Category Archives: Innovation and Resources

FT Partners Report (Jan 2020): The Rise of Challenger Banks: Are the Apps Taking Over?

FT Partners | Jan 2020

FTP rise of challenger banks research - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over?Executive Summary:

The banking sector is experiencing a major shift globally, as Challenger Banks are becoming increasingly formidable competitors to traditional banks and have begun to capture significant market share. Furthermore, the lines between banks and other consumer financial services providers are blurring, with several alternative lenders and robo-advisors beginning to offer banking products to their customers. E-commerce / internet giants are also jumping into the fray with Google and Amazon, among others, beginning to offer banking products. In response to the emergence of Challenger Banks, a number of incumbent banks have launched their own FinTech brands, and traditional financial institutions will likely turn to FinTech solution providers in order to defend their turfs.

 

Download this Jan 2020 FT Partners Fintech research (216 page PDF) -> Now

 


NCFA Jan 2018 resize - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Hong Kong hits major fintech milestone as half the city’s population signs up for HKMA’s Faster Payment System

South China Morning Post | Enoch Yiu  | Jan 13, 2020

Faster payment system adoption grows in HK - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over?Hong Kong residents can expect to benefit from cheaper and better banking services with the launch of more virtual banks this year, according to high-profile speakers at the Asian Financial Forum.

Their comments came as it was revealed the Hong Kong Monetary Authority has hit an important milestone in its efforts to promote financial technology (fintech). Half the population of the city has now signed up to its Faster Payment System, which enables the free transfer of money between bank accounts via mobile phone.

The development shows Hong Kong is moving quickly into a new era of branchless banking, a shift that brings up challenges for traditional lenders which must innovate to cope with the competition, said officials at the annual conference held by the Hong Kong government.

“The Faster Payment System is an important move for the city to develop its fintech. The system has been very popular with the Hong Kong public,” said James Lau, Secretary for Financial Services and the Treasury during a panel discussion at the forum on Monday.

See: 

The electronic interbank payment system introduced by the HKMA in September 2018 now has half of the local population registered and average daily transaction volumes of between HK$2.4 billion (US$308.82 million) and 38 million yuan, Lau said. The system allows anyone to sign up with their mobile phone number or email address and transfer money between different bank accounts. They can also make payments at shops and restaurants using QR codes on their smartphones.

“The next major development is the launch of more virtual banks in the first quarter of this year in Hong Kong, which will provide more online banking services to the public,” Lau said.

The Hong Kong Monetary Authority has issued eight virtual bank licences since March last year. The first virtual lender, ZA Bank, started operating in December.

“The banking industry will need to innovate and upgrade its technology to cope with the many challenges amid the US-China trade war, geopolitical tension and the global economic slowdown,” said Arthur Yuen, deputy chief executive of HKMA

in another panel discussion at the conference.

Yuen said the launch of virtual banks will benefit the public as a whole because it allows people who have never had a bank account to finally enjoy banking services.

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NCFA Jan 2018 resize - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Open Banking In Canada: Navigating The Future Of Money

Borden Ladner Gervais LLP | Stephen J. Redican, Robert Dawkins, Ross McGowan and Alexandra Nicol | Jan 9, 2020
Open Banking in Canada - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over?The Canadian financial services industry is at the threshold of change. Regulatory overhaul, the ubiquity of online services, and technological innovation and disruption will affect all players—from banks to FinTech start-ups.

Open banking will introduce new opportunities and business models for the financial services industry and new services from FinTech entrants to the market—but these opportunities come with unprecedented risks and operational requirements for a banking system that prides itself on stability. Given Canada's unique financial system and constitutional structure, the implementation of open banking won't look the same as it has in the U.K., the EU or Australia, where its introduction is already underway.

See:  Why Canada must be open to open banking

We spoke with a diverse group of leaders from across the Canadian financial services industry to understand open banking's current and emerging issues: What do you see changing? How will your organizations fit into the new landscape? What might a made-in-Canada model of open banking look like for consumers and industry?

Roundtable Participants

Anne Butler
Chief Legal Officer and Head of Policy and Research, Payments Canada
"If there isn't trust in the security and integrity of the system, especially among consumers, open banking will not succeed."

Lisa Ford
Senior Counsel, RBC Law Group, Enterprise Payments and Open Banking
"Open banking has existed in some form since the turn of the century and now technology and other changes are fuelling a more public debate."

Andrew Boyajian
Head of Banking, North America, Transferwise
"A concept like, "We're a known bank, we've been around for hundreds of years and therefore we're better equipped," doesn't necessarily make sense. Instead, it comes down to the contents and adherence to risk policies, and the importance that institutions give to cybersecurity."

Oscar Roque
AVP, Innovation, Research & Emerging Solutions, Interac Corp.
"...it's not just about the security of the technology, but also governance structure, accreditation, and making sure that the proper controls are in place so that it's not just anybody accessing that system."

Tanya Postlewaite
VP Compliance and Governance, Corporate Secretary, Chief Compliance Officer and CAMLO, Concentra
"We hope open banking will bring FinTechs into the same realm of regulation as other financial institutions, to ensure everyone is operating on the same playing field and that the integrity of the entire system is protected."

Andrew Boyajian, TransferWise

Andrew Boyajian is the Head of Banking, North America, for TransferWise, an international money transfer service headquartered in the U.K.

For a FinTech like TransferWise to grow in the Canadian market, we needed to address both operational and regulatory issues. From our experience in other markets, we find Canadian payments infrastructure can be a bit guarded. And this is a challenge not only to us, but to the entire FinTech ecosystem. As an example, in Canada only a select group of financial institutions can participate in payment systems. But Canada also goes one step further. To be a direct clearer, the current rules require financial institutions to handle a specified percentage of the gross payment volume in Canada. While this is slated to change, it can limit the system to a few big banks and financial institutions. For a company whose primary role is to provide payment services to customers, this is a challenge. First, we need to find a bank that's willing to actually onboard us as a customer. And second, we're going to rely on that banking relationship as part of our business continuity.

See:  Big Tech takes aim at the low-profit retail-banking industry

Fortunately, we've seen some progress overseas with central banks becoming more open to including non-traditional financial institutions in payment systems. TransferWise was one of the first non-banks in the U.K. to hold a settlement account with the Bank of England, which supported our direct participation in the Faster Payments Service. And more recently we learned that the Bank of England is considering even broader access rights for non-banks, in terms of holding deposits. We're seeing some progress in Canada, too, where Payments Canada is considering roles like associate memberships in the payment schemes, including the proposed real time rail. All of this movement is good, but until it's a reality there is an over-reliance on financial institutions to properly support FinTechs and their customers.

On the regulatory side, some laws and regulations are antiquated. In general, frameworks are written with the idea that businesses are physically present, with face-to-face settings for their customers. Unfortunately, we don't always see policymakers thinking about how to modernize these regimes for digital companies. But when they do look to modernize frameworks, it's important that they do so in a way that is technology agnostic. So, instead of references to specific file types, ".pdfs" as an example, we encourage policymakers and regulators to think about principles that transcend today's technology to future-proof them as much as possible.

One example of regulation that is already changing for the better is the move to safeguard customer funds held by payment service providers. It's a protection that doesn't currently exist for Canadian consumers. If you hold a balance with a FinTech, there isn't a live regulatory framework to ensure that the balance is protected, set aside, and guaranteed for the consumer. It's in a similar vein to CDIC or provincial schemes to protect deposits at financial institutions. Fortunately, the Department of Finance, as part of their overhaul of the retail payment system, saw this gap and is taking steps to put in place safeguarding methodology for Canadian consumers. It will mean protection and transparency for consumers, so they can know they're getting the same level of service from FinTech providers as they are with banks.

Often banks or regulators may feel that money transmitters, payment service providers, or FinTechs pose a higher risk for money laundering. But if we think about the topics of money laundering or financing of terrorism, those can occur through any channels — whether it's a FinTech or a bank. So, we don't think the argument of higher AML risks is a reason to exclude FinTechs from direct access to payment systems. The challenges in addressing AML are the same for FinTechs as for banks — laws do not really differentiate between the type of provider.

See: Inflection point:Seven transformative shifts in US retail banking

We can see more validity in the argument that keeping a smaller number of entities with that clearing access could promote stability. Generally, a regulator should be thinking about sound capitalization or business models and then the operational risk policies that entities have. Those concepts are broad and universally applicable. If one institution or entity is capable of meeting them in the same fashion that a defined depository financial institution is, we really don't see the difference and need to create a division in access rights between the two.

In the U.K., while TransferWise has been in a position where we have advised policy makers relating to the implementation of open banking deriving from PSD2, we have instead focused more on transparency in fees. That said, we can certainly see areas where there are benefits. For example, with any payment method other than payment cards — like direct debit — there is quite a bit of information that could be obtained about a customer to help inform a merchant whether or not those funds are actually going to settle, as well as the overall risk profile of the individual with whom they're engaged in business. One of the benefits that I can see in open banking is the ability for consumers to share that information in a standardized way.

Some technology already exists through a screen-scraping service, where a consumer might choose to enter an online bank ID and password in a third-party application. That application essentially logs in to that customer's online bank account and scrapes the screen to obtain this data and then provides that data back to a platform. But that's brittle. If a bank decides to change its interface or implement two-factor authentication, for example, that could easily break the service. Also, depending on the bank, that could be a violation of the terms of use for the account because the account owner has granted access or authorization to a third party. Open banking can be a way to simplify these protocols and allow that same data set to be universally applied. And, more importantly, it gives consumers an active role in deciding with whom and how to share that information.

In today's world, where digital information is increasingly being passed through digital channels, cybersecurity is an area that we need to deal with. And the payments industry saw that with payment cards — as things began to move from point-of-sale to card-not-present, the idea of security and how these payment instruments are being authenticated and validated became important. It's a matter of the market adapting to understand how data is being stored and transmitted, identifying where the vulnerabilities are, and knowing that responsibility is not housed within any particular provider or role in the payment chain. Instead, it's universal.

See: How Jack Ma’s $290b SME credit engine is changing Chinese banking

Whether the industry is using cloud services or their own infrastructure, they're all susceptible to possible attacks by any type of bad actor. That's not something that's exclusive to a FinTech. So, all entities need to have robust plans for fraud, cybersecurity, and data protection. Meanwhile, regulators should understand that these aren't always challenges defined by entity type, but rather by entity preparedness. A concept like, "We're a known bank, we've been around for hundreds of years and therefore we're better equipped," doesn't necessarily make sense. Instead, it comes down to the contents and adherence to risk policies, and the importance that institutions give to cybersecurity.

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NCFA Jan 2018 resize - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Canadian Securities Regulators Publish Additional Guidance for Facilitating Crypto Asset Trading

CSA |  Jan 16, 2020

CSA logo - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over?

Montreal - The Canadian Securities Administrators (CSA) today published Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets, to help these entities to determine situations where securities legislation may or may not apply.

“The evolving landscape of the industry prompts us to clarify our regulatory framework so as to better support fintech businesses seeking to offer innovative products, services and applications in Canada,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “As we continue to consider the comments and responses to the consultation we launched last year, the staff notice published today will help platform operators to determine whether their activities are subject to securities legislation.”

The notice describes situations where securities legislation will and will not apply. For example, securities legislation may apply to platforms that facilitate the buying and selling of crypto assets that are commodities, because the user’s contractual right to the crypto asset may itself constitute a derivative, a security or both.

The relevant determination will depend on the facts and circumstances, including the obligations and intention to provide immediate delivery of the crypto asset. The notice provides guidance on what constitutes immediate delivery, together with a detailed example of a situation where securities legislation does not apply.

See:  IIROC Announces Crypto-Asset Working Group Members

The CSA and the Investment Industry Regulatory Organization of Canada (IIROC) continue to review the comments and responses to Joint CSA/IIROC Consultation Paper 21-402 Proposed Framework for Crypto-Asset Trading Platforms. We anticipate publishing a summary of comments and responses along with guidance on the regulatory framework applicable to crypto-asset trading platforms that are subject to securities legislation later this year.

CSA Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets is available on jurisdictions’ websites.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co- ordinates and harmonizes regulation for the Canadian capital markets.

For Investor inquiries, please refer to your respective securities regulator. You can contact them here

For media inquiries, please refer to the list of provincial and territorial representatives below or contact us at media@acvm-csa.ca:

View release here

Download CSA Staff Notice 21-327Guidance on the Application of Securities Legislationto Entities Facilitating the Trading of CryptoAssets


NCFA Jan 2018 resize - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Facebook is banning deepfake videos

Vox Recode |

deepfake Zuckerberg - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over?Facebook’s new rules will still allow controversial fake videos like the one of Nancy Pelosi that made her appear to be drunk.

Facebook announced late Monday that it would ban “deepfakes,” which are AI-manipulated videos that distort reality, often simulating real people in fake situations.

The social media giant announced the changes in a company executive blog post, saying it will remove deepfakes and other types of heavily manipulated media from its platform.

Specifically, the company laid out two main criteria for removing content under the new rules.

The first is that the company will remove content posted on Facebook if has been edited in ways that would “likely mislead someone into thinking a subject of the video said words that they did not actually say,” according to the post written by Monika Bickert, Facebook’s vice president of global policy management. Secondly, the platform will ban media if it’s the product of AI or machine learning that “merges, replaces, or superimposes content onto a video, making it appear to be authentic.”

Facebook came under fire last year for allowing a manipulated video of Speaker Nancy Pelosi that made it appear as though she was drunk by altering her speech to slur her words. At the time, Facebook said the video went through its fact-checking process, which does not require content to be true to be allowed on the platform. The company said it displayed a note with additional context about the video, telling users that it was false.

See:  Even Facebook’s Libra can’t escape the fintech establishment

Under its new rules, Facebook told Recode it still would not take down the Pelosi video, saying that it does not meet the standards of the new policy.

“Only videos generated by artificial intelligence to depict people saying fictional things will be taken down. Edited or clipped videos will continue to be subject to our fact-checking program. In the case of the Pelosi video, once it was rated false, we reduced its distribution,” the spokesperson told Recode.

Whether videos are deepfakes or not, they’re all subject to Facebook’s fact-checking system. If content is proven to be false, it can be flagged with a note labeling the content as such, and Facebook will deprioritize it in its News Feed.

In an email, Omer Ben-Ami, the co-founder of Canny AI (the Israeli advertising startup that last year helped artists produce a viral deepfake of Zuckerberg on Instagram, which Facebook opted to keep up) said Facebook’s new policy seemed “reasonable.” However, he cautioned that his company and others, “use this technology for legitimate reasons, mainly for personalization and localization of content.”

He said it was unclear why the policy only applies to content manipulated by artificial intelligence.

Overall, there are some exceptions to Facebook’s new rules: They don’t apply to videos that are parody or satire, nor do they ban videos edited “solely to omit or change the order of words” someone is saying.

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NCFA Jan 2018 resize - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Goldman Sachs, the 150-year-old investment bank, is staking its future on a mobile app

CNBC | Hugh Son | Jan 13, 2020

Marcus app - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over?Key Points
  • When Goldman Sachs released a long-awaited app for customers of its Marcus consumer bank last week, it did so with little fanfare or hype.
  • But the app will one day serve as the bank’s storefront and one-stop shop for an array of digital banking services, according to Adam Dell, a Goldman Sachs partner and head of product at Marcus.
  • “There are two kinds of incumbent banks,” Dell told the audience at a financial conference in June. “There are banks that are screwed, and there are banks that don’t know they’re screwed.”

When Goldman Sachs released a long-awaited app for customers of its Marcus consumer bank last week, it did so with little fanfare or hype.

Unlike the intense attention on its last retail product, the Apple Card, the launch of the bank’s Marcus app was heralded by little more than a smattering of user reviews.

See:  JPMorgan has a plan to help Amazon and Airbnb look more like banks

But the app may prove to be far more important to Goldman than its credit card partnership with Apple. That’s because the portal, which today lets customers check balances and set up recurring transactions, will one day serve as the bank’s storefront and one-stop shop for an array of digital banking services, according to Adam Dell, a Goldman Sachs partner and head of product at Marcus.

“Over time, our ambition is to extend the capabilities of the Marcus app and have that be the centerpiece of our consumer-facing experience,” Dell said in an exclusive interview.

The app comes at a crucial time for Goldman. Ahead of the bank’s first-ever investor day later this month and earnings report this week, shareholders are eager to hear about how 3-year-old Marcus will drive revenue growth. Last week, Goldman, which has served corporations, heads of state and rich individuals for most of its 150-year history, changed its reporting lines to give its retail operations a stand-alone division for the first time.

Goldman executives like Dell – an entrepreneur and brother of billionaire Michael Dell who joined Goldman in 2018 after selling his start-up to the bank for $100 million – have made no secret of their intention to beat big retail banks at their own game. That means expanding Marcus from its two products – savings and personal loans – to potentially include wealth management, mortgages, car loans, insurance and cards beyond the Apple Card.

See:  JP Morgan is rolling out the first US bank-backed cryptocurrency to transform payments business

Dell, who is a part of a recent wave of outsiders to join Goldman at the senior-most partner level, said the firm spent much of last year planning, building and testing the app with hundreds of employees. The development team was led by Dell and former employees of Clarity Money, the personal finance start-up that Goldman acquired.

“Our aspiration is very clear: We want to build the best digital banking experience that any customer can have,” Dell said. “As I think about the competitive landscape of the incumbent consumer banks, I think there’s enormous opportunity for us to differentiate ourselves with great digital products.”

Perhaps more than at any time in decades, bank customers are up for grabs as consumer preferences evolve, driven by slick apps from tech firms like Uber. And unlike tech giants like Google and fintech competitors like Chime, Goldman doesn’t have to partner with a bank to offer services – it became a bank holding company in 2008.

But as last week’s disclosure showed, Goldman’s retail business is tiny compared with rivals. High expenses as the company ramped up investments in Marcus and the Apple Card meant the business generated a fraction of the profit of the bank’s other, mature lines. Marcus has collected about $55 billion in deposits and made $5 billion in loans, a pittance compared with the more than $1 trillion in deposits and $900 billion in loans J.P. Morgan Chase and Bank of America each have.

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NCFA Jan 2018 resize - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech World

Fortune | Rey Mashayekhi | Jan 14, 2020

Visa acquires plaid - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over?In late 2018, payments giants Visa and Mastercard both invested in fintech startup Plaid through a $250 million funding round that valued San Francisco-based firm at an impressive $2.65 billion.

Described as “strategic investments,” the two financial services heavyweights sought not only to provide Plaid with financial backing, but also to leverage the fintech firm’s sprawling technological capabilities to improve their own services.

See: Visa R&D Arm Develops a Blockchain System That Could Replace Financial Data Aggregators

“We’re really excited about working with [Plaid] to enhance payment experiences globally,”

Bill Sheedy, executive vice president of Visa’s strategy group, told Fortune at the time.

With Plaid’s APIs (application programming interfaces), Visa could potentially improve the customer experience via everything from fraud detection to real-time account balance verification—services that “reduce the friction around financial transactions,” as Sheedy put it.

A little over a year later, Visa has decided to come back for the whole thing.

Whether it beat its great rival Mastercard to the punch, or saw a deal that its East Coast rival did not see, is as yet unclear. But on Monday, Visa announced that it has agreed to acquire a 100% stake in Plaid in a deal valued at a whopping $5.3 billion (twice the firm’s late-2018 private valuation).

The transaction sees Visa snap up one of the more impressive growth stories in the ever-expanding realm of financial technology. Since launching in 2013, Plaid has made itself an indispensable piece of the fintech ecosystem—a company with the technological capabilities to connect one in four people with a U.S. bank account to thousands of apps and services, from Venmo to Robinhood, from Chime to Acorns.

Plaid likes to describe itself as the “plumbing” that makes the increasingly tech-enabled financial services world go round, a claim justified by the company’s already sizable reach. Given the eye-watering sum that Visa is prepared to fork over—not to mention the bullish noises coming out of the company’s C-suite on Monday afternoon—

it’s clear that the payments behemoth believes it is picking up an asset that will help it “capitalize on the fintech-driven evolution,” as Visa CEO Al Kelly put it.

“Fintechs are clearly reshaping financial services, and Plaid is unquestionably the leader in this space,” Visa president Ryan McInerney told Fortune on Monday.

The deal is about expanding Visa’s services beyond its bread-and-butter, debit and credit card solutions and into a “broader set of money-movement services,” as McInerney described it.

See:  Visa Makes Its Second Investment Into a Crypto Startup

While Visa may have 3.4 billion debit card holders globally, the acquisition of Plaid—a company that holds the keys to countless fintech services that promise to increasingly shift online the way that people move and spend their money—provides the credit card giant with access to “new products and services in a higher-growth market than we are in today,” McInerney said.

According to EY, 75% of the global consumers accessed a fintech application for money transfers and payments last year, compared to only 18% in 2015. “It’s something that positions Visa for the next decade and beyond,” McInerney added.

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NCFA Jan 2018 resize - FT Partners Report (Jan 2020):  The Rise of Challenger Banks: Are the Apps Taking Over? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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