga. We have all been looking forward to mobile payments finally taking off, yet we would be wrong to expect Samsung Pay to suddenly take off just because they have checked all the boxes: open, multi-modal, spending on promotions, etc. A mobile wallet seems to be a competitive necessity, but the real returns on the investment will likely be poor.

10. Google Finally Responds to Apple Pay With Android Pay:

I have met one person so far who has used Android Pay (and I meet a lot of people). Hope there are a few people using it in the company’s Mountain View offices.

11. America’s Bank, JPMorgan Chase & Co. announced the launch of its own digital wallet Chase Pay:

We should expect more bank-led initiatives in this space. They are taking charge and will succeed, JPMorgan and other big banks, especially as they continue to weave together their other products and services such as banking and lending along with payments.

12. LG is Gearing Up To Launch LG Pay:

Perhaps there’s a reason why the leading non-Apple device manufacturers launch new mobile services outside the US first. The US payments ecosystem is way too closed, controlled and complex as compared to anywhere else in the world. So, LG might launch LG Pay elsewhere, but it’s unlikely to have any impact in the US or anywhere outside Korea.

13. Walmart Introduces Mobile Payment Solution ‘Walmart Pay’:

This is completely understandable from WalMart’s perspective, and it will probably get more traction than Samsung Pay and LG Pay combined many times over, but it does raise questions about MCX, Chase Pay and perhaps Apple Pay as well. The size and scale and WalMart is formidable, and cannot be ignored.

14. Apple Pay Starts its Journey in UK, Officially, Plans to launch in China by February, 2016:

Apple Pay will continue its slow and steady growth. It will invest in technologies and partnerships to take charge and do to payments what it did to music, but it won’t happen in one fell swoop. Perhaps we won’t see anything dramatic in 2016 from Apple on this topic, but I do expect steady forward build-out.

Proximity Marketing:

15. Facebook Enters the Arena of Proximity Marketing with Bluetooth Beacons:

Proximity marketing is different from digital marketing. It is closer to traditional marketing, on the ground, with boots on the street, needing hardware in the aisles and on store doors, with robust software and data platforms to make it all work. As much as we want this to work quickly, it will work only only as fast as the mobile OS providers, the in-wall electric fixture makers, retailers and brands want to make it work.

On the whole, we should be positively optimistic about 2016, with many FinTech IPOs and plenty of exits in the space. More importantly, we should continue to expect for technology to play a dominant role in the innovation that will provide an ever-expanding bouquet of faster, better and cheaper financial services for consumers around the world.

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