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noun ​/ˈfinˌtek/

computer programs and other technology
used to support or enable banking and financial services.

“Fintech is one of the fastest-growing areas
for venture capitalists.” 

The fintech r(e)volution

Perhaps, reflecting speculation by some astute analysts, at least some of the momentum behind the surge of fintechs in recent times has spewed from the financial crisis of 2008. Techies, millennials—and not least of all, voters—around the world were persuaded that incompetent, self-serving, and myopic elites on Wall Street and elsewhere in the financial industry were vulnerable to really smart, strategically focused, tech-driven competition. 

But many more factors are driving the fintech (r)evolution. Over the past decade the surge of big and smaller technology companies and the ascendency of artificial intelligence (AI) have fed obvious opportunities beckoning from $17 trillion in cash and check spending by consumers and $20 trillion by businesses. The potential of fintech lies in converting those opportunities to digital. Adding to their momentum together is the fact that about 1.7 billion people globally lack access to financial services and less than 50 percent of global consumer spending currently is digital.

In this context, our exemplar of the fintech (r)evolution is not a stellar startup but rather a hugely successful financial and technology driver and strategic champion of the global fintech community—Visa. Not unlike big tech, the fact that Visa is up and running at scale around the world gives it a strategic platform advantage, especially with a strategy that includes partnering with and investing in fintechs to enable them to leverage that scale.


Continued from the emailed newsletter

“Power to the People,” the political slogan in the 1960s and 70s, expressed the mission of individuals taking control away from their political institutions. Fast forward about half a century and we hear the call for a radical shift in financial power from traditional financial institutions to consumers—the “Amazonization” of financial services—from none other than a spokesperson for traditional European financial services, the finance minister of Luxembourg. This extraordinary message also challenged European banks to either disrupt and reinvent themselves or be disrupted.


With survival at stake, the strategic disruption would consist of innovative platforms for the digitization of all components of banking. Operating like megatech companies, megabanks already have begun that radical transition to empowerment of consumers with online platforms. JP Morgan Chase, for example, spends over $10 billion a year on new technology. JP Morgan’s investment is part of a trend. In 2019 alone there have been $75 billion in mergers of digital payments businesses!


Every second of every day and night, seemingly at an ever-accelerating pace, fintechs are transforming the global financial ecosystem, changing the way we all make payments, invest, manage our money, receive loans, and more. Daily news stories about the fintech community usually focus on hot innovative tech startups carving out new niches in digital payments or making strategic deals with big tech or big finance. Largely unnoticed for many years has been Visa’s rather remarkable and deepening commitment to digital payment innovation.


This summer, in the aftermath of the highly controversial Libra announcement, Visa arguably made an even more significant and strategic announcement about expansion of its Fintech Fast Track program in the U.S. Fast Track aims to speed up and facilitate the process of fintech startups and other companies integrating with and leveraging the capabilities and security of VisaNet, Visa’s global payment network.


Already available in Europe, Africa, the Middle East, Latin America and the Asia-Pacific region, and yet largely unnoticed, Visa’s Fast Track program has successfully helped Visa propel the growth of the fintech industry around the world. Its recent move would substantially strengthen the Visa U.S. network of partners. And as these fintech startups scale more quickly, Visa’s global payment network grows and strengthens, including all of Visa’s already established collaborations. 


With or without Libra (which Visa does not need), Visa will provide a catalyst and pathway for fintech across the globe as they accelerate the growth of digital payments and creating better ways to move digital money everywhere. Part of the genius of this strategy is that the Visa Fast Track program also leverages the venture capital pouring into fintechs. Just last year, venture capital-backed fintechs raised a record $39.6 billion from investors globally, up 120% from the previous year.


Fast Track is not simply a passive beneficiary of this VC financing trend. As part of the launch of Fast Track in the U.S., Visa is working with a who’s-who of leading venture capital firms to automatically qualify innovative fintech companies in their portfolios for the U.S. Fast Track program. Fintechs mostly start up as global companies, especially if their technology is sufficiently innovative to attract business interest from around the world. As Visa partners with these fintechs, companies around the world know that fintech startups have the backing and support of Visa’s speed, security and scale. The fact that Visa also actively invests in the cutting-edge technology of fintech startups jumpstarts their international marketing.  


Lab Notes, the St. James Faith Lab newsletter, aims to provide an understanding of global fintech trends because it involves the pocketbooks of billions of people. And for these pocketbooks fintech provides the “last mile” —digital solutions that bring people on every continent and place in society into the financial and increasingly e-commerce systems that they depend on for survival, prosperity, and everyday goods and services. 


For example, more than 2 billion people around the world plan to use digital wallets this year. In emerging markets, this means that consumers will become connected to an app, for example to take advantage of e-commerce. This digital wallet becomes their payment vehicle for countless merchants, including on-demand delivery and rideshare services. Visa has partnered with numerous fintech companies in Latin America, Africa and the Asia-Pacific region to reach both consumers and merchants. 


In the U.S.,, Visa is partnering with companies like Marqeta, which has created and offers “virtual cards” that can be used by merchants for every kind of transaction, and Chime, whose Chime Visa debit card has more than 5 million users and is growing very rapidly. The keys to FDIC-insured Chime’s success in online banking are: millennials depositing their paychecks and getting two-day advances on their paychecks, paying no overdraft fees on up to $100 (SpotMe), no banking service fees, and customers have access to 38,000 ATMs. Visa also has invested in GreenDot and N26 (a European fintech based in Germany that has started a U.S. subsidiary)—these are branchless banks appealing to a younger demographic. All of these competing banks will be targeting people who live from paycheck to paycheck and need to avoid overdraft and other banking fees.


Much to think about!

Tell us your thoughts.


The Rev. Canon Cindy Evans Voorhees


St. James Faith Lab

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