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  • Hello and welcome to sectors up close.

  • I'm Elena Casas.

  • Our focus today is Fintech, and our guest is Dean Kim, the head of global financial sector research at O'Neill Global Advisors.

  • Fintech has grown from niche to big business, comprising payments and lending companies, as well as companies that deal in Cryptocurrency.

  • This sector has vastly outperformed traditional financial services despite a sharp selloff this week.

  • This index, for example, is up 50% over the past year.

  • Financial technology companies are abroad, but do focus heavily on mobile payments and consumer lending.

  • PayPal Square and Australia's Afterpay are good.

  • Examples of those are risen to the top of the tech heap, but it can also include more risky up and coming ventures, such as those dealing in Cryptocurrencies.

  • So what is his outlook and how do investors approach the sector?

  • Let's ask O'Neill Global Advisors Dean Kim, Dean, Hi.

  • Thanks for joining us now The sixth biggest financial tech firms now have a bigger market camp than the six biggest banks, don't they?

  • So how did Fintech overtake traditional banking?

  • Yeah, well, first of all, thanks for having me when you look at payment or the fintech payment space and you're looking at it from 30,000 ft.

  • The world is still used to using physical cash, and they are still in their evolution to moving over to non cash.

  • And so we think there's a secular trend that's going to go on for multiple years and to give you an example.

  • If you look at Visa and how big Visa is, they're still growing double digits in terms of revenue and GPS.

  • And so we think that secular trend from physical cash to digital is has a long way to go.

  • And the FINTECH companies definitely are going to benefit from that.

  • Now.

  • Some financial tech firms are moving into offering bank accounts, aren't they?

  • And the regulators in some countries are trying to regulate them like banks.

  • So how blurred is the line becoming between?

  • What's a fintech company and what's a bank?

  • Yeah, that's a very interesting topic these days, and we're seeing acceleration of fintech companies moving into traditional banking just, you know, yesterday or the day before square announced that they had received banking license from F D.

  • I C here in the US, and so now they're gonna be offering banking services to their merchants, millions of merchants.

  • And the next step for them is to offer banking services to their, you know, 35 million active users, uh, in terms of consumers.

  • So they're definitely going to be a competitive threat in terms of total, you know, traditional banking service.

  • Uh, and at the same time, we have traditional banks now coming into the space of offering fintech like services.

  • So we have Silver Gate Capital, based in San Diego in California is a bank.

  • But there are, You know, they're taking in Bitcoins as deposits now, and what they're doing is they're taking that funding in terms of digital currency turning around and underwriting loans to their customers.

  • So, uh, space is definitely becoming blurred.

  • But I think at the end of the day, it's all about capturing consumers or customers.

  • What's your advice to investors?

  • Then how should you approach this sector?

  • Yeah, I think you know, as we talked about, you know, the payment processing world is still in a secular growth trend.

  • And so for investors, I think it's a great way to invest, you know, in terms of E t s.

  • You know, if you're kind of risk averse.

  • Definitely looking to E t s.

  • Uh, so e t s like I pay Finex R F as well as Kayla, Kayla and Coin.

  • Those are all excellent Hutts where investors get have exposure to the secular trend.

  • So definitely look into those.

  • Thanks so much for joining us.

  • That was Dean Kim, head of global financial sector research at O'Neill Global Advisors.

  • Before I go, here are some of the top stories in the sector.

  • Hippo Enterprises will go public through a $5 billion merger with a blank check firm backed by Silicon Valley heavyweights Reed Hoffman and Mark Pincus.

  • Hippo will merge with the special purpose acquisition company called Reinvent Technology Partners Z, and we'll give the company about $1.2 billion in cash.

  • The deal comes as the pandemic has forced the insurance sector to rely heavily on technology to reach customers.

  • With total annual investment in the so called insure tech sector rising to $7.1 billion last year, China's FINTECH companies are expected to meet capital adequacy requirements within two years.

  • This from the head of the China Banking and Insurance Regulator Commission, who also said these platforms should have adequate capital.

  • Like all other financial institutions, Chinese regulators have rolled out a slew of measures since last year to tighten the oversight of the industry in the wake of discovering of the ant financial I p o and the European Union securities watchdog says rules on company financial information need to be updated.

  • To prevent another wire card scandal, the watchdog set out proposed reforms to eliminate barriers to sharing confidential information about a company and to clarify which body is responsible for enforcement.

  • White Card was once worth $28 billion and collapsed last year after disclosing a multi billion dollar hole in its accounts.

  • And that's your roundup of the Fintech sector.

  • I'm Elena Cassis and this is Reuters.

Hello and welcome to sectors up close.

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Changing consumer habits push fintech stocks to new heights

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    林宜悉 posted on 2021/03/05
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