Banks Give Fintech Acquisitions the Cold Shoulder, Ten Disruptive Innovations That Will Make You Think! Podcast!
Holiday Edition!
Artwork of the day: Argonaut or Paper Nautilus, Richard Turrin, 20 meters depth, 8 pm in Bunaken National Park, Indonesia.
“This species of octopus is as unusual as it is beautiful. The argonauts, also known as paper nautiluses, spend their lives drifting near the surface of tropical and subtropical seas far from their cephalopod cousins on the seafloor. Females do this tucked into fragile, translucent shells that they create themselves.” (Nat Geo)
This is my picture of a Paper Nautilus. The creature is about 2 cm in length and has attached itself to a piece of seagrass to camouflage itself. At night, it migrates from 1000 meters deep to surface waters.
A photo of a paper nautilus is somewhat like the holy grail of underwater photographers, as these creatures are rare. That I got such an exquisite shot is half skill, half dumb luck!
Sorry I’m a day late!
I finished this last night but forgot to send it.
Expect shorter, poorly edited and even late newsletters for the next two weeks for these special “Holiday Editions.”
A very short newsletter this week as I am focusing on taking underwater pictures more than writing as I recharge my writing batteries.
Why today’s stories matter:
Banks won’t buy your failing fintech: This is an interesting story that shows how banks may want to work with fintechs and use their tech, they most certainly don’t want to bring them in-house.
Ten DISRUPTIVE INNOVATIONS that will make you stop and think!: This “Citibank GPS” report is a fabulous read and should stop and make you think about what our future will look like. It was so good I read this on holiday!
My Podcast talks about why China’s lending model is coming to the West and how the Innovation Lab concept of shared resources applies to AI development.
Banks Give Fintech Acquisitions the Cold Shoulder
No, They Won't Buy Your Failing Fintech.
Banks made less than 1% of all fintech acquisitions from 2013 to 2023, which casts doubt on the fintech-bank courtships.
Banks are showing that they’re not truly interested in buying a fintech to better their tech, which isn’t necessarily bad for banks but is bad for fintechs.
This isn’t to say banks won’t use a fintech’s services, and reports of how this has increased have widely circulated, but banks don’t want to buy the tech, and who can blame them?
👉TAKEAWAYS
🔹 Fewer-than-expected bank-fintech acquisitions: despite their share of the total economy, banks made less than 1% of all fintech acquisitions from 2013 through 2023. In the cohort of top 50 US and top 15 Canadian and International Banks analyzed (collectively known as "Top Banks"), only 94 fintech acquisitions were completed in the past 10 years (Exhibit 1).
🔹 Bank-fintech deals are small: Only 13% of the 94 transactions were over $300 million in size — a figure cited by experts as a dividing line between major and minor fintech deals — with most deals focused on tuck-in capabilities easier to integrate into the bank and less challenging to sunset if derailed by common integration and operating challenges.
🔹 Long-term fintech acquisition success is tough: the values, incentives, and cultures are often too dissimilar between banks and fintechs. Examples range from regulatory approach to operating model, and can result in product shutdowns, talent attrition, and dilution of asset value. We suspect that this disincentivizes additional acquisitions despite the case for synergies.
👊STRAIGHT TALK👊
It’s very common to hear pundits talk about banks buying fintechs, and the numbers in this report show how unlikely that is.
Banks may be technically behind, but they aren’t dumb and know that when it comes to “build or buy,” they’ll buy a fintech’s services but have little interest in bringing them in-house.
This is probably a good move for behemoth banks which would smother a fintech in their ossified cultures and pay more while receiving less in work product.
This is, however, bad news for fintechs looking for a bailout and a more stable life as bank employees.
Given the 1% figure, this is not a reasonable expectation.
Thoughts?
Ten DISRUPTIVE INNOVATIONS that will make you stop and think!
Citibank’s GPS series never disappoints; this tenth edition gives us much to ponder!!
Read through these ten, and I dare you not to think: “The world is changing faster than I thought!”
👉TAKEAWAYS: CITI’s TOP 10
🔹 Antibody Drug Conjugates – ADCs combine the potency of chemotherapy with the precise targeting on monoclonal antibodies in the war against cancer. Approvals have been granted and revenues look set to rise.
🔹 Autonomous Agents – Digital assistants will increasingly be powered by Artificial Intelligence to carry out useful tasks. Large language models have captured the imagination over the last 18 months. Large action models could be next.
🔹 FemTech – Women are less well served than men in many health areas, including diagnosis, therapeutics, and pain management. FemTech can help close the gender
health gap.
🔹 Joint All-Domain Command and Control – JADC2 uses sensors, communication, and AI capabilities to materially reduce critical decision-making timelines and deal with military threats across air, land, sea, space and cyberspace.
🔹 Neuromorphic Computing Architecture – Computing will take on more human brain-like architectures to reduce the bottlenecks between logic and memory as AI-related computing demand rises.
🔹 Piezoelectric Roads – Smart roads could harness electricity generated by vehicles travelling across these new roads.
🔹 Quantum Sensing – Sensors are the eyes and ears of our technological world. Quantum sensors can provide an unprecedented level of detail to generate new
insights and aid decision-making across multiple industries.
🔹 Retail Media – Digital adverts tied directly into a retailer’s website, or on third-party websites, are growing fast in part due to stricter data privacy standards.
🔹 Smart Money – Generative AI has revolutionary potential in financial services, expanding the uses cases of ML and AI into unstructured data to change customer service, sales and marketing, content generation and coding.
🔹 White & Gold Hydrogen – Naturally occurring hydrogen sources are trapped below the earth’s surface in underground deposits. Exploration techniques are being looked at by governments and private companies alike.
👊STRAIGHT TALK👊
It’s easy to get excited about technology—we all do. However, the reality is that technology requires societal approval for use.
What unwanted effects will they have? Will people or governments have issues?
Piezoelectric roads may seem uncontroversial, but "Joint All-Domain Command and Control" sounds like the start of “Skynet.”
Thoughts?
Podcast: “How to Lend Money to Strangers” and Why China’s Model Works in the West.
Links: And above a short teaser video with highlights.
How To Lend Money to Strangers Website (with transcript): https://www.howtolendmoneytostrangers.show/episodes/episode-154
Spotify:
Youtube :
Thank you to Brendan Le Grange for this fabulous discussion on China’s Lending and why it is still relevant to the West despite heightened political tensions.
Brendan knows his lending skills and is an expert in the field, which made for a great discussion.
His observations on GenAI are spot on and greatly contribute to the discussion!
The reality is that China still offers a glimpse of the West’s future. It has made virtually all financial services available online through open platforms that share open banking data.
And the irony of it all is that China built this and has been using it for almost a decade!
It is still a model of what the West should strive for if it seeks to democratize access to financial services.
I know that this will ruffle feathers with some, but the reality is that a typical Chinese person has better digital access to financial services than his Western counterpart.
I know someone out there will call me brainwashed or worse for even suggesting this, but it’s true.
In this episode, I also discuss my first book, “Innovation Lab Excellence,” and how the innovation techniques in it are perfectly adaptable to AI teams.
When I wrote ILE, I focused on how to distribute scarce digital talent within a corporate environment; the same is happening now with scarce AI talent.
GenAI will require shared resources and the same innovation approach developed for innovation lab teams.
Thanks once again to Brendan and I hope you enjoy the episode!
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