Beware of toxic unicorns

In the spirit of “coopetition,” High Street banks are cozying up to FinTech startups, but the prospect of partnering with a “toxic” one looms large. Rather than try to compete directly with disruptive startups, banks are making decisions whether to partner with, or even buy, these ventures that offer a quick way into true innovation, whether in payments, blockchain or lending.

No one doubts that FinTech, together with blockchain, is one of today’s hottest topics in financial services, with dozens of startups in London alone. Of those to make the FinTech50 list this year, 29 were in London. Most have been around for just two to five years. The lucky ones that reach the magic valuation of $1 billion are known as “unicorns.” Their products range from payments to mortgage lending to bond market social networking, and most have solid backing by venture capital. A staggering $13.8 billion in VC was invested in FinTechs last year, up from $6.7 billion in 2014, according to a report by KPMG and CB Insights.

Payments: what is going on behind the scenes?

The payments space has been the most frustrating to report on over the years. There is a collective groan in IBS Towers when the big payments conferences come around again. It feels like the same old people talking about the same old things. There will be lots of focus on the high-level issues, including that ‘FedEx’ comparison once more (we can see our parcels at any point in their journeys, why can’t we do the same with payments, particularly as these are electronic so should be easier to track than physical goods?). But when was the last time you heard a detailed case study at one of the events from a bank that has actually addressed and solved the issues?

Banking software market: more M&A to come

Broadridge HQ

As 2014 was drawing to a close, a handful of takeovers in the banking software space were announced but went under the radar. SS&C bought rival DST Global Solutions for $95 million, bringing rival investment management systems under one umbrella, whilst loss-making 3i Infotech shed its investment management software business in the UK to an Italian outfit, Objectway.