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How fully do you understand

the fintech and payments industry?

I wouldn't say there is unbridled enthusiasm, however,
like there was during the tech bubble of the late 1990s or
the growth in the technology sector 10 years later. I am
skeptical of the hype surrounding cryptocurrencies and
blockchain. I am also skeptical that fintech companies will
enjoy unbridled growth going forward. There is a new
player in this ecosystem: the governmental regulator.

The public is very much aware of data breaches and the
potential of abuse by tech companies like Cambridge
Analytica. The European Union just put into effect the
General Data Protection Regulation, which requires
data transparency, user control and user opt-in for data
collection. In addition, it includes standards for data storage
and protection, encryption, and breach and compromise
reporting. Companies, such as Facebook and Google,
that rely on "data science" to provide targeted advertising
By Brandes Elitch should be particularly concerned about this.
CrossCheck Inc. Adding value

recently received an email with the same title as this We hear a lot of talk about the Internet of Things, smart
article. The introductory paragraph said, "If you're homes, the cashier-less shopping experience, virtual
involved in the financial industry in any way, it's reality, autonomous cars and automated human functions,
I important for you to have a clear understanding of and there will be many other new developments powered
the payments landscape, and how fintech is impacting it by fintech. As an ISO, identify early on how to add value
along with the rest of the financial world." to your clients from these new developments – if you can.

Most ISOs and merchant service providers are busy calling In the payments world, we are interested in how to
on clients, searching for leads, working referrals, writing monetize new capabilities and products our merchants
proposals, doing demos and driving hundreds of miles a and their customers will want to use. But it's challenging
week to get new business and keep the business they have. to identify who to work with here, because most fintech
They are focused on their clients' needs, not technology. players will not be around in five years.

But payment service providers must stay up to date with The analytics used to value fintech companies are different
technology to help merchants run their businesses more than those you studied in school. The genesis of financial
efficiently and provide a better user experience for their analysis and corporate finance is a book called Security
customers. Analysis, written in 1934 by two Columbia University
professors, Benjamin Graham and David Dodd. They
Seeing past the hype would never countenance a $500 billion market cap for
Facebook, or see Twitter with a $100 billion market cap
Changes in payment processing are being driven by in 2025, or Netflix with a growth multiple of 200+. They
advancements in hardware that increase workflow and would not readily understand why Amazon – which has
computation ability, accompanied by increased software never really turned a profit or paid dividends to investors
capabilities, which are driven by things such as artificial – has a market cap of over $800 billion.
intelligence. Some observers are calling this the "Third
Industrial Revolution." There's a lot going on here. Zeroing in on one industry

A September 2017 study by Deloitte, using data from In retrospect, the Amazon business model seems so
Venture Scanner Inc., sets forth four fintech categories: obvious: a complete marketplace, one-click checkout and
banking and capital markets, investment management, next-day delivery (plus the ability to return things you don't
insurance, and real estate. The clear leader is payments in want). In 2002, Amazon standardized the way information
the banking segment, with fully 645 startups to date. Can is shared internally, using APIs.
anybody keep track of what 645 startups are doing?

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