Fintechs and banking disruptors have been on the scene for some years now, and have arguably totally changed the way we spend, lend and borrow money. All the financial changes that consumers and businesses have seen have been backed by teams of tech and digital professionals, who have pushed the boundaries of what’s possible, increased access to banking services for those who previously did not have them, and mixed up the business landscape. The changes to the business landscape – technology and startup publication TechCrunch has pointed to a trend noting that many fintech startups are themselves lending to small businesses.
As TechCrunch states: “Everyone wants to lend to small businesses, as the fintech boom continues to bring constituent players closer together in feature-terms.” The author further argues that the “rising focus on small-business lending amongst B2B fintech and fin-services companies feels directionally similar to the rise of consumer-oriented fintech startups adding banking-like features last year”.
The startup/bank crossover
Going further on that final point – that fintech startups have added banking-like features – two TechCrunch authors argue that these days, every startup is a bank. They say that it’s not only startups that originally intended to become “neo banks” (digital banks, basically) that are now offering banking services: in fact, many other startups are seeking to get involved in that world too.
Alex Wilhelm, one of the article’s authors, points to a few examples. It’s worth pointing out that some of these startups were originally intended to be fintechs, but not banks. Offering a tech solution for financial problems is one thing, but offering banking services (and therefore moving into the realm of dealing directly with people’s money and all the regulation that comes with it) is a big step.
Wilhelm notes that Uber has launched Uber Money, Acorns has gone from saving to banking with the launch of a credit card, Robinhood has gone from a trading platform to cash management (and therefore banking). This, he argues, is “one of the weirdest tech booms … the advent of every company becoming a bank”.
Deals, data and tech
Another notable trend is the continuation of tie-ups between old-school companies and big tech in the world of finance. News broke recently that Goldman Sachs is “close to a deal with Amazon to offer loans to the e-commerce giant’s merchants,” according to CNBC. TechCrunch notes that Amazon has a lot of data on its merchant-partners and Goldman Sachs has “a pile of money … by combining their powers, they can probably make some money loaning out capital”.
That combination of access to data and access to capital is certainly an intoxicating one. Visa’s recent acquisition of Plaid is notable for many reasons – not least because it signals Visa’s continued commitment to becoming a “network” company first and foremost.
But it also shows just how important access to data is in this world. A conference call following the acquisition heard Plaid executives talk at length about Open Banking – an EU scheme designed to open up financial information to promote innovation; with the acquisition of Plaid, Visa will gain access to all the information that Plaid holds about the bank accounts and fintech startups that it connects – a valuable asset.
With these changes, the world of technology employment changes too. Companies will demand new skills and the ability to apply technology in a highly regulated environment such as banking, with all its particular demands. Those with the right skills are bound to benefit.