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Friday, December 02, 2022

FinTechs adding brick-and-mortar banks worldwide

There are some trends within payments and within financial services in general, which are undeniably global in scope.

Type cards to pay at the register. Card-not-present transactions, of course. Work from home… and get just about everything off the threshold.

Add to that list: FinTechs becomes banks. Fast, the old-fashioned way – by buying them.

We’re noticing that it’s becoming a global phenomenon, where newcomers who only use digital consumers are finding some footprints and utilizing the traditional players’ customer and asset base.

Example: Indonesian peer lender Amartha is in talks to acquire 70% of local bank PT Bank Victoria Syariah, as noted in this space this week.

That rumored deal would come on the heels of the Singapore wealth management FinTech iFAST, which has acquired a majority stake in a UK bank, and the small Singapore bank Singapura Finance, which is partnering with FinTech MatchMove. And SoFi Technologies bought Golden Pacific Bank.

The USA and beyond

If the moves outside the US are any indication, any number of digital players will be eager to take advantage of the benefits of creating an omnichannel roadmap for consumers. By purchasing all or part of a traditional bank, the digital company provides at least some access to the charters and licenses through which much more than prepaid cards or other digital “envelopes” can be offered for financial products and services. word. Having already marked the regulatory blocks, these FinTechs can begin to offer a continuum of traditional account-oriented offerings that span traditional lending and deposit activities.

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For the brick-and-mortar firms, there is the fact that they have to adjust their operations to meet the digital expectations of their clients. Banks can no longer expect every card, every account, to be standalone or a cookie printer… instead they have to be adapted to each user’s needs.

Also read: JPMorgan’s UK Digital Bank Introduces Higher Interest Savings

LendingClub’s own acquisition of Radius Bancorp, completed early last year, is perhaps one of the most visible examples in the United States of what has so far, as measured by the past few months, represented an international surge.

By buying Radius, the combined firms have the ability to launch a full range of banking services delivered in branchless (read, digital) lines. That platform model enables a bit of cross-pollination, where advanced technologies can help the above customization of presentations, and where analyzes help to put those presentations into context.

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We also see, so to speak, some of the more marquee names in banking cross-channels (without buying the digital arm, but actually building it). For example, as reported this week, JPMorgan Chase & Co. offers an interest rate of 1.5% for savings account customers at his digital bank in the UK.

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