Fintechs that add physical banks go global

There are certain trends in payments and in financial services in general that are undeniably global in scope.

Tap cards to pay at checkout. Cardless transactions, of course. Working from home…and getting just about everything delivered to the door.

Add to that list: FinTechs are becoming banks. Quickly, the old fashioned way – by buying them.

We note that this is becoming a global phenomenon, where digital-only newcomers are finding a foothold, tapping into the customer and asset bases of traditional players.

Case in point: Indonesian peer-to-peer lender Amartha is in talks to acquire 70% of local bank PT Bank Victoria Syariah, as reported in this space this week.

The rumored deal would come on the heels of FinTech iFAST, a Singapore-based wealth management firm, acquiring a majority stake in a UK bank, and small Singaporean bank Singapura Finance in partnership with FinTech MatchMove. And SoFi Technologies bought Golden Pacific Bank.

The United States and beyond

If the moves beyond the US are any indication, a number of digital players would be keen to reap the benefits of building an omnichannel consumer roadmap. Buying all or part of a traditional bank gives the digital business at least some access to charters and licenses to offer much more than prepaid cards or other digital “wrapping” for products and services financial. By already ticking the regulatory boxes, these FinTechs can begin to offer a continuum of traditional account-focused offerings spanning traditional lending and depository activities.

For physical businesses, there is the fact that they must adapt their operations to meet the digital expectations of their customers. Banks can no longer expect every card, every account to be stand-alone or cookie-cutter…instead, they must be tailored to the needs of every user.

Read also: JPMorgan’s UK digital bank launches high-interest savings

The acquisition of Radius Bancorp by LendingClub, completed early last year, may be one of the most visible examples, in the United States, of what so far, measured over the past few months, represents an international groundswell.

By purchasing Radius, the combined businesses have the ability to launch a full range of banking services delivered in branchless conduits (read, digital). This platform model allows for a bit of cross-pollination, where advanced technologies can facilitate the aforementioned tailoring of offers, and where analytics help put those offers into context.

We’re also seeing some of the hottest names in cross-banking channels so to speak (not buying the digital arm, but building it). For example, as reported this week, JPMorgan Chase & Co. is offering a 1.5% interest rate to customers of savings accounts at its digital bank in the UK.

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