Wall Street is buying into fintechs; ASX small caps up 60pc in six months
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Fintechs may still be a while away from overtaking the major financial institutions but guess who’s taking notice of them?
Since January 2018, US banks have conducted 69 deals led by major investment banks Goldman Sachs, Citi and JP Morgan. But each of the banks have their own specific focus.
Goldman Sachs is focusing on real estate, data analytics and payments. In addition to financing provided to scale up companies, it now has its own consumer lending platform, Marcus.
Marcus’ lead generation uses Even Financial’s platform – a company it invested in last year.
Citi is focusing on bank infrastructure with investments in blockchain, capital markets and payments start ups. JP Morgan is looking at regtech, lending, accounting and capital markets.
Among all US banks, the two biggest fintech subsectors, by number of deals, were payments and settlement and capital markets.
What about the Swiss banks?
The fintech scene is certainly quieter, but that is changing. Swiss fintech Numbrs Personal Finance is now a $1 billion unicorn.
While the banks have not invested, notable alumni from major US banks have invested including ex-Deutsche CEO Josef Ackermann.
Numbrs aims to break even in two years and enter Britain next year. Fintechs such as these may gain ground in the low-tax, bank-secrecy ridden financial hub.
A recent survey by the Swiss National Bank showed that on one hand the banks see digitisation as a threat and are well below their digitisation targets.
As for ASX listed fintechs, they are performing well. Collectively they are up 60 per cent in six months.
The best performer of these has got Chinese banks on board, not as investors but as partners. Namely Fintech Chain (ASX:FTC), which is up 243 per cent this year.
Buy now, pay later stocks have surged, with exception of Splitit (ASX:SPT). The successful July IPO of Sezzle (ASX:SZL) showed investor appetite for the sector has not dried up.
Speaking of payment specialists, EML Payments (ASX:EML) has also surged in six months and is up 131 per cent.
Consumer finance platform Wisr (ASX:WZR) has surged too in recent months as the larger institutions tightened their requirements in the aftermath of the Hayne Royal Commission.
|Code||Name||Price (2 Sep)||Market Cap||6M % Return|
|FTC||FINTECH CHAIN LTD||0.12||$81.3M||243|
|EML||EML PAYMENTS LTD||3.82||$941.9M||126|
|Z1P||ZIP CO LTD||3.43||$1.2B||123|
|IP1||INTEGRATED PAYMENT TECHNOLOGIES||0.03||$9.3M||80|
|APT||AFTERPAY TOUCH GROUP LTD||31.38||$7.9B||55|
|RZI||RAIZ INVEST LTD||1.04||$64.3M||40|
|MNY||MONEY3 CORP LTD||2.28||$404.3M||12|
|CCA||CHANGE FINANCIAL LTD||0.06||$5.7M||-3|
|MNW||MINT PAYMENTS LTD||0.025||$15.7M||0|
|PIL||PEPPERMINT INNOVATION LTD||0.008||$8.9M||-22|
|SPT||SPLITIT PAYMENTS LTD||0.50||$126.1M||-45|