Fintechs Pose A Threat For Conventional Lenders - Read How

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  • Global brands from Mercedes and Amazon.com Inc (NASDAQ: AMZN) to IKEA and Walmart Inc (NYSE: WMT) are migrating to software from tech startups from banking and credit to insurance services at the cost of the traditional lenders, banks, and financial institutions, Reuters reports.

  • The trend will worsen for the lenders by further pushing them away from the finance chain and data trove, the key to client preferences and behavior.

  • Some upstarts have procured licenses for regulated services like lending; they lack the scale and deep funding pools.

  • The report added that Stripe, the payments platform behind multiple sites with clients including Amazon and Alphabet Inc's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google, was valued at $95 billion in March.

  • Affirm Holdings Inc (NASDAQ: AFRM) bonded with Amazon to offer BNPL products, while Square Inc (NYSE: SQ), now worth $113 billion, aims to acquire BNPL firm Afterpay Ltd (OTC: AFTPF) for $29 billion.

  • Related Content: How Affirm's Amazon Partnership Could Launch Stock Into High Orbit

  • Walmart launched a fintech startup with investment firm Ribbit Capital, while IKEA acquired a minority stake in BNPL firm Jifiti.

  • Automakers like Volkswagen AG's (OTC: VWAGY) Audi and Tata Motors Ltd's (NYSE: TTM) Jaguar Land Rover have tried embedding payment technology in their vehicles besides Daimler AG's (OTC: DMLRY) Mercedes.

  • Shopify Inc (NYSE: SHOP), valued at $184 billion, has provided $2.3 billion in loans and usually reaches out to merchants to cater to their needs.

  • However, JPMorgan Chase & Co (NYSE: JPM) had a consumer and community loan book worth $435 billion at June end.

  • Interestingly, the Bank for International Settlements warned watchdogs to control the growing influence of fintech firms.

  • Still, Citigroup Inc (NYSE: C) collaborated with Google on bank accounts, Goldman Sachs Group Inc (NYSE: GS) is offering credit cards for Apple Inc (NASDAQ: AAPL), and JPMorgan is acquiring 75% of Volkswagen's payments business.

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