Partnerships / Acquisitions

FinTech And FIs, Paired And Global, Sandbox By Sandbox

A whopping $613 billion in cross-border B2B payments is nothing to sneeze at, and the Banking Circle buyout gives the nod to the international appeal of FI/FinTech partnerships. Plus, Brexit may have its challenges, but the EU is pressing ahead with sandboxes.

If you can't beat 'em, join 'em. Or rather, strike a pact with 'em, and look beyond your own borders.

It’s long been established that nimble tech startups (and not a few tech giants) are competing with traditional FIs to provide financial services. There are any number of incentives for larger traditional firms to take the leap into the digital realm, to work with APIs and to move beyond the burdens of legacy technology – especially as they eye international markets.

There’s a fundamental headwind in play, too, as the European Banking Authority (EBA) has said that banks have been a drag from their very structural issues, including not just older tech systems in place, but also bad loans that are on the books. According to the EBA, banks can be seen as falling into three categories when it comes to technology, amid them frontrunners, followers and those who are “reluctant” to change.

There is a wide recognition, though, that the European Union is aiming to bring to bear a draft law that in turn would accelerate FinTech efforts on the continent. The spur, of course, is Brexit, which has taken a dramatic turn as of this writing. As reported on Monday (July 9), the British government was in disarray following the resignations of top officials in charge of Brexit, as hard-liners, agitating for a “clean” break from the EU, battled with those who want a more measured approach.

Amid the broad strokes of the draft law is an indication that crowdfunding and blockchain efforts will help promote FinTech growth. Oversight would include how firms handle security issues and, among other wrinkles, cryptocurrencies. All of this comes, of course, as sandboxes continue to take shape, with more than a dozen of the 28 members having made the leap to such “playgrounds" (tongue firmly in cheek), which in turn allows for new financial products to be tested.

With an eye toward bringing money (and services) digitally around the globe, recent deal-making has focused on the remittances that are worth as much as $613 billion, per estimates from the World Bank. In a $300 million deal illustrative of the allure of B2B payments crossing borders, the investment firm EQT is buying Banking Circle from Denmark-based Saxo Bank. B2B is still the name of the game, though the combined entity will also look to branch out into B2B2C. Banking Circle, which provided real-time FX and open APIs in service of B2B payments, processes roughly 60 billion euros in payments annually, with a focus on digital rails. The deal is slated to close in the final quarter of this year.

In another deal highlighting bank and FinTech efforts done collaboratively, the banking software-as-a-service firm additive has said it is entering a partnership to give traditional financial services firms greater presence in wealth and asset management. The FinTech offers what has been billed as enhanced wealth management through its Digital Finance Suite, via the cloud, to partnering firms.



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