Success Stories: Fintech – July 2021
In success stories, we profile some of the key stories in Fintech and payments this month, focusing on areas of growth, resilience and innovation.
Here’s this month’s dose of positivity, featuring news of unparalleled European Fintech investment, innovation in the ‘pocket money’ space and an ethics-driven approach to retirement tech.
Fintechs have smashed the previous European funding record... already!
It has proved a prosperous year for European fintech investment. The annual record has already been broken, barely six months into 2021. So far €10.4bn has been raised, which is over a billion euros more than was raised in all of 2019, the previous record holder. This year’s figure is €2bn higher than last year when funding dipped during the pandemic.
A bright six months seem to lie ahead. Projections foresee that funding could reach as high as €21bn, shattering all previous records. Whether or not those dizzying heights are reached, this certainly looks to be a golden year for European Fintech.
Visa is buying Swedish fintech Tink for €1.8bn.
Visa announced last week that it had signed a €1.8bn deal to acquire the Swedish open banking platform, Tink. If the agreement holds up, this will be the third-largest acquisition of a European VC-backed fintech in history.
Tink started life as a consumer app in 2012, helping customers keep track of their personal finances. Later, the business model evolved, with Tink providing banks and other fintech players with its aggregation software.
Visa’s CEO and Chairman Al Kelly commented on the deal that “Visa is committed to doing all we can to foster innovation and empower consumers in support of Europe’s open banking goals.”
Spend Now, Recover Sooner
Buy Now Pay Later services are growing rapidly, supporting the financial recovery of multiple industries.
Buy Now Pay Later (BNPL) has been a great initiative to boost spending during uncertain financial times. Initially focusing on the retail space, multiple industries have since followed suit, including the health and travel industries, (the latter embracing a tagline of “Fly Now Pay Later.”)
Whilst BNPL has been dubbed a potential credit card slayer, the reality is not so black and white. Nigel Morris, founder of Capital One invested in Klarna, the champion of BNPL, seeing the initiative as “complementary” rather than threatening to his business.
He pointed out that BNPL companies such as Klarna cater to a lower-income market than credit cards, and that BNPL is still mostly focussed on retail. As spending habits continue to evolve BNPL and similar schemes may grow to rival traditional payment methods, but alliance seems more profitable than war.
Digital Pocket Money
Starling Bank release money management app for children.
Starling is rolling out “Kite”, a new child friendly area within the Starling app for children who have one of the bank’s Kite debit cards. Kite will integrate into the parent or guardian’s account, allowing full oversight and control over their dear darlings’ purchasing activity.
Pocket money is an area that’s seemingly ripe for Fintech innovation, particularly with covid induced cash uncertainty still present. The Kite system also saves the parent the hassle of having to set up a full bank account for their child.
Helen Bierton, Chief Banking Officer at Starling Bank sees the scheme as “the perfect way for both parents and children to educate themselves about digital banking together.”
Smarter savings for retirees
Smart raises £165m to grow its global retirement technology offering.
With its dedication to financial ethics (causes such as Make My Money Matter and activities around climate change), Smart has proved popular for investors. The retirement technology provider is now looking to expand its products and services to a greater market.
Having just concluded a series D funding round, Smart has accrued £110m in primary and £55m in secondary equity. Chrysalis Investments - one of the UK’s leading crossover investors - has led Smart’s funding round with a £75million equity investment.
Chrysalis will join the ranks of Legal & General, J.P. Morgan, the Link Group, Barclays and Natixis Investment Managers, the strategic investors to date in Smart.
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