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Fintech A.M.: 4-1-2018

After reflection on 2017, what will be the defining topics for fintech in 2018?

With the summary lists on everything what happened in 2017 being drawn up in the coming weeks, one thing that sprung to mind was the position of tech companies in the M&A industry. We haven’t seen huge mergers like the one between LinkedIn and Microsoft in 2016, but the tech industry hasn’t been quiet. They’ve mostly focused on vertical integration over the last twelve months, taking over SMEs and start-ups in smaller-sized deals. We’ve observed this trend can benefit entrepreneurs in the start-up space, as providing or improving solutions within the value-chain can be a more interesting value proposition than building anJ entire company from scratch.

Another preferred and jointly profitable method of delivering improved services is by engaging in partnerships to improve current platforms or create new additional solutions. The payments sector in the US saw several of these successes in 2017, with Fifth Third, US Bank and TD Bank all capitalizing on their customers thirst for new solutions by launching partnerships with fintech firms. The joint offering satisfied the need for innovative solutions, while driving profit gains. According to Tim Spence from Fifth point, the new solutions contributed to the 86% year-on-year increase in fee incomes from payments and treasury management solutions. As banks are looking to become less reliant on interest rate based income, we can expect these type of partnerships to broaden in 2018.

Still plenty of gain in payments

In other payments related news, Analysys China released its 2017Q3 payments report. The report highlighted the staggering growth path of payments solutions in China.  The quarter ended with online B2C retail transactions worth a total of RMB 985.44 billion in the 2017Q3, a year-on-year growth of 39.1%. The market growth has also led to a fierce competition between Tmall.com, an independently operating Alibaba subsidiary, and JD.com. The companies’ combined output account for approximately 85% of the online retail transactions.

By Lars van den Enk, Research Analyst for Holland FinTech

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