MAPP Advisors met with over 50 companies at the Money 20/20 conference. Here is the payments insight we would like to share with you:
Jim Battista, Partner: “The consolidation at the top of the payments industry has caused big companies to become bigger. This presents an opportunity for smaller companies because the investors and buyers are coming downstream. Smaller payments companies focused on a niche or technology have the greatest advantage. Old school payments companies that have general or non-vertical portfolios should monetize them now because we predict that these types of portfolios will be less valuable in the future.”
Vaden Landers, Strategic Advisor to MAPP & EVP/CRO for Payment Data Systems: “We continue to see a steady stream of consolidation efforts within the industry. Large and small players alike are looking at the market very opportunistically as they seek to identify acquisition targets offering differentiating technology, distribution, vertical focus, earnings or some combination of all of these value-driving components. The hunt for portfolios large and small is once again heating up after cooling a bit over the last 6 to 12 months. Valuations are on the rise, especially where one or more of the previously mentioned value drivers are present within a specific opportunity. It is still an opportune time to monetize one’s efforts through the sale of a portfolio or an enterprise, especially as the uncertainty of what the future may hold in the way of value (what is being paid) for these assets.”
Jim: “There is tremendous interest and investment in cross-selling additional technology products and services to traditional payments customers to reduce attrition, increase profit margins, and increase revenue per account. The most interest is in payment facilitation. It takes two years to get set up and put all of the tools in place to become a payment facilitator. Companies are looking to collapse the time needed to enter this market by acquiring payment facilitators who already have everything in place. Lastly, there is continued interest in reducing risk by creating new sponsor bank partnerships.”
Vaden: “The evolution of payments continues to be around technology driven solutions such as integrated offerings, mobile, and other innovations targeted toward a certain vertical or set of verticals where industry players seek to gain market share. The theme of our discussions during Money 20/20 were primarily centered on payment facilitation, payment enablement of software solutions, mobile apps and other vertical oriented technologies. And, while there are still many players in the space who are acquiring business through more traditional channels such as “feet on the street”, outbound telemarketing and third-party agent networks, most players have adopted or implemented a strategy that has them scouring the market for opportunities to partner with software developers or other ISV’s in an effort to embed their own version of a payments solution within a given platform. Again, primarily in a specific vertical(s), in an effort to increase efficiencies in terms of customer acquisition and reduce the potential for attrition by building these technical “walls” around customer relationships.
In summary, if you are a buyer or seller looking for ways to enhance your strategic approach to growing the value of your business, MAPP Advisors is uniquely positioned to assist you in both the preparation and execution of that strategy. Contact us to learn how we can help you leverage the current payments market opportunities. We’d like to share more payments insight with you.”
Marketing Insight from Money 20/20
Aimee DuCasse, Marketing Director: “I attended the workshop: Facebook’s Guide to Digital Marketing: How to Acquire Fintech Customers Online. It featured a panel of marketing executives from Facebook and other top fintech companies. Here is what was shared:
To achieve success in digital marketing, fintech companies must make digital marketing efforts a strategic priority for the whole company, digital marketing must not operate as a separate entity within the organization, and the efforts must be done in house rather than by an ad agency so companies have the control needed to continually monitor and adapt the efforts.
Mobile brings about new opportunities for businesses to engage with and acquire customers, and it also brings challenges such as measuring incremental impact. Companies must decide if they are going to be mobile only or mobile also. There is a push for fintech companies to go mobile but they shouldn’t do it for the sake of doing it. Do it because it makes sense for the business. Determine if mobile is the best way to reach the target market. While many mobile only companies have achieved success, others have added more traditional efforts such as telemarketing and direct mail to reach their target market. Fintech companies that go mobile are finding the most success with a cross-channel marketing effort that includes both digital and traditional marketing efforts working in unison.”