Visa takes a swipe in fintech, builds new online marketplace
The relationships between banks and fintechs are multi-faceted.
In some cases, they partner. In many cases, they compete. In other cases, one acquires or invests in the other.
Well, today, an announcement by global payments giant Visa is aimed at helping facilitate banks and fintechs' ability to work together.
Specifically, Visa said today it has expanded its Visa Fintech Partner Connect, a program designed to help financial institutions quickly connect with a vetted and curated" set of technology providers.
I talked with Terry Angelos, senior vice president and global head of fintech at Visa, to understand just exactly what that means.
Global fintech investment last year was $105 billion," Angelos said. There were about 2,861 deals in venture, PE and M&A. So literally over $100 billion is going into fintech, which is more than the combined tech budgets of every bank in the U.S. As a result, a lot of innovation that is occurring in fintech is funded by venture dollars. We're trying to bring that innovation to our clients, whether they are banks, processors or other fintechs."
The program initially launched in Europe in November of 2020, and now is available in the U.S., Asia Pacific, Latin American and CEMEA (Central Europe, Middle East and Africa). Visa has worked to identify fintechs that can help banks and financial institutions (that are clients of Visa's) as well as other fintechs create digital-first experiences, without the cost and complexity of building the back-end technology in-house."
Local teams will run programs in the respective regions, and vet and manage partners in the following categories: account opening, data aggregation, analytics and security, customer engagement and new cardholder services and operations and compliance.
So far, Visa has identified about 60 partners that offer a range of technologies - from back-office functions to new front-end services, according to Angelos. Those partners include Alloy, Jumio, Argyle, Fidel, FirstSource, TravelBank, Canopy, Hummingbird and Unit21, among others. Twenty-four are located in the U.S.
So much of fintech focus and coverage is about disrupting existing banks. Everyone is trying to disrupt everyone, including fintechs like PayPal," Angelos told TechCrunch. Venture numbers are certainly very large. What we're realizing is there is a significant opportunity to pair up a lot of venture-backed companies with our existing clients. It runs a little bit against us versus them approach you typically hear about."
Visa clients can get in touch with program partners via the Visa Partner website and get benefits such as reduced implementation fees and pricing discounts.
The Fintech Connect program is about both helping to identify and curate interesting fintech companies and then create a favorable commercial partnership for our clients so they can engage with these Fintech Connect partners," Angelos said.
So, what does Visa gain from all this?
Our goal is that all of our clients are in a position to build better digital experiences for their consumers," he told TechCrunch. We would love it if every bank had the latest tools in order to onboard clients and build digital experiences."
One of its partners, for example, is virtual card startup Extend.
There are fintechs that provide this today such as TripActions, Ramp and Divvy," Angelos points out. But what Visa is doing is looking at How can we enable our banking clients to do something similar?' So we're bringing innovation into our ecosystem so that anyone can take advantage."
It can also help companies such as TripActions, Ramp or Divvy with other complementary technologies for security posture, for example.
The net beneficiary is to hopefully move more spending onto those rails," Angelos said. For example, if you look at B2B spend, there's about $120 trillion of it annually. We believe about $20 trillion of that is card eligible. Today, Visa captures about $1 trillion of that. So, another $19 trillion is available for Visa to capture through our partners if our banks and fintechs can build these kinds of solutions to enable B2B payments."
To be clear, Visa also invests in startups from time to time. But this initiative is distinct from those efforts, although a couple of its partners have been recipients of funding from Visa.