All The Fintech - 1.3.19 - Ma Thoughts on 2019 Fintech

Happy 2019 everyone! Put some quick thoughts below on what's top of mind for me on fintech as we head into the new year.

1) Neobanks - Gradually, then suddenly

• Neobanks started to get some more mainstream attention in 2018, and I believe that in 2019 companies such as Chime, Acorns, MoneyLion, Empower, Aspiration, etc will continue to scale.

• By the end of 2019, large FI's will be caught by surprise at the amount of scale that these neobanks will achieve and will start thinking about M&A for user, product, and talent acquisition.

2) Global competition heats up

• Related to thought number one, 2019 will see later stage fintech companies compete on a global stage

• UK + EU based companies such as Revolut, Monzo, N26, and EToro have all announced plans to launch in the US

• Meanwhile US based companies such as Robinhood, Coinbase, Acorns have already launched small beachheads in countries such as Australia + UK

• A lot of these companies have requisite amount of significant capital to launch internationally and scale quickly, will be particularly interesting to see how it affects the US neobank market

3) Bitcoin price remains (relatively) constant

• ¯\_(ツ)_/¯ seems as though most retail investors have been burned, so at this point it's mostly hodler or institutional investors

• would not be surprised if we still see more massive rises + dips driven by algo's chasing signal

4) Enterprise blockchain still isn't really a thing

• I've blogged about this before, but I'm still super bearish on "enterprise blockchain" - I have yet to see a great use case that's actually easily implementable by a large enterprise

• Getting an enterprise to buy and deploy a simple database is hard enough...

5) AI moves into overhyped enterprise technology

• Honestly more of a personal wish due to a lot of personal experiences this year with my banks...

• The point isn't to completely automate personal banking, the point is make it easier for consumers to get their needs met in a de-risked manner

• When it's something that should take 1-2 minutes, give me an AI but if it's something more involved, please stop making me click through 500 options, that's not using AI!!

6) Beginnings of a new credit model

• A ton of companies are starting to investigate / build really interesting new credit models based off data separate from a pure credit score.

• Companies to look at include Square, Petal, Brigit, Dave, Even, Earnin, Credit Karma, etc

• I find CK to be really interesting as they've been able to use their scale to convince large US lenders to share underwriting models...

• (Slowly) moving away from a delayed, pull based model to a real time, consumer-consent push model.

7) Winter is (finally) coming? Raise up.

• Growth stage companies will continue to raise "mega-rounds" and stay private longer

• I actually think this is not a bad outcome, allows fintech companies to focus more on long term value creation vs chasing endless growth (although of course they will still need to grow...)

8) Larger tech companies offering more "fintech" products

• Everything is fintech if you look closely. I don't expect large tech companies to be launching competing fintech products any time soon, but increasingly they are starting to offer more products that look like fintech.

• Examples include Uber Cash, Amazon Pay + Cash + Lending, Facebook's stablecoin for WhatApp India, etc

• Privacy topics from 2018 will prevent many of these companies from launching new finance products quickly - public fintech companies to watch IMO are Amazon, Square, PayPal, and FiServ.

9) M&A activity driven by banking core providers

• Hot take - I think we'll see FiServ ($29B market cap) acquire a "newer-age" banking core provider like a Q2 holdings ($2B market cap), or a large bank acquiring a smaller core banking provider to jumpstart a new application

10) All of the large fintech unicorns stay private

• Pretty self explanatory - it seems as though most unicorn fintech companies still have a healthy amount of funding (at least off the number of ads that I see still...), so no need to IPO for 2019

• Unicorn companies will find other ways to provide liquidity to employees while still staying private ala Uber's secondary offerings, etc.