Open Banking drives consolidation
2020 is the year of consolidation for Open Banking API businesses
When Visa first announced the acquisition of a little known fintech company called Plaid for an eye popping $5.3bn in January 2020, the deal attracted significant investor and strategic interest. Since then we have seen multiple acquisitions in the API space, including Galileo which was acquired for $1.2bn by SoFi in April. Mastercard, reeling from missing out on the acquisition of Plaid to Visa, went on to acquire another API provider Finicity for $860m ($985m including earn-outs) in June. Swedish API provider Tink raised €90m in December last year at a post-money valuation of €415m and boasted several well-known investors including PayPal. Since then, Tink has gone on to acquire three companies including financial API provider OpenWrks (Sep 2020) in the UK, which accounts for one third of the country's account aggregation volume.
Fintech dedicated to the Gig economy
Fintech firms continue to add new product lines catering to gig economy workers and to expand their offering, both organically and through M&A. Banks and lenders are leveraging Lending as a Service to surface their products and services on platforms outside of traditional banking channels. Companies that started with B2B2C models for gig platforms are now targeting the entire gig economy. The launch of Payments as a Service has increased speed to market and resulted in greater competition. This client briefing note describes how the gig economy is driving the next wave of fintech.