|Rowland Goddard, Staff Writer|
Money has a new face, and it’s no longer a political figure or a social justice hero, it’s nothing. In many regards, the Coronavirus has propelled us into the future. This can be seen when looking at the transfer of money. No longer are the days of cash payments or written cheques, as businesses are forced to forgo this method in lieu of electronic methods.
Most consumers and businesses have turned towards a completely contactless form of payment to help mitigate the spread of COVID-19. These habits are likely to become the new norm, regardless of the severity of the Coronavirus. According to Payments Canada, 44% of those surveyed have changed their payments preferences to digital and contactless long-term and similarly, 42% are uncomfortable handling cash. It then begs the question, how will consumers change in payment preferences affect financial services and the flow of money.
Roughly a year ago, I wrote an article on VISA acquiring the fintech Plaid for $5.3B and how this was just the beginning of Fintechs. The acquisition fell through because the Department of Justice (DOJ) blocked it, citing that it created an anti-competitive environment. This is another hint at the direction regulators are beginning to lean to in terms of breaking up the power held by Silicon Valley giants like Apple, Facebook, Microsoft, and Alphabet. Although anti-competitive laws are needed in the business environment, there still exists primitive financial regulations that limit the success of new Fintechs.
Regardless, Plaid’s customer base has grown by 60% this year due to more people going digital. Although the VISA acquisition falling through is troubling for investors at this time, there is still much left for Plaid to build in the Fintech infrastructure. Plaid now plans on going public in efforts to raise more capital. In this growing Fintech environment, Plaid has a bright future and will continue to progress with or without the assistance of a large corporation like VISA.
Plaid isn’t the only Fintech striving for new heights. Walmart has recently announced its own Fintech startup with Rabbit Capital to build new digital financial products for its customers. The products could include but are not limited to, ways of saving, borrowing, and investing money online without dealing with a traditional bank. Shares of Walmart went up 1.5% following this news.
Fintech’s are also being developed in Canada. The Canadian Fintech Neo Financial has partnered with Concentra Bank to offer CDIC-eligible high-interest saving accounts. The Fintech, which was created by two co-founders of SkipThe Dishes, also offers a cash-back credit card through ATB Financial. Both of these products are meant to disrupt conventional means of banking.
Financial organizations have a significant amount of power and control over how we use our money. They take countless fees, use our data, and embed unnecessary and unavoidable terms into contracts that take away from our paychecks. Fintechs are pioneering new ways of saving/spending/investing your money in the new age of technology.