It was a $2.9 billion week for fintech💵😎
Rivka Abramson| Oct 01, 2023
Welcome back – all 15k of you! – to Fintech for CFOs, Papaya Global’s fintech news digest for CFOs, finance pros, and fintech enthusiasts.
What you need to know right now:
1. FinTech sector roars on with 31 deals this week – FinTech Global
It’s been a tough couple of years for the fintech sector, but it seems there is light at the end of the tunnel.
Fintech firms raised an impressive $2.9 billion in funding last week, with 13 deals in the US and 7 in the UK, according to FinTech Global.
As tech industry IPOs creep back into fashion with the blockbuster listings of Arm and Instacart, could we see a resurgence of VC funding and even a fintech IPO boom?
We suspect that won’t happen while the Fed continues to warn about further rate hikes.
But if inflation continues to cool and rates start to move down in 2024, expect investors to pile into fintech, especially as AI continues to drive efficiency and reduce costs in the sector.
2. Rival banks unite to take on Big Tech – Financial Times
America’s major banks, including JPMorgan Chase, Bank of America, and Wells Fargo, are set to launch “Paze”, a mobile wallet, in response to the growing influence of tech giants in the financial sector.
The Paze app will be managed by Early Warning Services, the same consortium that runs the payments app Zelle, and will connect directly to the credit and debit card accounts of 150 million customers.
Previously, large banks attempted to compete individually against tech companies and fintech startups, but recent trends show a growing interest in partnerships and collaborations, with 65% of banks and credit unions having formed at least one partnership with a fintech in the past three years.
But with Apple Pay now reaching over 500 million users, mobile wallets have become a primary area of competition between banks and tech companies, prompting the introduction of bank-led initiatives like Paze.
Despite the success of its stablemate Zelle, we think that Paze might struggle in the face of Apple Pay’s ubiquity and ease of use.
3. WhatsApp Brings In-Chat Payments to India – PYMNTS.com
Meta’s WhatsApp has introduced a new payment method for its users in India, allowing them to make purchases directly from the app.
Users can now add items to their cart and make payments using various methods, including debit and credit cards.
WhatsApp has previously launched payment programs in Brazil and Singapore. It is now poised to become one of the top three digital payment apps in India, a country with over half a billion WhatsApp users.
Mobile payments are widespread in India, with 55% of retail purchases being made through digital wallets. Younger Indians are particularly keen on digital-first shopping experiences.
Meta views WhatsApp as a strategic revenue source, especially as it seeks to compensate for losses from its metaverse ventures.
CEO Mark Zuckerberg has emphasized the importance of messaging as a business pillar, and WhatsApp Business reported a growth from 50 million active users in 2020 to over 200 million by late June.
While this is a great step for Meta, it does beg the question: what took them so long?
WhatsApp has been ripe for mobile payments since Meta acquired the company in 2014. We’re glad to see this potential finally come to fruition.
Further reading: The evolution from banks to e-wallets