Europe’s biggest financial technology (fintech) firms are poised to benefit from “secular tailwinds” in coming years as the payments industry continues to undergo a revolution, according to Citi.
A newly-published paper by the bank’s researchers Josh Levin and Ronit Ghose cites four key forces that are driving the new order in Europe: changing consumer preferences; which is linked to the ubiquity of mobiles; increasing merchant demands as payment firms are increasingly seen as technology providers able to handle complex transactions, boost revenues and profitability; and changing regulations designed to boost e-payments at the expense of cash.
The authors expect these forces to drive annual growth in electronic payments in the high-single digits range for years to come as cash still comprises the majority of transactions in most developed markets. What they dub an EMEA (Europe, the Middle East and Africa) ‘fintech five’ – Gemalto, Ingenico, Worldline, Wirecard and Worldpay – are seen as particularly well positioned to benefit
“As merchants adapt to this trend, we believe there’s a lot of low hanging fruit for our payments companies to pick given that much of today’s merchant payment acceptance technology is surprisingly primitive,” the report notes. “In addition, payment companies have the opportunity to further increase their profitability by providing value-added services.
“At the same time, we believe that changing regulations will drive consolidation in the European payments industry and that the industry will eventually evolve into an oligopoly with the attendant benefits which oligopolies usually enjoy.”
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
Kicking off day two of the Singapore Fintech Festival, Deloitte Chairman David Cruikshank said that fintech is significant for three reasons. First, customer expectations of services are higher than ever. Second, barriers to entry are lower than before. And finally, financial institutions (FIs) face a threat of what a competitor might do.
Kicking off the first day of the Singapore Fintech Festival, issues with cryptocurrencies were addressed by MIT media labs director, Joi Ito, and panels of technology leaders discussed how they’re using data analytics.