Digital’s continuing rise in remittances; How generative AI can be put to work in banking; Discrepancy in front- and back-office of banks in the implementation of AI solutions;
Hi Fintech Fans, our agenda for this edition of Fintech Wrap Up below:
Insights & Reports:
1️⃣ Segmenting the world of wallets
2️⃣ Digital’s continuing rise in remittances
3️⃣ The Forrester Wave: Merchant Payment Providers, Q1 2024
4️⃣ Discrepancy in front- and back-office of banks in the implementation of AI solutions
5️⃣ How generative AI can be put to work in banking
6️⃣ Payments from a merchant’s perspective
Curated News:
1️⃣ Nuvei in advanced talks with private-equity firm Advent
2️⃣ Robinhood launches to UK customers
3️⃣ Digital bank Monzo in talks to sell stake to Singaporean state fund GIC
TL;DR:
Insights & Reports Analysis:
- Digital Wallet Segmentation: The concept of digital wallets encompasses a broad spectrum, ranging from basic payment facilitators to comprehensive super apps like Uber, necessitating a nuanced understanding of various wallet archetypes and their underlying business models.
- Digital Remittances Surge: The growth of digital remittances, long perceived as sluggish, has gained momentum, with players like Wise and Remitly surpassing traditional giants like Western Union in digital revenue, reflecting shifting consumer preferences and evolving market dynamics.
- Forrester’s Merchant Payment Provider Evaluation: Forrester’s analysis of merchant payment providers underscores the evolving role of these entities, beyond transaction processing, towards offering strategic guidance and tailored payment experiences to merchants, emphasizing the importance of domain expertise and adaptability.
- Discrepancy in AI Implementation: Capgemini’s CXO survey reveals a disparity in investment allocation between front-end and back-end AI initiatives within banks, highlighting a predominant focus on customer-facing enhancements over foundational infrastructure upgrades, necessitating a shift towards holistic investment strategies.
- Generative AI in Banking: Accenture explores the transformative potential of generative AI across banking functions, advocating for a balanced approach that prioritizes top-down support, regulatory compliance, and multi-speed implementation to maximize business value and foster innovation.
- Merchant Payment Challenges: Insights from the Merchant Payments Ecosystem (MPE) and Arkwright Consulting highlight prevalent challenges faced by merchants, particularly regarding fraud prevention across in-store and online channels, emphasizing the need for robust payment security measures.
News Highlights:
- Nuvei Acquisition Talks: Canadian payments processor Nuvei, supported by Ryan Reynolds, is in advanced discussions with private-equity firm Advent International for a potential buyout, demonstrating significant developments in the fintech acquisition landscape.
- Robinhood’s Expansion: Robinhood, notorious for its involvement in the Gamestop saga, has expanded its services to the UK market, marking a significant step in its global expansion strategy despite previous setbacks.
- Monzo’s Stake Sale: Digital bank Monzo, which recently achieved a valuation exceeding £4 billion, is exploring the sale of an additional stake to Singapore’s sovereign wealth fund GIC, indicating continued interest from institutional investors in fintech ventures.
Insights & Reports
Segmenting the world of wallets
The term digital wallet is applied to a bewildering array of different solutions — from single-function wallets that do nothing more than enable a particular type of payment, to true super apps which bring together a wide range of capabilities and services, like taxi hailing, food delivery, cinema tickets, and even wealth management within one easy customer interface.
So, to begin with, it’s worth segmenting the main wallet categories — or archetypes — and the business models that underpin them.
👉 1 common denominator
The one thing that all wallets have in common is payments. Indeed, a typical definition of a digital wallet is “a storage place of secure information necessary to authenticate a customer and initiate an authorization process to make a transaction to purchase goods and services”.
👉 2 main funding mechanisms
While every type of wallet enables some form of payment, there are two main funding mechanisms:
✅ Bank or card-connected wallets
This category includes simple pass-through wallets and more complex staged wallets, which store payment information relating to the customer’s connected payment card or bank account.
Digital’s continuing rise in remittances
The slow growth of digital remittances has been a strong and persistent narrative in the space for some time, and in 2023 we saw this gain notable momentum.
On digital revenues, not all players report sufficient information to accurately chart these, however those that do show the impact of different growth rates. Wise and Remitly both offer digital-only services to different consumer money transfers market segments, but Remitly’s slightly higher growth rates have seen the two companies converge around the same C2C revenues, all of which is digital.
Curated News
Nuvei in advanced talks with private-equity firm Advent
Canadian payments processor Nuvei, backed by celebrity entrepreneur Ryan Reynolds, is nearing a buyout deal.
Private-equity firm Advent International is in advanced talks with Nuvei for a transaction that could be announced soon, according to people familiar with the matter. The talks could still fall apart before a deal is reached.
