visa takes a swipe in fintech, builds new online marketplace

The Evolving Relationship Between Banks and Fintech Companies

The dynamic between traditional banks and innovative fintech companies is characterized by a variety of interactions. These range from collaborative partnerships to direct competition, and even instances of acquisition or investment.

Visa, a leading global payments provider, has recently announced an expansion of its Visa Fintech Partner Connect program. This initiative is designed to streamline collaboration between banks and fintechs.

Facilitating Collaboration Through Partner Connect

According to Visa, the expanded program will enable financial institutions to efficiently connect with a carefully selected group of technology providers.

Terry Angelos, senior vice president and global head of fintech at Visa, explained the rationale behind this expansion. “Last year, global fintech investment reached $105 billion, encompassing approximately 2,861 venture capital, private equity, and M&A deals.”

Angelos continued, “This represents over $100 billion flowing into fintech, exceeding the combined technology budgets of all U.S. banks. Consequently, much of the innovation within fintech is fueled by venture capital, and we aim to deliver this innovation to our clients – be they banks, processors, or other fintechs.”

Initially launched in Europe in November 2020, the program is now accessible in the U.S., Asia Pacific, Latin America, and CEMEA (Central Europe, Middle East and Africa).

Program Focus and Partner Categories

Visa is actively identifying fintechs that can assist banks and financial institutions – as well as other fintech companies – in creating digital-first experiences. This is achieved without the substantial costs and complexities associated with developing back-end technology internally.

Regional teams will oversee the program, vetting and managing partners across key categories. These include account opening, data aggregation, analytics and security, customer engagement, new cardholder services, and operations and compliance.

Currently, Visa has identified around 60 partners offering a diverse range of technologies, spanning both back-office functionalities and innovative front-end services. Some of these partners are Alloy, Jumio, Argyle, Fidel, FirstSource, TravelBank, Canopy, Hummingbird and Unit21, with 24 based in the U.S.

Shifting the Narrative: Collaboration Over Disruption

“Much of the current focus in fintech revolves around disrupting established banks. Everyone seems to be attempting to disrupt everyone else, including companies like PayPal,” Angelos stated to TechCrunch.

“While venture capital funding remains substantial, we are recognizing a significant opportunity to connect venture-backed companies with our existing clients. This approach diverges from the typical ‘us versus them’ mentality often observed in the industry.”

Visa clients can access program partners through the Visa Partner website, benefiting from reduced implementation fees and pricing discounts.

Angelos emphasized, “The Fintech Connect program is dedicated to both identifying and curating promising fintech companies, and then establishing favorable commercial partnerships for our clients, enabling them to engage with these Fintech Connect partners.”

Visa’s Benefits and Strategic Goals

What advantages does Visa derive from this initiative?

“Our primary objective is to empower all our clients to deliver superior digital experiences to their customers,” Angelos explained. “We want every bank to have access to the latest tools for onboarding clients and building engaging digital experiences.”

For instance, Extend, a virtual card startup, is one of the program’s partners.

“Fintechs like TripActions, Ramp and Divvy already offer similar solutions,” Angelos noted. “However, Visa is focused on enabling our banking clients to develop comparable capabilities. We are integrating innovation into our ecosystem, making it accessible to all.”

The program can also assist companies such as TripActions, Ramp, or Divvy with complementary technologies, particularly in the area of security.

Expanding Market Reach and Transaction Volume

“Ultimately, the goal is to increase spending on our payment rails,” Angelos said. “Considering the $120 trillion in annual B2B spending, approximately $20 trillion is eligible for card payments. Currently, Visa captures around $1 trillion of this, leaving another $19 trillion potentially available through partnerships with our banks and fintechs, enabling B2B payment solutions.”

It’s important to note that this initiative is separate from Visa’s direct investments in startups, although some partners have previously received funding from Visa.