Nick did not have Venmo and I do not use Paypal. The amounts were small and odd and I had not got used to paying using my mobile banking app that was too complex to use. It was my first week as a student in the US and we were just settling a group lunch amongst a few friends. I had got so used to paying using 24*7*365 Unified Payment Interface (UPI), back home in India, there were times when I opened my wallet only to embarrassingly realize that there is no cash. So this was a unique challenge. In the end, we resolved it where I paid a friend who had both Venmo and Paypal that Nick had and paid him! …
By Nirvikar Jain on The Capital
In my last story, I spent some time trying to deconstruct traditional banks’ evolution and then looked at the changing business and technology landscape and established some core pillars that underscore the evolution of new age banking.
In the next set of articles, I will present my analysis of how this disruption is likely to affect various parts of the traditional banking ecosystem. I have divided my analysis into three different parts divided across Consumer Banking, Corporate Banking, and Small and Medium Enterprise Banking. …
Executive Summary
Build up the initial valuation parameters to understand the company’s direction.
To begin to value a fintech business, one must first assess the following characteristics about the company and its market:
- Market size: TAM, SAM, and SOM
- Pricing range and potential: What will one unit of product/service cost now and into the future for the target company and market?
- Market shares across different segments: Different areas of the business will grow differently,
- EV/EBITDA comparison: Looking at public valuation comparisons will provide an initial range of expectations for valuation multiples.
- EBITDA margin comparison: Especially for opaque private companies, a comparison of profitability margins for similar companies will give an indication of free cash flow generation for the target business. …
Fintech is a popular contemporary buzzword and many of its products touch our lives every day. A fintech simply refers to a company that operates in the financial services sector and leverages the power of technology to simplify, automate, and improve the delivery of financial services to end customers. Further, they can be classified into various sub-sectors including payments, investment management, crowdfunding, lending and borrowing, insurance, cross border remittances, and so on based on the specific segment that they are trying to service.
There were over 12,000 fintechs operating globally as of January 2019 (Crunchbase Dec 2018), who since 2013 have amassed total funding resources of well in excess of US$100 billion. In terms of the number of fintech startups, the US is the most active country, with India and the UK following. According to KPMG, global investment activity in fintechs exceeded $30 billion across 450 deals that took place in the first half of 2018 alone. …
New-age fintech challengers are chipping at “traditional banks” from all sides and slowly dismantling the protective walls built up by the incumbents over the past century. The banking and wider finance industry is facing these upstart digital banking innovation challengers across the spectrum of payments, cash, lending, money transfer, investment management, and lending, among other areas.
Some examples of how the incumbents are being usurped include:
- Credit card/online payments being replaced by solutions from Apple, Amazon, Google, Paytm, Wechat, and Alipay.
- Digital wallets replacing cash/cards and the need to visit ATMs.
- Real-time payment platforms and systems removing the need to use cheques or make online payments. …
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