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Klarna Champion,Existential Crisis in Fintech, the Future of Banking And Other Digital News



Happy Monday!



In this post:


  • Fintech Sector Faces "Existential Crisis" Says McKinsey

  • German Fintech Monedo Files For Bankruptcy

  • Should The UK’s Loan Guarantee Scheme, A Lifeline To Fintech, Be Extended?

  • Does The Future Of Banking Lie In The Hands Of Neobanks?

  • Fintech Trends According To AXA IM

  • Klarna Becomes Largest Private Fintech Firm In Europe



Fintech Sector Faces "Existential Crisis" Says McKinsey.



After growing more than 25% a year since 2014, investment into Europe's fintech sector dropped by 11% globally and 30% in Europe in the first half of 2020, states the McKinsey paper. "The Covid-19 crisis has in effect shortened the runway for many fintechs, posing an existential threat to the sector" says the consultancy.


To navigate the economic fall-out from Covid-19, Europe’s fintechs will need to adjust their playbook. Many of the key actions fintechs want to take—such as launching new features, building new capabilities, or pivoting toward new revenue streams and segments—could be achieved more rapidly through thoughtful acquisition or partnerships than by organic development. Three areas stand out as likely to see higher activity: next-generation credit capabilities, open data, and distribution collaboration.

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German Fintech Monedo Files For Bankruptcy.



Monedo, a German fintech once backed by PayPal investor Peter Thiel and media giant Naspers, has filed for bankruptcy after failing to recover from the economic effects of the Coronavirus pandemic. The online lender, formerly known as Kreditech,  was one of the most highly valued fintech startups in Germany but it was reported by online news site Sifted that Monedo filed an insolvency claim in a German court last week and a Hamburg law firm had been appointed to manage the proceedings.

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Should The UK’s Loan Guarantee Scheme, A Lifeline To Fintech, Be Extended?



For British fintech lenders, the government’s handful of government guaranteed lending schemes have been a lifeline. Some of the biggest marketplace lenders have become entirely reliant on lending out money through CBILS – to the point of pausing all other lending and P2P investment.


Ultimately, the real test of the scheme’s success will come when the inevitable defaults start to surface. In time, the due diligence of fintech lenders that were active during this period will be put to the test. It would be a bad look for them to prove a disproportionate burden on British taxpayers.


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Does The Future Of Banking Lie In The Hands Of Neobanks?



Utilising several of the new waves of disruptive technologies such as big-data analytics, artificial intelligence (AI) and cloud computing, neobanks across the world are fundamentally transforming the very notion of banking. And given the restrictive impact that the coronavirus pandemic is having on the global population, there is now a growing belief that this new digital model of banking will play a critical role in addressing the shortcomings posed by traditional lenders.



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Fintech Trends According To AXA IM.



Technological transformation is changing many aspects of how we live and work, and this is particularly true when it comes to financial services.


In this article, AXA identifies three multi-year trends for the fintech industry under which they believe companies are poised to experience rapid growth: cashless society, innovative leadership and technology enablers.


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Klarna Becomes Largest Private Fintech Firm In Europe.



Klarna is among a wave of fintech firms seducing shoppers on tight budgets. It bills itself as offering a “healthier, simpler and smarter alternative to credit cards” as shoppers can spread the cost of purchases over interest-free instalments.


Investors clearly think the “buy-now pay-later” model has big potential, with Klarna raising $650 million in an equity funding round, valuing the company at $10.6 billion. The round was led by Silver Lake Partners, alongside GIC, Singapore’s sovereign wealth fund, as well as BlackRock and HMI Capital.

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