US Bank’s Giant Strategies for Confronting Fintech

Fintech giants Square and Paypal are taking over Wall Street trading. Young people make up the majority of consumers who use Square’s Cash and Venmo apps for mobile payments.

Conventional banks do not stand and fight. Investors take this seriously. Goldman Sachs (GS) performed well, with the stock gaining 55 percent. It’s in line with American Express (AXP), which trailed it with a 45 percent increase. Both companies are starting to adopt digital banking to attract new customers.

Goldman Sachs began its journey as a powerful investment bank and wealth manager for the rich. This is thanks to Marcus’ online bank. Launched in 2016, the platform offers branchless and free consumer loans.

“There’s no doubt that what we’re doing is digitizing rapidly. I think there’s been a significant acceleration in the disruption caused by the digitization of financial services,” Goldman Sachs CEO David Solomon said at a financial conference earlier this month. said. /2021).

American Express has also enhanced its old-fashioned image. The company announced on Thursday, October 28, 2021, about a new digital control scheme for small and medium enterprises (MSMEs).

As part of the launch, AmEx even launched its first debit card. Dean Henry, VP of Global Business Finance Payments and Digital Experience, said: “This is part of a multi-year strategy to move beyond credit cards. This is its latest manifestation.
“We have an obligation to go where customers transact. The newest is the AmEx debit card. We are modernizing the network and keeping track of popular payment types,” Dean said.

Big financial companies also realize that partnering with fintechs can be very lucrative.

“Fintech has also driven our growth. In 2020, nearly 30 percent more fintech issued Visa credentials and more than doubled their payment volumes,” Visa CEO Al Kelly said at a finance conference on Tuesday, October 26, 2021.

Buy Now and Pay Later
Buy now and pay later (buy now and pay later) jargon is growing in the fintech space. This move by Goldman Sachs, AmEx, Visa and others is a sign that traditional financial companies are realizing that more modern changes are needed.

It’s growing by the day, as are Square (SQ), PayPal (PYPL) and other top fintechs.

Stripe, a private payments company, is currently valued at US$95 billion, or IDR 1,349.6 trillion (assuming an exchange rate of IDR 14,207 per US dollar). Recently, Square has partnered with Amazon (AMZN), Walmart (TPL), Target (TGT), and other retail giants.

Affirm has also developed a feature that allows customers to pay for their purchases in monthly installments. This startup went public earlier this year. Its shares have more than tripled since the first

public offering. Klarna is another special unicorn worth $45.6 billion equivalent to IDR 6,748.3 trillion. Square acquired Australian BNPL (buy now, pay later) startup Afterpay for $29 billion, or Rp 412 trillion, this summer.

Visa’s competitor, Mastercard (MA), has launched its own BNPL program called Mastercard Installments (Mastercard installments). Unfortunately this BNPL trend will disappear in the near future.

Conventional Banks Have Difficulty Following Developments
Jeremy Barnum, Chief Financial Officer of JPMorgan Chase, confirmed that the BNPL trend has become a proverb in society. This was announced at the company’s financial conference earlier this month.

“We’re facing all kinds of potential disruptions, especially fintech-type disruptions, which are pretty serious. In the case of BNPL, it’s clearly very evident because of the growth we’re seeing,” said Barnum.

JPMorgan Chase CEO Jamie Dimon has promised that the bank will also keep up with emerging fintech competitors.
“We’re going to spend whatever it takes to compete in our field with all these people,” said Dimon at the same time.

However, big banks should be cautious in this developing world. Regulators in Washington continue to watch the financial giant. This is the factor that caused Visa to cancel its plans to acquire fintech startup Plaid in early 2021. The US government maintains strict antitrust oversight.

The Wall Street Journal reported on Thursday, October 28, 2021 that the Department of Justice is investigating Visa’s ties to Square, PayPal and Stripe. As part of a broader investigation that Visa first disclosed to investors in March.