Dissenting Views on Recuperation Outlook: Expansion of Major Fintech; Unraveling the Hertz Stock Mishap, and Other Developments
In the rapidly evolving world of finance, big fintech players are increasingly opting for strategic partnerships with local firms to navigate the complexities of entering international markets. This approach offers significant advantages in scalability, regulatory navigation, and user acquisition.
Partnering with local firms provides fintech companies with access to existing customer bases and distribution networks, facilitating faster and more efficient user acquisition and funding. This local insight ensures products and services are tailored to market-specific needs, improving scalability and relevance.
Financial markets are heavily regulated, and entering a new jurisdiction requires navigating complex local rules. Collaborating with local partners who understand the regulatory environment accelerates compliance and reduces risks. For instance, jurisdictions with close regulatory dialogue and operational trust, like Malta, demonstrate how local partnerships can drive innovation while maintaining financial stability.
Partnerships with incumbent financial institutions or local fintechs enable rapid prototyping, testing, and deployment of new offerings. This agility helps fintechs stay competitive and adapt to market demands effectively. Through Banking as a Service (BaaS) models, fintechs integrate with local banks’ technology and regulatory frameworks without building infrastructure from scratch. This lowers entry barriers, ensures compliance, and accelerates time-to-market.
These strategic collaborations foster long-term ecosystem relationships that support scaling and innovation, providing staying power beyond initial launches. In summary, big fintech firms partner locally to harness on-the-ground knowledge, regulatory support, faster innovation cycles, and established infrastructure—making expansion more efficient, less risky, and more sustainable than launching independently in foreign markets.
Meanwhile, the economic crisis has posed unique challenges for various sectors, including homeowners, prospective buyers, renters, and landlords. However, the rise of fintech solutions and the shift in power from large institutions back to consumers is enabling more efficient and accessible financial services.
For example, in Brazil, where 60% of the population owns smartphones, and WhatsApp is installed on more than 90% of them, WhatsApp Pay was launched but was subsequently suspended for further review by Brazil's central bank. Despite the temporary setback, the potential for WhatsApp Pay in Brazil remains significant, given the country's large user base of 120 million WhatsApp users, second only to India.
WhatsApp is not only Brazilians' main means of texting, but it's also used by millions of small businesses to showcase their storefronts and inventory. In a country where COVID-19 has increased ecommerce sales by approximately 99% month-over-month, WhatsApp Pay could further bolster digital transactions and allow merchants to seamlessly accept payments.
The CARES Act protects consumers' credit by requiring lenders to report deferred payments as current. However, it's unclear how many of those deferred payments will actually become delinquencies or charge-offs. TransUnion recently began selling data to lenders that indicates which consumers are in deferment and for how long.
As supplemental unemployment benefits are slated to expire next month, there are concerns about a potential 'cliff' coming, particularly for renters. The economic crisis has also seen fintechs returning fees to consumers, changing existing industries and fueling the creation of entirely new categories of financial services.
In the world of finance, the pace of innovation is accelerating, and fintech firms are at the forefront of this change. By partnering locally, they are able to navigate the complexities of international markets, deliver relevant and scalable solutions, and drive the future of financial services.
[1] The Financial Brand. (2020, September 24). The Future of Fintech: Strategic Partnerships. Retrieved from https://thefinancialbrand.com/7250/fintech/future-fintech-strategic-partnerships/ [2] FinTech Magazine. (2019, October 17). How Malta is becoming the fintech hub of Europe. Retrieved from https://fintechmagazine.wixsite.com/fintechfocus/post/how-malta-is-becoming-the-fintech-hub-of-europe [3] Finextra. (2020, May 19). Fintech partnerships accelerate innovation and time-to-market. Retrieved from https://www.finextra.com/blogposting/18015/fintech-partnerships-accelerate-innovation-and-time-to-market [4] Banking Tech. (2020, April 23). Banking-as-a-Service: The next big thing in fintech. Retrieved from https://www.bankingtech.com/2020/04/banking-as-a-service-the-next-big-thing-in-fintech/ [5] McKinsey & Company. (2020, March 19). The future of fintech: The role of open banking and APIs. Retrieved from https://www.mckinsey.com/industries/financial-services/our-insights/the-future-of-fintech-the-role-of-open-banking-and-apis
- By partnering with local fintech companies, businesses can leverage their understanding of the regulatory environment and accelerate compliance, ensuring they stay competitive and adapt to the complexities of international investing in technology-driven markets.
- Embracing strategic partnerships with local firms, such as those in Malta with close regulatory dialogue and operational trust, can drive innovation while maintaining financial stability, as these alliances provide access to market-specific knowledge, established infrastructure, and agility in adaptation to market demands.
