Your Monday morning brainteaser.
What were some of the most important things that happened in the payments and commerce world last week?
Something related to security and hacking? Or MasterCard and tokens?
With so much data repelling through cyberspace, it is unsurprising that it all sort of blurs together, especially after the weekends are over.
So, to start your Monday on the right foot, here are four of the big things from last week that might drive discussion and possibly inform decisions this week.
Among digital users, PayPal still has a lot of sway.
A new survey released last week by CMB indicates that among U.S. adults who described themselves as “likely mobile wallet adopters,” 71 percent identified PayPal as their preferred brand. That both put PayPal out in front and gave it the largest margin of difference between it and its nearest competitor. Among likely mobile wallets users, 55 percent noted a preference for Apple Pay, 49 percent indicated a preference for Amazon and 48 percent selected Google Wallet.
The study also showed a general surge in mobile wallet use and interest.
Among respondents, familiarity and usage have doubled since 2013 — 15 percent of the respondents have used a mobile wallet in the past six months and an additional 22 percent are likely to use it in the coming six months.
After 131 years in business, NCR looks increasingly destined for sale.
Shareholders have been demanding the sale as revenues declined 3 percent year over year to $1.48 billion.
The Duluth-based company is currently valued at around $5 billion. Though initially famous for the mechanical typewriter in 1884, not to mention cash registers, the firm is best known for one core product today: ATMs.
Blackstone and Carlyle, the world’s two largest private equity firms, are reportedly joining forces to acquire NCR. The buyout is said to be more than $10 billion, including debt.
The next few weeks may see additional buyers; Apollo Global Management LLC and Thoma Bravo LLC both reportedly show interest.
In the last year, NCR stock has fallen 11 percent and was trading below where it was 10 years ago. The stock closed at $33.70 on Friday.
While the notion of top-shelf Goldman Sachs brand pursuing the “average Joe” borrower with $15,000-$20,000 loans may seem surprising at first glance, there is probably nothing all that surprising about Goldman stepping into an $840 billion (and growing) a year industry.
The move is being led by ex-Discover executive Harit Talwar, who joined at Goldman Sachs last month.
Reporting in the The New York Times suggested that Goldman Sachs believes it has an edge in lending to smaller borrowers over traditional banks, which have to deal with costs of maintaining an extensive network of brick-and-mortar locations and services.
“Retail banks are institutions. Old. Established. Global… And in danger of becoming extinct. Today’s competitive landscape in banking is far removed from what one would have seen just 10 years ago,” stated a recent report by Oracle’s financial services unit. “No longer do retail banks simply vie for customers against other retail banks. Instead, we are witnessing an influx of new, tech-savvy, digital competitors – FinTechs – all eager for a piece of this lucrative financial pie.”
However, getting a slice of that pie may shape up to be a little more complicated for Goldman than showing up at a table that is already getting crowded. As our Alternative Lending Tracker indicates, lots of players from all over financial services and tech are trying to reinvent this space.
Also, though consumers are increasingly looking to alternative lenders, it is not clear that there is a strong preference emerging, or at least one strong enough to drown out lasting concerns. A Javelin research report found that 69 percent of customers thought that banks have a data security edge over online transactions, while 60 percent preferred to visit a physical location for answers to their questions.
Despite the fact that the unbanked (or underbanked/non-traditionally banked) represent literally billions of people all over the world – many of us in the first world tend to have an image of their financial lives that is inaccurate, bordering on actually being mythological.
The No. 1 myth of the unbanked, according to research by Amit Jain, principal at the Global Payments Strategy Knowledge Center with MasterCard Advisors? The idea that the unbanked lead static financial lives — or simply do not have them at all, somehow.
The problem with this view, according to Jain, is a gigantic missed opportunity for all parties involved with any side of a potential transaction.
“The day to-day-strategy,” Jain writes, “of juggling income and spend probably makes the unbanked even more active managers than the banked” and given that constant flow and management of money “the unbanked own and use several financial products.”
Jain also noted that in Nigeria, the unbanked account for more than $50 billion in customer expenditures on an annual basis; in Mexico, unbanked consumers were responsible for expenditures of $125 billion to $175 billion.
And the tendency to view the underbanked as static, Jain noted, leads to the second main error and myth of the unbanked: They are all somehow similar to each other.
“[You would] be hard-pressed to find a financial institution that has not developed segmentation for the banked. There is the misconception in place that unbanked have similar needs.”
He further noted that office workers, day worker and agricultural workers all have very different needs – and one-size-fits-all solutions to the problem are doomed out the door.
So, to recap, what to pay attention to this week? PayPal — since they’re not only popular with consumers but inching closer to their IPO, Alternative Finance and Financial Inclusion, since it’s what’s garnering a lot of investments and focus and NCR, which just might end up with a new owner (and business plan) pretty soon.
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