In its second edition, here’s my top five fintech news makers from 2017. You can see last year’s recap here.
1 – Bitcoin
Crowning 2017 the year of bitcoin would be an understatement. The cryptocurrency entered mainstream vernacular with seemingly everyone and their uncles praising its virtues and hailing it as a harbinger to a financial revolution. Defying all logic and common sense, bitcoin’s price soared, vindicating early buyers with handsome returns and attracting fresh money from those fearful of missing out. Institutional investors also bought in while future contracts began trading on the CME exchange. The news wasn’t all roses as hackers made away with large sums of bitcoin, including almost $100 million in the last two months of the year alone.
2 – Initial Coin Offerings
Start-ups capitalized on the bitcoin craze to raise capital with initial coin offerings (ICO). Eschewing conventional fundraising means, firms tapped into investors’ digital appetites by offering early backers proprietary cryptocurrencies in exchange for fiat currencies or bitcoin. The popularity of ICOs moved in tandem with the rise in bitcoin’s value and like it, also attracted unscrupulous actors with scam campaigns abound. The remarkable rise of this novel fundraising method led regulators to chime in, some warning that tokens could qualify as conventional securities while others outright banning the practice.
Financial institutions in Europe spent the past year preparing for the January 2018 entry into force of the European Commission’s second payment directive. Known by the PSD2 moniker, the directive was pegged as a new chapter in financial services. By relying on APIs, a fancy way to describe how software exchanges information, tech companies will be able to offer new products by tapping into their users’ bank accounts – think payments through Facebook messenger. Countries outside of Europe also showed interest, including Hong Kong and Australia which announced plans to develop their own API frameworks.
4- Western March
Chinese payment powerhouses Alipay and WeChat began expanding outside of their strongholds. To cater to Chinese tourists abroad, Alipay made its mobile wallet service available in Europe, the US and Southeast Asia. In the US for example, it partnered with online review site Yelp to allow its users to make payments through Alipay when using the website for restaurant bookings. Rival WeChat took a different approach by encouraging Western brands to sell their wares on its platform. Luxury brands Burberry and Channel were early adopters.
5 –From Cars to Credit Cards
Financial services became a new way for ride hailing companies to distinguish themselves from ferocious competitors. Uber launched a Visa credit card with in app application and almost instant acceptance. The card offered cash back and other perks such as mobile phone protection and invites to exclusive events. Not to be outdone, its Southeast Asian rival Grab introduced a mobile wallet which allowed users to pay for both rides and in-store purchases.