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Sunday, February 05, 2023
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The Fintech Fix 14/12/2022

Welcome to The Fintech Fix, where we cover the biggest fintech stories of the working week. Whether it’s the next groundbreaking trend in crypto, or a new partnership that’s about to change the global economic landscape, this is the place to keep up with the breaking news of the future.

Location, Location, Location

Lockdown could not have ended soon enough for the fintech world, as a production line of the industry’s most ambitious companies move forward with their plans for national and international expansion.

SME banking services provider, Tide, ventured out of the UK and launched the Tide app in India. With their two solutions – the Tide Business Account and its RuPay-powered Tide Expense Card – the company aims to onboard half a million SMEs in India in the next two years. Small businesses who sign up for the business account will have access to contactless services and can use the Expense Card to withdraw cash for in-store purchases, as well as eCommerce and other payment options.

India is home to an astounding 64 million SMEs. Tide’s commitment to this market includes its goal to introduce “a large segment of this market into the formal economy,” said Oliver Prill, the CEO of Tide.

In the UK, Starling Bank has opened its fourth UK office in the city of Manchester. With teams in London, Cardiff, Southampton, and Dublin, this new edition promises the creation of 1000 fresh jobs – mainly in the fields of operations, software engineering, data science, cyber security and customer service.

The move is a strategic one for the neobank, as Manchester has been named the UK’s Top Digital Tech City in 2020, according to The Data City report, and nurtures a £5 billion digital ecosystem. This marks the end of an incredibly successful year for Starling, who have had their first year of profitability, reached their 3 million account milestone, and launched their BaaS offering, Engine.

Across the pond, in the state of Georgia, Access to Capital for Entrepreneurs Inc (ACE), a non-profit community lender, has received its largest grant of $3.75 million from Truist Foundation – in a joint effort to establish the Diverse, Equitable and Inclusive Small Business Capital strategy. Already a reliable lender to SMEs in Atlanta and North Georgia, the grant will be used to provide equitable loan capital for minority-owned businesses across three years. The grant will also be used to enforce job creation and infrastructure expansion in South Georgia.

“We are proud to partner with ACE and its work to eradicate barriers to entry for minority entrepreneurs, building a more equitable economy across Georgia,” said Lynette Bell, the President of Truist Foundation.

A Unique Year for the Neobank

As the previous stories have shown with Tide and Starling, neobanks have had a successful year, despite the economic downturn and funding dry spell felt overall in the financial and non-financial services sectors. In our increasingly digital world, this pattern is a testament to the neobanks stronghold on the current zeitgeist of real-time and online payments.

In an exclusive article for The Paytech Magazine we spoke to Alex Weber, the Chief Growth Officer of German favourite, N26, about the digital solutions offered by neobanks and what it takes to push that offering for the world stage. N26 has ambitious expansion plans, most notably defining territories in Eastern Europe and Brazil. Their exit from the U.S. and UK markets was not because of a lack of enthusiasm – N26 had half a million customer accounts in the States – but the expense of running multiple operations in different regions, with dissimilar payment habits from their locale. This has not stopped the bank’s global efforts, regrouping, I expect their absence from the Uk will be short-lived.

“Around the world, we still have a huge way to go, to reach any level of harmonisation,” said Weber. “That’s a good vision to have. I would love to see more harmonisation, as we have in Europe, to allow truly global players in the industry. A lot of collaboration would be necessary; to enable new business models, as well.

Adjacent to neobanks, we have card payment innovators like Curve, who have recently secured a deal for its first $1 billion in loans with a facility provided by Credit Suisse. This astronomical investment will be used to scale the company’s lending business, Curve Flex, across the UK, the EU, and the United States. As a way to nurture customer management, Curve Flex allows users to split transactions they made through Curve, using any of their included payment cards, into monthly instalments.

The product has been available in the UK with the product Swipe Now to Pay Later (‘SNPL’), the funding will be used to further offer access to direct lines of credit before a transaction and refinancing previous credit lines. The curve is diving head-first into the BNPL market, planning to launch an offering in 2023.

A Silver-lining for Hospitality

With the global recession and the limitations in funding avenues, 2022 has not been kind to the hospitality industry. With needs becoming more orientated around digital payment options and accessibility, fintechs could provide a much-needed solution to reinvigorate the sector.

Fintech platform, Adyen, has continued in its partnership with KodyPay to further support hospitality businesses by providing seamless payments, data analytics and frictionless finance capabilities. The two worked previously on a successful QR code system in 2021, which has now helped KodyPay exceed $100 million annualised gross payment volume in only 5 months. With Adyen’s new embedded financial products, the new venture aims to provide better access to capital for small business owners, and autonomy over loans and customer insights.

“To share the same values and vision with a business partner is of the highest importance to us at KodyPay, it’s essential for building a brand and a solution that propel us forwards and onto our ambitious growth journey,” said Yoyo Chang, the Founder and CEO at KodyPay.

Mirroring the success of neobanks recently, FintechOS has also announced its revenue growth, with its insurance revenue increasing by 300% YoY. The acceleration is thanks to the company’s portfolio of industry-leading clients and partners, including Admiral Insurance Group, Howden Group, and Vienna Insurance Group.

With their focus on no-code accessibility and data-driven personalisation, FintechOS has proven popular with insurers for their goal to grow their share of wallet and decrease cost ratios. Operating primarily in the UK, the company’s 2023 resolution involves building its presence in the U.S’s gigantic insurance market.

“The insurance industry is undergoing a rapid transformation. Timelines are compressing, customer expectations are rising, and competition – especially from digital-first upstarts – is fierce,” said Teo Blidarus, the CEO and Co-Founder at FintechOS.

That concludes your weekly Fintech Fix! Stay tuned for another round of big fintech buzz, right here at FF News.

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