Weekly Briefing No. 176 | Another Fintech Takeover, the Rise of Proptech, and More

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Welcome to The FR, where you’re always secure against outside threats.

In this edition:

  • Global Payments Takes Over TSYS

  • The Rise of Proptech

  • How Secure Are Financial Apps?

  • Connecting the Global Fintech World


More Fintech Consolidation with Global Payments–TSYS Deal

As the masses move from cash to cashless, the fintech world is consolidating yet again. On Tuesday, Global Payments, Inc. announced it was purchasing Total System Services Inc. (TSYS) for $21.5 billion in stock.

This comes on the heels of recent fintech deals we’ve covered: in March, tech giant FIS agreed to pay a whopping $35 billion for Worldpay in the largest digital payments M&A deal to date, and in January, Fiserv acquired payments powerhouse First Data for $22 billion—another all-stock deal like this week’s Global Payments–TSYS stock deal.

This will make Global Payments one of the largest fintech players, capable of making 50 billion transactions a year. It will serve 3.5 million small-to-medium-sized businesses and 1,300 financial institutions in about 100 countries. The name of the game in integrated payment technology is scale and the ability to bypass payments networks by routing purchases directly to banking systems. And it looks as if Global Payments will be able to do just that.

We’ll be sure to follow this, as the global payment market is predicted to reach $3 trillion a year in revenue by 2023, according to consulting firm McKinsey.

The Rise of Proptech

First there was fintech. Shortly afterward came insurtech and wealthtech. Now we’re seeing increased interest from start-ups and investors alike in real estate technology, or, as it’s become known, “proptech.”

Proptech allows for innovations such as homeowners being able to turn on their lights, or even their favorite song, from a mobile device before they get home. Voice-enabled functions already exist and will only grow in number in the years to come. And even the commercial real estate industry is primed to be transformed by proptech, with developments such as using drones for property inspections.

So perhaps it’s no surprise that investors have poured money into proptech, seeking to back the early winners in the next hot tech sector. Venture capitalists invested $9.6 billion in proptech start-ups globally in 2018, according to the CRETech End of Year Report. We’d venture to say that proptech will be a phrase you will hear a lot of (and may get tired of) over the next few years.  

How Secure Are Financial Apps?

It seems as if there’s news of a cybersecurity breach or some kind of hack every week. Most recently, Redtail Technology suffered a breach that exposed personal client information of advisors who use the firm’s customer relationship management software.

Of course, Redtail is hardly alone; financial apps are among the most highly targeted by cybercriminals due to the valuable nature of the data inside. In fact, in a study conducted by consulting firm Aite Group on the security of 30 mobile apps from financial services firms in the U.S. and Europe, 29 were found to have vulnerabilities.

It’s an ever-present issue: as quickly as financial firms and their cybersecurity partners patch vulnerabilities and address potential attack vectors, criminals evolve and look for new ways in. Indeed, the complex, ever-changing, and expanding nature of cyber risk has exceeded many firms’ abilities to serve those who seek protection. While it will never fully be eliminated, both financial firms and tech vendors need to reduce and mitigate cyber risk as best they can.


Connecting the Global Fintech World

Recently, we touched on how several hot European fintechs have set their eyes on the U.S. market, and now a major U.S. player is moving in the other direction across the pond. This week, Plaid said it is launching in the UK as part of a planned global expansion.

Plaid has created an application programming interface (API)-fueled platform that connects third-party fintechs—such as robo-advisors and payments budgeting apps—to bank accounts in the U.S.

The UK launch is just the beginning of what the company says is a planned international network. It’s one small step closer to creating a world where every aspect of a consumer’s financial life can be connected digitally. According to Fintech Finance, fintech supports over 75,000 jobs in the UK, and there will be an estimated 3,200 fintechs there by 2030.

Quote of the Week

“Get your facts first, then you can distort them as you please.”

—Mark Twain