Fintechs Pose A Threat For Conventional Lenders - Read How

  • Global brands from Mercedes and Inc AMZN to IKEA and Walmart Inc WMT are migrating to software from tech startups from banking and credit to insurance services at the cost of the traditional lenders, banks, and financial institutions, Reuters reports.
  • The trend will worsen for the lenders by further pushing them away from the finance chain and data trove, the key to client preferences and behavior.
  • Some upstarts have procured licenses for regulated services like lending; they lack the scale and deep funding pools.
  • The report added that Stripe, the payments platform behind multiple sites with clients including Amazon and Alphabet Inc's GOOG GOOGL Google, was valued at $95 billion in March.
  • Affirm Holdings Inc AFRM bonded with Amazon to offer BNPL products, while Square Inc SQ, now worth $113 billion, aims to acquire BNPL firm Afterpay Ltd AFTPF for $29 billion.
  • Related ContentHow Affirm's Amazon Partnership Could Launch Stock Into High Orbit
  • Walmart launched a fintech startup with investment firm Ribbit Capital, while IKEA acquired a minority stake in BNPL firm Jifiti.
  • Automakers like Volkswagen AG's VWAGY Audi and  Tata Motors Ltd's TTM Jaguar Land Rover have tried embedding payment technology in their vehicles besides  Daimler AG's DMLRY Mercedes.
  • Shopify Inc SHOP, valued at $184 billion, has provided $2.3 billion in loans and usually reaches out to merchants to cater to their needs.
  • However, JPMorgan Chase & Co JPM had a consumer and community loan book worth $435 billion at June end.
  • Interestingly, the Bank for International Settlements warned watchdogs to control the growing influence of fintech firms. 
  • Still, Citigroup Inc C collaborated with Google on bank accounts, Goldman Sachs Group Inc GS is offering credit cards for Apple Inc AAPL, and JPMorgan is acquiring 75% of Volkswagen's payments business.
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