In-depth: FinTech 2020

Statista Digital Market Outlook

October 2020
Management summary (1/2)

The last decade has seen considerable disruption of the traditional banking industry, especially in the
areas of payments, lending, wealth management, and retail banking. Interestingly, this change has
not been limited to financial technology (FinTech) start-ups. Large technology and eCommerce
companies such as Google, Amazon, Facebook, Apple, and Alibaba have managed to leverage their
massive reach and technological capabilities to pose a stiff challenge to competitors. The FinTech
industry as we consider it, consists of four segments: Digital Payments, Alternative Financing,
Alternative Lending, and Personal Finance. Of those four, Digital Payments has by the largest
transaction volume.

The digital payment and lending businesses, including mobile wallets, P2P payments, alternative
lending, cryptocurrencies, and robo-advisors, are now finding mainstream acceptance in both
developed and emerging countries. Broadly speaking, there are three types of players in the digital
commerce payments market: providers with their own wallet such as Venmo and PayPal, online
payment interface providers such as Stripe, and B2B offline payment providers such as Square.
These providers make money by charging fees for each transaction, which is usually paid by the
merchant.

Alternative lenders and robo-advisors make their money by either charging service fees from
borrowers and investors or transaction fees from the bank. Blockchain is a distributed ledger
technology that can be used to execute, store, and verify transactions of every kind. Its main uses are
in money transfer, buying and selling stocks, insurance contracts, and buying and selling physical
goods or energy. Blockchain funding fell in 2019 and in the first half of 2020 after exhibiting strong
growth in 2018. The COVID-19 pandemic has contributed to this decline with cryptocurrency markets
freefalling amid a sell-off in equities globally. Cryptocurrencies are probably the most well-known
adoption of blockchain technology. Bitcoin, emerging in 2009, is by far the oldest and the most
widely used cryptocurrency in the world.

Ant Financial, the most highly valued FinTech company in the world, is the holding company of
Alibaba’s financial products. It operates in various business areas including digital payments (Alipay),
business finance (Ant Micro Loan), marketplace lending (Ant Check Later), wealth management (Ant
Fortune), online banking (Mybank), and insurance and credit reference (Sesame Credit). Key factors
behind Ant Financial’s success include diversified businesses, robust government support, and a
strong international presence.

2
1: Peer-to-peer 2: Business-to-business
Management summary (2/2)

Online payment methods (e.g. PayPal, Amazon Payments) have the highest use in Germany, the UK,
Mainland China and the U.S. compared to any other form of payments such as credit/debit cards,
and prepaid cards. PayPal is the most favored brand in terms of online payment in the eyes of the
surveyed population in the U.S., the UK, and Germany, whereas Mainland China has a completely
different story, with Alipay, Wechat Pay and UnionPay taking the first three spots in the chart.

Cash still dominates financial transactions at the POS in the U.S. the UK and Germany, but in
Mainland China, mobile payments have already taken the lead. The most widely used mobile
payment provider in Mainland China is Ali Pay, whereas Apple Pay leads in the UK and the U.S.

The U.S. leads in the number of FinTech companies globally. Specifically, most of the prominent U.S.
FinTech companies are located in California and New York. We have a closer look at some of those
prominent U.S. FinTech start-ups: Venmo, Stripe, Ondeck, Lending Club, Prosper, SoFi, Betterment,
and Wealthfront. Although they offer services in the same segments, their specific conditions and
features vary a lot. For example, in the marketplace lending segment, SoFi offers personal loans with
no origination fees whereas its 1-6% for LendingClub and Prosper.

SoFi and Kabbage are the two most well-funded fintech start-ups in the U.S.. Each of the companies
have raised around US$2.5 billion in funding since 2011. SoFi is backed by key investors such as
SoftBank, Silver Lake Partners, Peter Thiel and others and was last valued at US$4.5bn in Q1 2017.
Similarly, Kabbage is backed by BlueRun Ventures, Guggenheim Securities, ING Group, Lumia Capital
and others. Avant and Commonbond are two other key FinTech start-ups who managed to get more
than US$1.5bn each in funding.
A number of U.S. banks have made FinTech investments, with Goldman Sachs leading the pack with
20, followed by CapitalOne (13) and Citigroup (12). Additionally, the banks have also started
innovation hubs focused on various areas such as mobile banking, blockchain and cryptocurrencies,
wearables, Internet of Things, next-generation commerce, authentication, biometrics integration,
augmented reality, and big data.

Even though the COVID-19 pandemic has affected many fintech companies adversely, their smaller
size as compared to legacy financial institutions, gives them the flexibility to adapt to new market
dynamics. Also, their already advanced technology platforms saves them the hassle of migrating from
legacy systems, thereby giving them a technological edge to attract a younger digital-first audience.

Questions? U.S.: [email protected] EU: [email protected]

3
Table of contents (1/3)

Management summary 2

Table of contents 4

Introduction 7
▪ Overview 8
▪ Digital Payments 9
▪ Alternative Financing 13
▪ Alternative Lending 17
▪ Personal Finance 21
▪ Key players 25
▪ Investments 27
▪ FinTech vs. traditional banks 29

Selected business & revenue models 31

▪ Digital Payments 32
▪ Alternative Lending 36
▪ Robo-Advisors 38

Deep dive: Blockchain 42

▪ Blockchain technology 43
▪ Funding 46
▪ Bitcoin, Ethereum & co. 47
▪ Evolution of blockchain 50
▪ Blockchain adoption by banks 53
▪ Key blockchain developments in the banking industry 54
▪ Future of blockchain 59

4
Table of contents (2/3)

Case study: Ant Financial 61

▪ Overview 62
▪ Key success factors 63
▪ Alipay vs. PayPal 65

Consumer insights 66
▪ Online payment 67
▪ Mobile payments at POS 70
▪ P2P payments 77

Competitive landscape 80
▪ Overview of selected U.S. FinTech companies 81
▪ Comparison: Alternative Lending – Crowdlending 82
▪ Comparison: Alternative Lending – Marketplace Lending 83
▪ Comparison: Personal Finance – Robo-Advisors 84
▪ Venmo 85
▪ Stripe 89
▪ OnDeck 93
▪ LendingClub 97
▪ Prosper 104
▪ SoFi 108
▪ Wealthfront 114

List of U.S. FinTech start-ups 118

▪ Overview 119
▪ Coverage 121
▪ Funding & key investors 124

U.S. banks with FinTech activities 129

▪ Overview 130
▪ FinTech investments 131
▪ Innovation hubs & focus areas 132

5
Table of contents (3/3)

Appendix 133
▪ Glossary 134
▪ Statista Global Consumer Survey 136
▪ Statista Digital Market Outlook 136
▪ Statista Research & Analysis, Statista Content & Design 137
▪ Authors, imprint, and disclaimer 138

6
Introduction
The last decade has seen a considerable disruption of the traditional banking
industry, especially in the areas of payments, lending, wealth management,
and retail banking. Interestingly, this change has not been limited to financial
technology (FinTech) start-ups.
Large technology and eCommerce companies such as Google, Amazon,
Facebook, Apple, and Alibaba have managed to leverage their massive reach
and technological capabilities to pose a stiff challenge to competitors.
The FinTech industry as we consider it, consists of four segments: Digital
Payments, Alternative Financing, Alternative Lending, and Personal Finance.
Of those four, Digital Payments has by the largest transaction volume.

7
FinTech disruptors challenge
traditional banks
Overview

Banking has traditionally been one of the sectors that were most resistant to technological
disruption. Over the years, the industry had built a robust business model aided by favorable
regulations and a general consumer inertia against switching providers. However, the financial crisis
of 2008 triggered a sudden upsurge in FinTech start-ups across the world. Public anger at the
established banking system, stringent regulations imposed on lending in the post-crisis period and
complacency by banks created a conducive environment for FinTech growth.

The term FinTech essentially refers to the disruption caused by the use of technology in the financial
services industry. Technology-focused start-ups are now beginning to offer the products and services
that were only provided by banks in the past. The last decade has witnessed the rise of various start-
ups that have laid down a strong challenge to the major global banks in various areas, including
payments, lending, wealth management, and retail banking. Moreover, large technology and
eCommerce companies such as Google, Amazon, Facebook, Apple, and Alibaba (GAFAA) are also
leveraging their massive reach, technological capabilities, and the ability to deliver an exceptional
customer experience to break into the FinTech industry. We consider four major segments within the
FinTech market:

▪ Digital Payments

▪ Alternative Financing
▪ Alternative Lending

▪ Personal Finance

Evolution of FinTech

2006 2010 2014 2020

FinTech 1.0 FinTech 2.0 FinTech 3.0

▪ First wave of start-ups: P2P1 ▪ Investment by and ▪ Integration of traditional
lenders, payment companies, collaboration with banks banking and start-ups
robo-advisors
▪ Incubators, accelerators, and ▪ Banking transactions packaged
▪ Threat to banks hackathons through APIs

▪ First version of Bitcoin ▪ Regulatory technology ▪ Increased involvement of

blockchain technology
▪ No collaboration between ▪ InsurTech (insurance
banks and start-ups technology) ▪ Increased use of cloud-based
data
▪ Beginning of interest in cloud,
analytics, and blockchain

Source: AgileIntel Research

8
1: Peer-to-peer
Digital Payments transaction value
will reach US$8,170bn by 2024
Digital Payments: overview (1/2)

Digital Payments include payments for consumer products and services which are made over the
internet and mobile payments at point-of-sale (POS) via smartphone applications.

Within the Digital Payments segment, two types of transactions can be differentiated:

▪ Digital Commerce: Consumer transactions made via the internet which are directly related to
online shopping for products and services. Online transactions can be made via various payment
methods (credit cards, direct debit, invoice, or online payment providers such as PayPal and
AliPay).

▪ Mobile POS Payments: Includes transactions at point-of-sale (POS) that are processed via
smartphone applications (so-called “mobile wallets”). Well-known providers of mobile wallets are
ApplePay and Samsung Pay. The payment in this case is made by a contactless interaction of the
smartphone app with a suitable payment terminal belonging to the merchant.
The following are not included in this segment: transactions between businesses (business-to-
business payments), bank transfers initiated online (that are not in connection with products and
services purchased online), and payment transactions at point-of-sale where mobile card readers
(terminals) are used.

Global1 transaction value in billion US$

Digital Commerce Mobile POS Payments

8,170
7,424
+18.8%2
6,656
5,831 4,058
3,517
4,935 2,995
3,991 2,489
2,008
3,210 1,199
2,449 756
328 4,113
3,661 3,907
2,927 3,341
2,455 2,792
2,121

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

9
1: Only includes countries listed in the Digital Market Outlook 2: CAGR: Compound Annual
Growth Rate / average growth rate per year
Mainland China leads the Digital
Payments market
Digital Payments: overview (2/2)

The Digital Payments market is expected to grow at an average annual growth rate of almost 18.8%
from 2017 to 2024. Digital Commerce was the biggest segment in 2017 with a share of over 86%
(US$2,121.3bn) of the total transaction value and is expected to remain so till 2023. However, Mobile
POS is expected to become the dominant category in 2024 with a share of 50% (US$4,057.9bn).

Mainland China is set to remain the biggest market for Digital Payments between 2017 with 35.4%
(US$867mn) and 2024 with 42.4% (US$3,466.8bn) of the global1 market share. Together, Mainland
China and the U.S. will account for over 61% of the global1 transaction value by 2024. The third
biggest market in 2024 – the UK – is far behind Mainland China and the U.S. with a transaction value
of US$343.4bn. Japan and Germany follow with US$260.6bn and US$184.bn, respectively.

In the field of Digital Commerce, growth is mainly based on a growing user base: an increase from
2,481 million users in 2017 to 4,636 million by 2024 is expected. The global1 average transaction
value per user for Digital Commerce will only grow from US$855.1 in 2017 to US$887 by 2024,
whereas that of Mobile POS Payments is expected to grow exponentially from US$1097 in 2017 to
US$2,253.9 by 2024.

Regional split: transaction value in billion US$

U.S. China Europe1

3.467
3.208
2.935
2.638
2.309

1.739
1.565 1.477
1.340 1.393 1.323
1.235 1.161
1.076 981
867 910
792 790
669 680
567 501 572

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

10
1: Only includes countries listed in the Digital Market Outlook
Chinese Digital Payments to
surpass US$3.4 trillion by 2024
Digital Payments: key performance indicators (1/2)

Top 20 countries: transaction value in billion US$

CAGR1 ’17-’24
2017 2024

Mainland China 867.4 20.5%

3,466.8

U.S. 567.0 15.5%

1,565.4

UK 117.9
17.2%
343.4
Japan 139.8
9.7%
260.6
Germany 86.0
12.5%
184.4
France 57.7
13.6%
169.6
South Korea 68.9
25.0%
169.4
India 28.8
18.3%
137.5
Canada 41.6
14.8%
104.7
Brazil 31.5
111.0 19.2%

Australia 32.7
103.9 14.0%

Italy 28.5
94.3 15.4%

Spain 30.7
80.4 17.9%

Turkey 13.2
75.8 18.9%

Russia 27.2
70.0 25.0%
Poland 12.0
61.1 19.8%
Mexico 18.0
66.9 13.9%
Indonesia 13.4
64.1 17.4%
Netherlands 21.3
54.4 29.3%
Sweden 15.6
46.7 27.7%

1: CAGR: Compound Annual Growth Rate / average growth rate per year 11
Source: Statista Digital Market Outlook 2020
Average transaction value in Mobile
POS Payments is growing fast
Digital Payments: key performance indicators (2/2)

Global1 number of users in millions

Digital Commerce Mobile POS Payments

4.636
4.406
4.139
3.822
3.472
3.154
2.781
2.481

1.714 1.800
1.491 1.613
1.339
901
630
299

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

Global1 average transaction value per user in US$

Digital Commerce Mobile POS Payments

2.254
2.051
1.857
1.670
1.500
1.330
1.199
1.097
855 883 885 843 874 885 887 887

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

12
1: Only includes countries listed in the Digital Market Outlook
The Alternative Financing segment
is growing at a CAGR1 of 13%
Alternative Financing: overview (1/2)

The Alternative Financing market segment refers to digital financial services for business customers.
In view of processing complexity, this market is normally focused on small and medium-sized
enterprises (SMEs2) and freelancers.

Within the Alternative Financing segment, two types of transactions can be differentiated:

▪ Crowdinvesting: Focuses particularly on start-ups exchanging investment for company shares

(“equity-based”)

▪ Crowdfunding: Solutions that are used for non-monetary compensation, e.g. product launches,
music, art & film financing ("reward-based").
Bank financing is not considered, neither are any financial aspects that reach beyond the scope of
small and medium-sized enterprises or donation-based crowdfunding models.

The Alternative Financing market is growing at an average annual growth rate of over 13% from 2017
to 2024. Crowdinvesting is the biggest segment, with almost 76% (US$3.0bn) of the segment’s
transaction value in 2017 and 88% (US$8.3bn) by 2024.

Global3 transaction value in billion US$

Crowdinvesting Crowdfunding

9.5
+13.2%1 8.9
8.2 1.2
1.2
7.3 1.1
6.1 1.1
5.8
0.9
4.8 1.0
4.0 1.0
7.8 8.3
1.0 7.1
6.3
4.8 5.2
3.8
3.0

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

13
1: CAGR: Compound Annual Growth Rate / average growth rate per year 2: Small and medium-
sized enterprises 3: Only includes countries listed in the Digital Market Outlook
The U.S. and China are the top two
markets for Alternative Financing
Alternative Financing: overview (2/2)

Crowdfunding (also: reward-based crowdfunding) is a financing form independent of financial

institutions and the location of the campaign creator or investor. Reward-based crowdfunding
campaigns can be initiated for a wide range of different purposes such as product launches, art and
film financing, scientific research, etc. Usually, there is a financing goal defined by funding volume and
time to reach this goal for every campaign. The campaign creator publishes engaging content (e.g.
videos, text) that explains the goal and motivation of the fundraising. Almost everyone can participate
as an investor (the only prerequisite is a valid payment account).

The term Crowdinvesting (also: equity crowdfunding) defines a variety of transactions where an
unspecified number of investors come together in order to invest in a well-defined purpose. The
following segment exclusively considers “equity-based crowdfunding”; investments in equity shares
or profit-related returns (for example, royalties or convertible loans). Crowdfunding has become a
popular financing option for start-ups and is considered a part of venture capital financing. Well-
known platforms in this area are EquityNet, CrowdCube, and Seedrs.

Crowdinvesting is the larger segment in Alternative Financing and will remain so through to 2024 with
a market share of over 87%.

The U.S. and Mainland China are the two biggest Alternative Finance markets globally, with the U.S.
expected to be only marginally ahead all through the period 2020-2024. Mainland China’s immense
volume of small and medium-sized businesses as well as a less developed banking infrastructure, is
responsible for its success.

Regional split: transaction value in billion US$

U.S. China Europe1

3.7
3.5
3.2
2.8

2.3
2.2
1.8 1.8 1.7
1.7 1.6
1.5 1.6 1.5
1.4 1.3
1.3
1.2 1.2 1.1
1.1 1.0
0.8
0.7

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

14
1: Only includes countries listed in the Digital Market Outlook
The U.S. market will be closely
followed by Mainland China by 2024
Alternative Financing: key performance indicators (1/2)

Top 20 countries: transaction value in million US$

2017 2024 CAGR1 ’17-’24

U.S. 1,095 7.0%

1.764
Mainland China 682 13.6%
1.670
Israel 403 20.0%
1.445
UK 564 11.3%
1.191
Netherlands 234 17.8%
736
Sweden 84 23.3%
364
Hong Kong SAR 140 9.8%
268
Italy 34 28.1%
192
Finland 76 13.9%
190
Germany 100 8.8%
181
South Korea 32 25.9%
160
France 102 6.2%
156
Switzerland 68 11.6%
146
Russia 50 14.9%
131
Australia 47 12.4%
106
Canada 54 9.6%
103
Japan 36 15.7%
99
Austria 28 19.1%
95
Spain 34 12.1%
76
13 26.0%
Poland
63

15
1: CAGR: Compound Annual Growth Rate / average growth rate per year
Source: Statista Digital Market Outlook 2020
Crowdinvesting raises the highest
average amounts
Alternative Financing: key performance indicators (2/2)

Global1 number of campaigns in thousand

Crowdinvesting Crowdfunding

179 184 184 181

176 175 178
172

64 67
57 61
51
41 46
38

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

Global1 average funding per campaign in thousand US$

Crowdinvesting Crowdfunding

120,7 123,6
116,0
109,9
104,1 100,6
92,0
78,9

5,5 5,7 5,9 5,3 5,7 6,1 6,4 6,6

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

16
1: Only includes countries listed in the Digital Market Outlook
Alternative Lending will surpass
US$300 billion by 2021
Alternative Lending: overview (1/2)

The Alternative Lending market segment relates to digital financial services for business customers as
well as private borrowers.

Within the Alternative Lending segment, two types of transactions can be differentiated:

▪ Crowdlending (Business): Bank-independent loan allocation for SMEs1. This is for business
purposes only.

▪ Marketplace Lending (Personal): Bank-independent loan allocation for personal use. This is also
known as peer-to-peer lending.

The lending is done through private or institutional investors via online platforms (e.g. OnDeck,
LendingClub, Prosper). In view of the processing complexity, this market is focused on SMEs1,
freelancers, and private persons.

Bank financing is not considered, neither are any financial aspects that reach beyond the scope of
small and medium-sized enterprises or donation-based crowdfunding models.

The Alternative Lending market is growing at an average annual growth rate of almost 11.8% from
2017 to 2024. Crowdlending (business) is the biggest segment with 60% (US$108.4bn) of the
transaction value in 2017 and 75% (US$297.6bn) by 2024.

Global2 transaction value in billion US$

Crowdlending (business) Marketplace Lending (personal)

+11.8%3 396.9
382.7
363.6
334.3 99.2
98.0
291.5 96.2
267.1 92.7
221.0 85.4
86.3
181.3
78.9
72.8 284.7 297.6
241.6 267.4
180.8 206.1
142.0
108.4

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

17
1: Small and medium-sized enterprises 2: Only includes countries listed in the Digital Market
Outlook 3: CAGR: Compound Annual Growth Rate / average growth rate per year
Mainland China accounts for 88% of
the Alternative Lending market
Alternative Lending: overview (2/2)

China is expected to remain the biggest market for Alternative Lending between 2017 with 78%
(US$141.7bn) and 2024 with 88% (US$348.2bn) of the global1 market share. Together, China and the
U.S. account for nearly 96% of the global1 transaction value. The third biggest market in 2024 – the
UK – will be far behind China and the U.S. with a transaction value of US$4.7bn.

Switzerland, Denmark and Spain are expected to demonstrate the highest CAGR2 during 2017 and
2024, whereas Canada is expected to register the lowest negative growth during the same period.

Crowdlending (business) is the biggest segment with an expected average of nearly 75% of the total
transaction value in 2024. However, the average funding per loan is expected to be comparatively
low for Marketplace Lending (personal) at US$2,049 in 2024 compared to US$5,273 for
Crowdlending (business) in the same year.

Regional split: transaction value in billion US$

U.S. China Europe1 348.2

335.2
317.7
290.7
251.9
222.5

178.9
141.7

30.7 31.5 32.5 27.6 30.4 32.0 33.0 33.8

6.3 7.5 8.8 8.6 9.4 9.9 10.3 10.5

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

18
1: Only includes countries listed in the Digital Market Outlook 2: CAGR: Compound Annual
Growth Rate / average growth rate per year
The growth rate of the U.S. will be
one of the lowest during 2017-2024
Alternative Lending: key performance indicators (1/2)

Top 20 countries: transaction value in million US$

2017 2024 CAGR1 ’17-’24

Mainland China 141,673

348,201 13.7%

U.S. 30,711
33,752 1.4%

UK 3,770
3.3%
4.720
Switzerland 349
22.8%
1.471
Italy 310
14.3%
788
Australia 459
624 4.5%

Spain 168 19.9%

597
Japan 417 2.3%
489
France 327 3.7%
420
Singapore 173 11.2%
363
Finland 175 8.9%
318
Netherlands 224 5.0%
315
Poland 96 17.5%
297
Germany 259 1.6%
289
Mexico 111 14.5%
285
Denmark 69 19.7%
243
Russia 101 12.6%
230
South Korea 131 5.7%
193
India 106 3.1%
131
65 6.4%
Brazil 100

19
1: CAGR: Compound Annual Growth Rate / average growth rate per year
Source: Statista Digital Market Outlook 2020
Crowdlending (Business) to
disburse >50mn loans by 2023
Alternative Lending: key performance indicators (2/2)

Global1 number of loans in millions

Crowdlending (Business) Marketplace Lending (Personal)

53.1
50.7
49.1
46.1
41.8
37.4 36.6 38.0
35.8
34.0 33.9
31.5 31.0
28.1
24.5 25.9

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

Global1 average funding per loan in US$

Crowdlending (Business) Marketplace Lending (Personal)

5.441 5.618 5.601

5.239
4.830 4.931

4.182

3.442
2.971 3.049 3.077
2.752 2.732 2.688 2.676 2.609

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

20
1: Only includes countries listed in the Digital Market Outlook
Personal Finance transactions to
reach US$2.7 trillion by 2024
Personal Finance: overview (1/2)

The Personal Finance market segment relates to digital financial services for private investors and
users.

Within the Personal Finance segment two types of transactions can be differentiated:

▪ Robo-Advisors: Automated investment services that enable private investors to align their
investment strategy or portfolio using automated recommendations, for example via lead
investors, swarm intelligence, social trading, or individually configurable parameters.

▪ Digital Remittances: Cross-border money transfers made over the internet by the migrant
population. Remittances in general include fund transfers between residents and non-residents
and earnings transfer from short-time workers from other countries to their country of origin.
The following are not included in this segment: domestic fund transfers & social payments, non-
automated financial advisory, financial planning or broker services, personal finance management
services (PFM) and budgeting manager

The Personal Finance market is expected to grow at a CAGR1 of 33.5% from US$349bn in 2017 to
US$2.6 trillion by 2024. Robo-Advisors is the biggest segment with 85% (US$297.7bn) of the
transaction value in 2017 and 94.2% (US$2.5 trillion) by 2024.

Global2 transaction value in billion US$

Robo-Advisors Digital Remittances

2,640
152
2,253
140
+33.5%1 1,866
124
1,474
107
1,075 2,487
907 88 2,113
79 1,741
584 1,367
349 64 987
827
51 520
298
2017 2018 2019 2020 2021 2022 2023 2024
Source: Statista Digital Market Outlook 2020

21
1: CAGR: Compound Annual Growth Rate / average growth rate per year 2: Only includes
countries listed in the Digital Market Outlook
The U.S. leads the market through
2023
Personal Finance: overview (2/2)

The U.S. is expected to remain the biggest market for Personal Finance between 2017 with 68%
(US$235.9bn) and 2024 with 65% (US$1,715.1bn) of the global1 market share. Together, the U.S. and
China will account for nearly 90% of the global1 transaction value by 2024. The third biggest market
in 2024 – the UK – is far behind China and the U.S. with a transaction value of US$50.2bn. Germany
and Canada follow with US$43.7bn and US$24.7bn, respectively.

Mainland China, Hong Kong SAR, and the UK are expected to demonstrate the highest CAGR2
between 2017 and 2024, respectively.

The market share of Robo-Advisors transactions will grow from 85.3% in 2017 to 94,2% by 2024
despite a decline in average assets under management per user from US$6,959 to US$5,700. This is
due to a massive surge in the number of users, which is expected to reach over 436 million by 2024
from only 42.8 million in 2017.

Regional split: transaction value in billion US$

U.S. China Europe1

1,715

1,463

1,212

960

702
625

400
272 309
236 229
180 142
129 113 128
29 41 47 64 65 97 79 97

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

22
1: Only includes countries listed in the Digital Market Outlook 2: CAGR: Compound Annual
Growth Rate / average growth rate per year
Italy registers a CAGR1 of >50%
2017–2024
Personal Finance: key performance indicators (1/2)

Top 20 countries and territories: transaction value in million US$

2017 2024 CAGR1 ’17-’24

U.S. 235,901
1,715,072 32.8%

China 28,967
142.472 25.6%

Japan 5,664
77.862 45.4%

Uk 6,800
50.241 33.1%

Germany 4,658
43.659 37.7%

Italy 2,259
39.316 50.4%

France 4,064
35.7%
34.442
South Korea 5,641
26.5%
29.199
Canada 3,200
33.9%
24.707
Switzerland 5,010
23.1%
21.437
Australia 1,682
42.9%
20.494
Russia 4,290
24.7%
20.091
Netherlands 5,328 17.7%
16.674
Saudi Arabia 3,986 21.2%
15.273
Hong Kong 1,485
28.9%
SAR 8.788
Austria 1,058 32.7%
7.685
Norway 958 33.1%
7.103
Hong Kong SAR 475 44.9%
6.374
Denmark 1,011 25.8%
5.035
419
Singapore 3.418 35.0%

23
1: CAGR: Compound Annual Growth Rate/ average growth rate per year
Source: Statista Digital Market Outlook 2020
Robo-Advisor users will surpass 300
million by 2022
Personal Finance: key performance indicators (2/2)

Global1 number of users in millions

Robo-Advisors Digital Remittances

436
394
348

293

225

150

85
43
5 6 7 9 10 12 13 15

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

Global1 average transaction value per user in US$

Robo-Advisors Digital Remittances

10.963 11.189
10.493 10.568 10.631 10.602 10.511
10.294

6.959
6.118
5.514 5.700
5.367
5.007
4.398 4.669

2017 2018 2019 2020 2021 2022 2023 2024

Source: Statista Digital Market Outlook 2020

24
1: Only includes countries listed in the Digital Market Outlook
Most prominent FinTech players can
be found in Digital Payments
Key players (1/2)

Digital Payments – representative key players

Digital Commerce Mobile POS Payments

Source: AgileIntel Research

Alternative Finance – representative key players

Crowdinvesting Crowdfunding

Source: AgileIntel Research

25
Especially the Robo-Advisors
segment has many active players
Key players (2/2)

Alternative Lending – representative key players

Crowdlending (Business) Marketplace Lending (Personal)

Source: AgileIntel Research

Personal Finance – representative key players

Robo-Advisors Digital Remittances

Source: AgileIntel Research

26
FinTech investments increased by
around 150% in 2019
Investments (1/2)

According to estimates by KPMG1, global FinTech investment, including venture capital (VC), M&A and
private equity (PE) increased by around 150% in 2019 to reach a little over US$150 billion from
US$60.2 billion in 2017. However the industry is now cooling off after many years of robust growth
with only US$25.6 billion worth of investment activity having taken place as of 30th June 2020.
FinTech investment across the Americas dropped sharply in H12020 mainly due to a lack of M&A
deals, which in turn were affected by the ongoing COVID-19 pandemic. However, as the world looks
to resume normal functioning, FinTech investment in the Americas is expected to pick up pace in the
later part of the year to exceed 2019 levels overall. The U.S. companies constituted US$8.6 billion of
the US$12.9 billion investment across the Americas in 1H2020 with payments unsurprisingly being
the hottest sector. In the same time period, investments in Asia and the EMEA region amounted to
US$8.1 billion and US$4.6 billion, respectively.

Despite all this investment and speculation about banks facing extinction, however, only 1% of North
American consumer banking revenue had migrated to new digital models, according to a Citibank
report in March 20162.

We would like to entirely share with partners our capability of data

collection and data processing to jointly develop the inclusive financial
system. It won’t be a single giant firm that can dominate the country’s
digital banking services.

Jack Ma, Executive Chairman, Alibaba

This is mainly because even though these start-ups use advanced technologies, they have not yet
reached the scale of the incumbent banks. Moreover, the FinTech markets in North America and
Europe do not have a level of digital disruption as high as the Chinese market. However, the COVID-
19 situation has accelerated longstanding consumer and business shifts away from the branch and
toward digital channels – changes that could stick for the long-term.
The FinTech companies in Mainland China led by Ant Financial have managed to gain a significant
share of the market, mainly in third-party payments. This is due to the close integration of FinTech
start-ups in the broader eCommerce ecosystem. A great example is Alibaba, which has managed to
leverage its strong hold on Mainland China’s eCommerce market and vast capital reserves to aid
rapid adoption of Alipay and other financial products offered by Ant Financial. In fact, according to
the Citibank study, FinTech companies in Mainland China have already passed a tipping point in
disrupting the banking industry. This is reflected in the fact that Mainland China will surpass the U.S.
as the biggest FinTech market by 2023, according to the Statista Digital Market Outlook estimates.

27
1: The Pulse of Fintech H12020, September 2020, KPMG; 2: Digital Disruptions
Global investments in FinTech
surpassed US$150bn mark in 2018
Investments (2/2)

Total investment activity (VC, PE, M&A)1 in FinTech companies in billion US$

+149.8% 0.0%
-83.0%
150.4 150.4

60.2

25.6

2017 2018 2019 1H2020

28
1: VC – Venture Capital, PE – Personal Equity, M&A – Merger and acquisition
Source: The Pulse of Fintech H12020, September 2020, KPMG
FinTech still has to find its way to
the mainstream services markets
FinTech vs. traditional banks (1/2)

Banks have traditionally been a necessity in the global financial system. However, recent
advancements in digital technology and data mining, failed expectations, and continuously eroding
consumer trust in the banking system, as well as accessible venture capital funding and favorable
regulations, have all allowed FinTech companies to dilute their importance.
The first phase from 2006 to 2010 saw FinTech companies disrupting large financial institutions. As
the banks started to respond to the challenges thrown at them, we got to witness the second phase
in 2010 to 2014, in which banks and start-ups began to collaborate and develop interoperable
systems. From 2017 onwards, the entire structure of the financial services industry has been on the
cusp of change, driving the integration of services and systems.

Despite the mass of investments and activity in innovation labs, however, most FinTech companies
have not yet been able to achieve their desired scale of operations, which has caused a recent
slowdown in venture capital funding.

The cost of starting a FinTech company has decreased significantly, leading

to an increase in the number of FinTech start-ups. Not all of them will
survive but those that do will have a significant and lasting impact on the
financial services industry.

Jack Ma, Executive Chairman, Alibaba

There are positive signs for some FinTech firms, which are beginning to find their niche, especially the
ones developing technologies such as blockchain, which result in significant cost savings. Blockchain
solutions in the areas of payment authorization, settlement, and international transfers are expected
to experience fast and widespread adoption. Others with viable business models in areas such as
investment management are expected to keep eating away at the market share of traditional
providers and creating new markets, as a lot of people with lower and medium incomes that
previously never had access to affordable investment advice, now do.

29
Source: AgileIntel Research
Will traditional banks prevail
through disruption by FinTechs?
FinTech vs. traditional banks (2/2)

A lot of people have not yet heard of FinTech but certainly use some of the services and products
provided by FinTech companies, like internet payment services and mobile payments. Increasing and
guaranteeing security will help broaden the awareness and drive usage of FinTech products and
services.
While FinTech players have driven down cost and thus made it beneficial for all parties involved to
use their products, they have not managed to strip down their fee structure to an easily comparable
level. While borrowers can get their rating and resulting interest rates in minutes from FinTech
lenders, they will be hard pressed to quickly find the best deal for them similar to the old established
banking world, as fee structures and fine print vary from provider to provider.

Additionally, most FinTech providers focus on only one or two segments, unlike traditional banks,
which usually have a very broad product offering. This makes it necessary for customers to either
choose one of the few (almost) “full-service” providers like SoFi, which offers lending and wealth
management, or register with a lot of companies driving up the complexity of and the time
consumed by their finance management.

The rising number of investments by traditional banks and their adoption of FinTech technology
shows that they are aware of the risks and opportunities provided by these new developments.

The main question is whether the old banks will prevail by adopting new technologies and
successfully changing enough to shake off most of the new competitors by virtue of their sheer size
or whether FinTech start-ups will overtake the old system almost entirely.

30
Selected business & revenue
models
The digital payment and lending businesses, including mobile wallets, P2P
payments, alternative lending, cryptocurrencies, and robo-advisors, are now
finding mainstream acceptance in both developed and emerging countries.
Broadly speaking, there are three types of players in the digital commerce
payments market: providers with their own wallet such as Venmo and PayPal,
online payment interface providers such as Stripe, and B2B offline payment
providers such as Square. These providers make money by charging fees for
each transaction, which is usually paid by the merchant.
Alternative lenders and robo-advisors make their money by either charging
service fees from borrowers and investors or transaction fees from the bank.

31
Digital Payments are driven by a
growing eCommerce market
Digital Payments: overview (1/2)

Digital payment methods have brought change to the payments industry traditionally dominated by
debit cards, credit cards, checks, cash, and prepaid cards. The surge of smart devices and a booming
global eCommerce market are the major factors driving the rapid adoption of digital payment types.
Most new payment solutions offer an instant transfer of money via the web through various channels
such as mobile phones, tablets, and digital wallets.

Even though the U.S. alternative payments market is dominated by PayPal, Venmo, and Square,
technology giants such as Facebook, Google, and Apple, as well as large banks such as JP Morgan
Chase and Wells Fargo are also pushing into the market. The ultimate goal of the industry is to
reduce transaction costs, increase the speed of money transfers, facilitate the rise of global
eCommerce, and weave payments into the very fabric of social networking.

The total Digital Payments transaction value in the U.S. is expected to value around US$910 billion by
the end of 2020 and cross the US$1 trillion mark in 2021, according to the Statista Digital Market
Outlook. In 2020, Digital Commerce is expected to constitute US$538.2 billion (59%) while Mobile
POS Payments contributes US$372.2 billion (41%). Globally, the market is expected to increase from
US$4.9 trillion in 2020 to around US$8.2 trillion in 2024.

Operating model

Destination/
Payment sources Payment platform providers beneficiaries

Credit/debit card Payment transfer

Internet banking Shop online or at

point-of-sale
Source: AgileIntel Research

32
Source: Statista Digital Market Outlook 2020
Digital Payments has seen a lot of
innovation over the past few years
Digital Payments: overview (2/2)

Various retail payment innovations have gained traction over the past few years, including:
▪ Mobile wallets: A virtual wallet that lets businesses and individuals send and receive money
through mobile devices.

▪ P2P mobile payments: They allow individuals to transfer money from their bank account or credit
card to another individual's account through a mobile phone.

▪ Foreign exchange payments: Companies like TransferWise and Xoom allow consumers to
transfer money to or pay bills for family and friends around the world, using their mobiles, tablets,
or computers.

▪ Real-time payments: Payments that are cleared in real time or close to it, irrespective of the
payment instrument used.

▪ Cryptocurrencies: these payment methods exist only in electronic form and are not tangible.
Infrastructure needed to support such currencies at scale is still being developed. Examples
include Bitcoin, Ether, and Ripple.

The digital commerce market is fragmented with a lot of different players. In general, there are three
types of players in the broader digital commerce business:
▪ B2C payment methods with an own wallet: These system allow consumers to pay in online
shops with money stored in a digital wallet. The digital wallet can be filled by credit/debit card
transactions or bank transfers or when friends transfer money from their own digital wallet.
Example companies are Venmo and PayPal.

▪ B2B online payment providers: These are interfaces to connect online shops with payment
providers, e.g. credit/debit cards or online payment methods like PayPal and Alipay. These
interfaces are easy to implement for the online shop operators and allow them to add new
payment methods to their offering. The customer usually does not specifically know which
payment provider is used, but rather focuses on the payment methods that are offered via the
provider. An example company here would be Stripe.

▪ B2B offline payment providers: They offer an interface to connect offline shops with payment
providers and are not included in the Digital Commerce segment of the Statista Digital Market
Outlook1. Where before only cash payments were possible and credit/debit card payments
required expensive machines with high transaction fees for the merchants, start-ups now offer
point-of-sale online payments including all payment methods, e.g. PayPal and Apple Pay. One
provider for point-of-sale solutions is Square, which offers various devices to allow businesses to
process card and mobile payments as well as other online payment methods.

33
1: Payments are only included if they are done via mobile payments like Apple Pay that might be
supported by the payment providers
Revenue models are mainly based
on transaction fees for merchants
Digital Payments: revenues & fees

Generally, the revenue model of digital payment providers is based on charging fees for each
transaction, which are usually paid by the merchant. In most cases, the fees are a certain percentage
of the transaction value but can also include a per-transaction-fee component. Users are sometimes
charged a fee if they use specific payment methods such as credit cards.

Fee structure – transaction fees for digital commerce for businesses

Operator Transaction fee

Different depending on country – U.S. fees listed:
PayPal & Venmo1 ▪ 2.9% of transaction value + US$0.30 for payments from the U.S.
▪ 4.4% of transaction value + fix fee2 for payments from outside the U.S.

▪ 1.4% of transaction value + US$0.303 for European cards4

Stripe ▪ 2.9% of transaction value + US$0.30 for non-European cards4
▪ 0.8% of transaction value for ACH5 and Bitcoin transactions6

▪ 2.75% of transaction value for all automated transactions7

Square
▪ 3.5% of transaction value plus US$0.15 for keyed-in transactions

Source: Company information

1: A PayPal company 2: Fee is based on the currency of the payment 3: €0.25 4: Credit & debit
cards 5: Automated Clearing House – an electronic network for financial transactions in the U.S. 34
6: Max. US$5 7: Payments by card where magnet stripe or chip is read by the square device, or
via mobile phone
PayPal crossed the US$15 billion
revenue mark in 2018
Digital Payments: PayPal vs. Square

PayPal is one of the big players in the digital payments landscape. The PayPal platform provides
digital commerce and P2P money transfer capabilities and includes companies like Venmo, Braintree,
and Zoom. It is available in more than 200 markets worldwide. Mobile and in-store payments are
available in some countries as well.

Square, on the other hand, provides a point-of-sale payment infrastructure that allows businesses to
accept credit/debit card payments, as well as mobile payments via Apple Pay or Android Pay. Square
is available in the U.S., Canada, Japan, Australia, and the UK.

While PayPal’s and Venmo’s fee structure varies depending on the country the merchant operates in
and takes into account the country where the payment is issued and the currency, Square charges a
fee depending on whether the transaction is processed automatically or manually keyed into the
Square software.

When comparing revenue streams of PayPal and Square, it becomes obvious that PayPal’s global
reach is a key reason for their significantly higher revenue. Additionally, Square has to convince
merchants and stores to use their technology instead of the existing and wide-spread credit card
terminals, or focus on smaller merchants and stores that cannot yet afford them.

Revenues of PayPal and Square in million US$

PayPal Square
17.770

15.451

13.094

10.842
9.248
8.025
6.730
5.990
4.714
3.298
1.709 2.214
850 1.267
203 552

2012 2013 2014 2015 2016 2017 2018 2019

Source: Company Annual Reports and Press Release

35
Source: Company Press Release
Alternative Lending in Mainland
China is different from the U.S.
Alternative Lending: overview

Consumer and business loans in the FinTech space are mostly carried out by lending platforms,
which operate as marketplaces linking borrowers to lenders. This means that unlike banks, which
accept deposits and lend to consumers and businesses, these lenders do not take deposits or lend
themselves. They take no risk onto their own balance sheets, and therefore receive no interest
income directly from borrowers.

The main USP of these companies is to decrease the borrowing cost for borrowers and increase
returns for lenders or investors as well as to enable a lot of consumers to get a loan in the first place.
Marketplace lenders primarily target consumers and small businesses that are unserved or under-
served by traditional banks, thereby operating only at the lower end of the market. The high net
worth individuals who form the core of the market still turn to banks or other traditional investment
managers for financial advice.

According to estimates by Citi, it is credit card loans, student loans and SME financing that constitute
most of the market for FinTech lenders, which is pegged at about US$254 billion or 8% of the total
U.S. consumer credit market potential.

The marketplace lending model in Mainland China has differences to the U.S. and European systems.
Chinese firms mostly operate on an online-to-offline model in which investors are sourced online but
borrowers are served offline through partnerships with non-bank financial institutions or by their
own agents.
In the U.S., on the contrary, alternative lending is almost entirely based on an online model.
LendingClub, Prosper, and SoFi are the three major FinTech players in the U.S. in this segment.

36
Source: Citi
Profiteers are borrowers, market-
places, banks and investors alike
Alternative Lending: Marketplace Lending

Since marketplaces do not take any deposits or lend their own money, they do not receive an
interest income. Instead, they earn their revenues from fees and commissions generated by
matching borrowers with lenders.

There are mainly two types of fees that marketplaces profit from:

▪ Transaction fee from the bank

▪ Service fees for borrowers and investors, e.g. late payment fees, check payment fees, and service
fees based on invested capital

In some cases (e.g. LendingClub), origination fees contribute the greatest part to the revenue. In
2015, they accounted for almost 88% of the platform’s operating revenue. Often investors have to
pay a service fee based on their payments or the amount invested as well.

Alternate Lending: Marketplace lending process & revenue streams

Borrowers

Issuing bank
Marketplace lending (personal)

Loan Borrower Loan Investors Loan Loan Loan Investment

application evaluation1 listing funding issuing purchasing repayment payout2

Investors

Financial benefits for parties involved:

Borrower: Lending marketplace: Issuing bank: Investor:
Loan granted Transaction fee from bank, Interest rate from Return on investment
service fee from Investors loan issuance3 from marketplace
Source: Statista Digital Market Outlook 2020

1: Includes determination of loan interest rates, based on a prior credit scoring 2: Including 37
initially agreed interest rate 3: Interest rate is based on credit worthiness of marketplace and
therefore lower than for individual borrowers, the interest rate includes the origination fee
Robo-advisors offer algorithm-
based investments and advice
Personal Finance: Robo-Advisors (1/2)

Robo-advisors are automated investment platforms that offer investment advice by leveraging client
information and algorithms. When signing up for the service, investors are first asked to answer a
series of questions about the amount they’re looking to invest, their risk tolerance and expected
returns. The platforms then usually assign each investor a risk category from 1–10. This number is
then used by algorithms to put the investment into various asset classes, often low-cost exchange-
traded funds (ETFs). Robo-advisors also rebalance the portfolios at regular time intervals and offer
extra services such as tax loss harvesting. Companies are now looking to enhance their know-how in
big data and analytics to deliver more personalized and specific investment advice.

Even though the industry has experienced a strong growth since the first robo-advisors were
launched, their current market share is marginal and mainly concentrated in the lower end of the
market. Deloitte classifies robo-advisors according to their capabilities (see below) and says that, as
at August 2016, around 80% of robo-advisors in the U.S., Germany, the UK and the EU have 3.0
capabilities.

The Statista Digital Market Outlook forecasts the total assets under management by robo-advisors
globally, to increase from US$987.5 billion in 2020 to as much as US$2.5 trillion by 2024. The overall
push towards digital platforms, especially in the wake of the COVID-19 pandemic, is one of the main
factors driving growth over the next few years.

Robo-advisory evolution

4.0
3.0 ▪ Fully automated
2.0 ▪ Algorithm-based investments
1.0 ▪ Dedicated fund adjustments & ▪ Self-learning
management rebalancing algorithms
▪ Online
▪ Automatic asset
questionnaire ▪ Managed proposals
adjustments & ▪ Pre-defined shifts
▪ Product or
rebalancing investment rules
portfolio
proposal
▪ Funds of funds
& portfolio view
▪ Listed ETFs, ▪ Risk-based
bonds, shares portfolio
allocation

Source: Deloitte

38
Source: Deloitte, Statista Digital Market Outlook 2020
Robo-advisors attract customers
with significantly lower fees
Personal Finance: Robo-Advisors (2/2)

The revenue model of robo-advisors is based on significantly lower fees as compared to traditional
investment management firms. They can afford this as they use low-cost investment vehicles like
ETFs.

The main U.S. companies in this space include Betterment, Wealthfront, SoFi, and FutureAdvisor, all
of whom charge their clients between 0.15% and 0.5% per year, depending on the amount invested.
Investors also pay ETF expense fees at times, which range from 0% to 0.15%.

These advisors also provide for low account minimums and services such as tax-loss harvesting,
which were previously only available to big investors.

AUM1 by selected robo-advisors in million US$2

Vanguard 148,000
Schwab Intelligent
40,700
Portfolios
Wealthfront 20,000

TD Ameritrade 18,200

Betterment 18,100

Personal Capital 12,300

Wealthsimple 4,600

Acorns 1,800

United Income 1,200

Future Advisor 1,100

Source: Statista

39
1: Assets under management 2: March 2020
Robo-advisors mainly invest in
vehicles with low fees
Robo-Advisors: comparison to traditional wealth management

Robo-advisors vs. traditional wealth management

Traditional wealth
Parameters Robo-advisors management companies
▪ Algorithm-based investment ▪ Individual portfolio management by
Business advice bank, company, or institution
model ▪ Portfolio management advisor

▪ Individuals with modest assets, ▪ High and ultra-high net worth

Targeted investors technology-oriented clients

▪ Easy and affordable personal ▪ High level of service

finance management ▪ Top investment skills
▪ Approved investment strategies ▪ Individual approach
USP ▪ Passive approach to investing ▪ Tailored investment strategies for
▪ Automated rebalancing long & short-term allocation

▪ Up to 0.5% fee on assets ▪ Up to 2% fee on assets managed

managed ▪ Individual pricing
▪ Free management of "beginner" ▪ Minimum initial investment levels
Fee structure accounts with low balance may apply
▪ No transaction-specific fees ▪ Potential additional fees per
transaction

▪ Online risk profiling ▪ Individual dialog with advisor

▪ Setting up personalized portfolio ▪ Tailored investment strategies
based on risk tolerance ▪ Target asset allocation
Procedure ▪ Algorithm-based adjustment ▪ Asset management and brokerage
▪ Automated rebalancing ▪ Periodical performance reviews

▪ Low-fee stock and bond index ▪ Classic vehicle types (stocks, bonds,
funds, usually ETFs ETFs, mutual funds)
Investment ▪ Structured products
vehicles ▪ Alternative investments

40
Source: Company information, press releases
Betterment is the only robo-advisor
with a single-stock diversification
Robo-Advisors: company comparison

Product and service offerings of selected companies

Product/service
offerings

Account aggregation ✓ ✓

Asset allocation ✓ ✓ ✓ ✓

Exchange traded funds ✓ ✓ ✓ ✓

Individual stocks ✓ ✓ ✓

Single-stock
✓
diversification

Automated rebalancing ✓ ✓ ✓ ✓

Automated deposits/
✓ ✓ ✓ ✓
transfers

Dividend reinvestment ✓ ✓ ✓ ✓

Tax-loss harvesting ✓ ✓ ✓ ✓

41
Source: Company information
Deep dive: blockchain
Blockchain is a distributed ledger technology that can be used to execute,
store, and verify transactions of every kind. Its main uses are in money
transfer, buying and selling stocks, insurance contracts, and buying and
selling physical goods or energy.
Blockchain funding fell in 2019 and in the first half of 2020 after exhibiting
strong growth in 2018. The COVID-19 pandemic has contributed to this decline
with cryptocurrency markets freefalling amid a sell-off in equities globally.
Cryptocurrencies are probably the most well-known adoption of blockchain
technology. Bitcoin, emerging in 2009, is by far the oldest and the most widely
used cryptocurrency in the world.

42
Blockchain uses vast networks to
store and verify transactions
Blockchain technology (1/3)

Blockchain is a distributed ledger technology that can be used to execute, store, and verify
transactions of every kind. It allows parties to make and verify transactions or contracts instantly
without the approval of a central authority. There are a lot of potential use cases for this technology,
among else:
▪ Money transfer

▪ Buying and selling stocks

▪ Insurance contracts

▪ Buying and selling physical goods or energy

Blockchain essentially uses cryptography and complex algorithms to allow transactions to be shared
across a network of computers and then be authenticated by the participants in the network. The
concept of blockchain was first mentioned in a paper by Satoshi Nakamoto about Bitcoin in 2008.
Bitcoin was also the first publicly shared blockchain. This brings us to two things that are often
mentioned in relation to blockchains:

▪ Cryptocurrencies: Cryptocurrencies are often used as a synonym for blockchain, although they
are usually merely the result of one. Most existing blockchains are directly connected to a
cryptocurrency that is used to recompense people who contribute to the blockchain.
▪ Smart contracts: A smart contract is an electronic contract that monitors contractual rules and
clauses and can trigger pre-defined events automatically. One example would be a contract
between two parties to sell and buy stocks. Party A wants to buy stocks from party B at a specific
date for a specific amount of money. They agree on a contract that is automatically executed on
the given date. Blockchain technology makes smart contracts like this a lot easier and faster.

Broadly speaking, there are three types of blockchains: public, private, and consortium.

▪ Public: Also called “permissionless”, these blockchains are fully decentralized. They are open to
everyone, thereby allowing them to read or write data from or to the ledger. Bitcoin is an example
of a public network.

▪ Private: These blockchains involve restricted access to the network with only an organization or a
few users having the right to modify or read the blockchain state. Financial institutions all over the
world have shown considerable interest in private blockchains over the years to carry out
functions such as database management and auditing. The Hyperledger Project and R3's Corda
are examples of private blockchains.

▪ Consortium: These networks are controlled by a consortium of companies or institutions and are
different from private blockchains by virtue of the method of consensus. Being partially
centralized, the right to read these blockchains could be either private or public.

So how does blockchain work? This is not easily answered, as all blockchains use different methods
to achieve the same result: instant transactions and decentralized verification and storage. To
describe the blockchain technology in broad and general terms, we use the example of money
transfer. Party A wants to transfer money to party B. Both need to be members of a blockchain and
thus have both a private and a public key for the encryption.

43
Currently, two ways are used to
verify blockchain transactions
Blockchain technology (2/3)

Party A can only transfer the money to party B if it knows B’s public key and if B verifies the
transaction with its own private key. In terms of today’s banking, in the case of money transfer the
public key functions as a kind of account number and the private keys are like PINs. Once the
transaction is verified by both parties, it is encrypted with both parties’ public and private keys and
written into a block of transaction by the blockchain.

The block is filled with a lot of transactions, and once it is full, it is verified as a block by the members
of the blockchain and then encrypted and attached to the last block of the chain – hence the name.
The encryption key of the block is then derived by its own transactions and part of the key of the
previous block. At this stage it is not possible to change the block anymore.

This is important for the security of the blockchain, as it defines the order of the blocks and ensures
that transactions in a block cannot be changed retroactively. A retroactive change of a transaction
would require a change of the key and thus the whole blockchain in order to mask the manipulation.

One thing that is essential in a blockchain network are members who verify and store the blocks. As
the blockchain is stored and verified by many people, it is decentralized and hard to manipulate,
since you would have to manipulate the blockchain as stored by all of its members. As mentioned
before, blockchain technology incentivizes and rewards its members by giving them tokens for their
work in the blockchain. Usually, members get these tokens like Bitcoin or Ether (the token of the
blockchain Ethereum) when they verify blocks. These tokens often also have to be paid to conduct a
transaction in a blockchain. In order to balance the number of members needed to verify a block
with the number of blocks that need to be verified, blockchains currently use two different methods:
▪ Proof-of-work: As members need a certain amount of computational power to verify the
encrypted blocks, they need to solve a cryptographic puzzle first. Those puzzles are usually easy to
validate, but take computational power to solve. The first members to solve the puzzle are then
allowed to verify – or, as it is often called in blockchains, mine – the blocks. This method is used by
Bitcoin, for example.

▪ Proof-of-stake: Here the verification work is randomly distributed based on the wealth of the
members of the blockchain, e.g. the amount of the associated tokens that they are holding.
Certain measures are taken to prevent only the most wealthy being allowed to verify blocks – or,
as it is called in proof-of-stake verification, forge them. This verification method is used by
Ethereum, for example.

A verification only takes place if a certain high share of members agree on its authenticity and thus
achieve a consensus. Verification of a block takes from a few seconds to minutes depending on the
blockchain, the numbers of transactions and members of the blockchain to verify the blocks. Both
verification ways have certain pros and cons attached to them in terms of their incentives, security,
and effectiveness. Proof-of-work verification, for instance, requires a lot of energy, as it consumes
computational power and is thus not very cost-effective. There is also a lot of discussion on how to
ensure that members of blockchains verify correctly and to punish those who don’t.

44
Transactions in a blockchain rely on
consensus verification
Blockchain technology (3/3)

Example: Money transfer in a blockchain (illustrative)

A wants to send funds to B

1
Transaction: A sends US$20 to B today

Request to transfer money to B

Party A Verification of transaction by B Party B

Transaction is encrypted
2
Transaction: x&zh98%thgs98001

Encryption of transaction by using both

public and private keys of A and B
Party A Party B

Transaction is added to a block of transactions

3
xxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx
x&zh98%thgs98001

Block is verified by members once it is full

4
xxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx
x&zh98%thgs98001
✓ ✓
Distribution to members
xxxxxxxxxxxxxxxxx
and verification
✓

Block is added to the chain and encrypted

5
xxxxxxxxxxxxxxxxx Encryption is based on the
xxxxxxxxxxxxxxxxx
x&zh98%thgs98001 previous and current blocks
xxxxxxxxxxxxxxxxx hash value1

45
1: The encryption key of the block
Funding in cryptocurrency &
blockchain fell to US$4.6bn in 2019
Funding

Global investment in blockchain and cryptocurrency start-ups, that included VC, PE and M&A,
witnessed strong growth of almost 33% in 2018 to reach US$6.9 billion, as compared to US$5.2
billion in 2017. However the subsequent period has witnessed a sharp fall in market enthusiasm,
with 2019 and 1H2020 levels falling to US$4.6 billion and US$1.2 billion, respectively. The deal counts
also witnessed a similar growth trend with 326, 827, 573 and 197 deals registered in 2017, 2018,
2019 and 1H2020 respectively.
This downward trend over the last two years, applies to both, initial coin offerings and venture
investments for companies operating in this space. The coronavirus pandemic has contributed to
this decline with the cryptocurrency markets freefalling amid a broader sell-off in equities around the
world.

The short to medium term is characterized by much uncertainty driven mainly by complexity of
supply chains and, lack of trust. Therefore blockchain companies are now expected to focus on
making value-additions such as common languages (example – data taxonomies), which could help
restore consumer and investor confidence.

Blockchain & cryptocurrency funding1 in billion US$

6,9

5,2
4,6

1,2

2017 2018 2019 1H2020

Source: Pulse of Fintech H1’20

46
1: Includes VC, PE and M&A investments as at June 2020
Source: Pulse of Fintech H1’20
Investment in Bitcoin would have
outperformed other strategies
Bitcoin, Ethereum & co. (1/3)

Cryptocurrencies are expected to play a major role in the future of money. Bitcoin, emerging in 2009,
is by far the oldest and the most widely used cryptocurrency in the world. Bitcoin as a currency
attracted worldwide attention in 2013 when it surpassed the US$1,000 per unit threshold. There are
around 1,500 cryptocurrencies that have emerged since 2013, out of which around 600 are actively
traded around the world. According to a study by CoinMarketCap, the total market capitalization of
cryptocurrencies in the world stood at over US$237 billion in 2019.
The demand for Bitcoin has been growing at an exponential rate since 2011. In a typical market
condition, the Bitcoin payoff for US$100 invested in January 2011 would give an annualized return of
almost 295% in September 2020.

Although the market capitalization of Bitcoin has been on the rise and stood at US$117.8 billion by
the end of 1Q2020, other leading cryptocurrencies are also gaining traction, especially Ethereum and
Ripple (XRP), with a valuation of US$25.2 billion (2Q2020) and US$7.7 billion (2Q2020), respectively.
4Q2017 was the best period for the cryptocurrencies market with all three reaching their peak, only
to fall sharply after.

While Bitcoin, at US$10,2901 per coin, is very valuable as a currency as well, a high market
capitalization for other cryptocurrencies does not automatically mean a high value as a currency. The
third largest cryptocurrency from a market capitalization point of view, Ripple (XRP), for example, is
worth only US$0.241, while Litecoin, the number four on the current market capitalization list, is
worth US$49.041.

Bitcoin payoff for US$100 investment from Jan ‘11 to Sep ‘20 in US$

4.881.069

3.396.596

1.269.624

246.365 331.934
100 1,508 4,503 107.234 145.756

Jan-11 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Sep-20
Source: dqydj.com

47
1: Value as at September 8, 2020 on Coindesk
Source: Coindesk, Statista
Leading cryptocurrencies
Bitcoin, Ethereum & co. (2/3)

Various cryptocurrencies gained traction over the last few years, including:
▪ Bitcoin: a decentralized digital currency without a central bank or single administrator, which can
be sent from user to user on the peer-to-peer Bitcoin network without the need for
intermediaries.

▪ Ethereum: a cryptocurrency whose blockchain is generated by the Ethereum platform. It is an

open-source and publicly operating system featuring smart contract (scripting) functionalities.

▪ XRP (Ripple): a real-time gross settlement system, currency exchange and remittance network built
upon a distributed open source internet protocol. It supports tokens representing fiat currency,
cryptocurrency, commodities, or other units of value such as frequent flier miles or mobile
minutes. It is based on a shared public ledger, the XRP Ledger, which uses a consensus process
that allows for payments, exchanges and remittance in a distributed process.

▪ Bitcoin Cash: a cryptocurrency and a payment network. In relation to Bitcoin it is characterized as a

spin-off, an offshoot, a clone, or a second version.

▪ EOS: a blockchain protocol powered by the native cryptocurrency EOS. EOS operates as a smart
contract platform and decentralized operating system intended for the deployment of industrial-
scale decentralized applications through a decentralized autonomous corporation model.

▪ Stellar: an open-source, decentralized protocol for digital-to-fiat currency transfers, which allows
cross-border transactions between any pair of currencies.
▪ Litecoin: a peer-to-peer cryptocurrency and open source software project released under the
MIT/X11 license. Creation and transfer of coins is based on an open source cryptographic protocol
and is not managed by any central authority.

▪ Tether: a cryptocurrency that is backed by the U.S. dollar. It is designed to always be worth US$1.0.

▪ Cardano: a distributed computing platform that runs the blockchain for the Ada cryptocurrency.
Coins are minted and decisions are made via a proof-of-stake algorithm called Ouroboros instead
of a proof-of-work system; consensus is generated by coin-holder vote.

▪ Monero: an open-source cryptocurrency that focuses on fungibility and decentralization. It uses a

special kind of public ledger where anybody can broadcast or send transactions, but no outside
observer can tell what the source, amount or destination are. Monero uses a proof-of-work
mechanism to issue new coins and incentivize miners to secure the network and validate
transactions.

48
Source: Company Website
Bitcoin has by far the biggest
market capitalization
Bitcoin, Ethereum & co. (3/3)

Market capitalization of largest cryptocurrencies in billion US$

189.8
40.8
14.5
11.0
4.4
4.2
3.9
3.5
3.2
3.1

Source: CoinMarketCap as at September 10, 2020

Value of leading cryptocurrencies in US$ per unit

10,268.4
362.6
224.6
169.0
48.3
24.2
12.5
4.6
1.0
0.2

Source: CoinMarketCap as at September 10, 2020

49
Bitcoin: from the first transaction to
a US$1 billion market in 4 years
Evolution of blockchain (1/3)

August: Bitcoin.org was registered by Neal King, Vladimir Oksman and

2008 Charles Bry
November: Satoshi Nakamoto publishes a paper called “Bitcoin: A
Peer-to-Peer Electronic Cash System”
January: Satoshi mines the first 50 Bitcoins and makes the first
2009 transaction ever with Hal Finney
October: Bitcoin gets an equivalent value in traditional currencies,
US$1=1,309 Bitcoins

2010 May: Laslo Hanyecz makes the first real-world transaction with Bitcoin

August: Bitcoin gets hacked, causing 184 billion Bitcoins to be made

and released

November: Huge surge in Bitcoin value, US$0.5 = 1 Bitcoin

June: The first major theft takes place, Bitcoin Forum founder reports
2011 loss of 25,000 Bitcoins
U.S. Financial Crimes Enforcement Network issued guidance report
2013 on using virtual currencies

Bitcoin market crosses US$1 billion

August: a U.S. federal judge makes a landmark ruling allowing Bitcoin

to be used as money

November: the value of a Bitcoin soars to US$700

December: Mainland China bans the use of Bitcoin by its financial

institutions
February: The UK classifies Bitcoin as assets or private money, thus
2014 removing VAT on mining or exchange
July: Global Advisors launches the world’s first regulated Bitcoin
investment fund

50
Source: Company information, Press releases
Blockchain technology gets adopted
by governments and private players
Evolution of blockchain (2/3)

2014 July: Ethereum Project is funded by a crowd sale

August: The UK government purchases US$29 worth of Bitcoin1

The first Bitcoin transaction is carried out on a regulated exchange

Microsoft begins accepting Bitcoin payments

January: Coinbase’s US$75 million funding gains a minority investor,

2015 the New York Stock Exchange
March: Blythe Masters, ex-CFO of JP Morgan joins Digital Asset
Holdings, a blockchain tech company

April: NASDAQ commits to a blockchain trial

December: Tunisia becomes the first nation to adopt blockchain for

its currency
June: Santander UK introduces blockchain technology for
2016 international payments
September: IBM releases a study showing that 15% of major global
banks will use blockchain technology by 2017
October: The first ever cross-border transaction between banks using
multiple blockchain applications takes place

November: 356 blockchain-related patents are pursued by companies

February: Citing need to upgrade inspection and verification systems,

2017 BTCChina halts Bitcoin and Litecoin withdrawals until March 15.
April: Japan’s Financial Services Agency authorizes the use of digital
currencies as a method of payment
April: Malta approves first draft of the national strategy to promote
Bitcoin and blockchain technology

51
1: It was only a US$29 investment as a gesture to recognize Bitcoin
Source: Company information, press releases
Major and state banks adopt
blockchain technology
Evolution of blockchain (3/3)

April: ANZ Banking Group, BNP Paribas, BNY Mellon, DBS Bank, RBC
2017 Royal Bank, and Wells Fargo team up to use blockchain
May: Gibraltar proposes new government regulatory framework for
digital currency
May: Norwegian bank Skandianbanken rolls out a new feature which
allows customers to integrate their Bitcoin wallets
October: Fujitsu announces its plans to conduct a joint trial of P2P
money transfer service using blockchain with three Japanese banks
October: Monetary Authority of Singapore and The Association of Banks
in Singapore (ABS) develop blockchain tech for inter-bank payments
April: SK Telecom, South Korea announces the release of an asset
2018 management service with blockchain technology
May: Goldman Sachs announces its plan to start its operations in
Bitcoin trading
May: Money Forward Inc., the Japanese personal budgeting app,
announces its plans to launch a crypto asset exchange in 2018
May: New York Stock Exchange (NYSE) plans to offer Bitcoin (BTC)
2019
swap contracts
April: Digital currency exchange Coinbase launched its cryptocurrency
debit card in the UK

June: Facebook launches a new cryptocurrency called Libra

September: Seven Indian Banks joined JP Morgan's blockchain

platform

2020 May: Russia legalizes the trading of cryptocurrencies.

August: Blockchain forensics firm Chainalysis announced that over

US$50 billion of in cryptocurrency assets had left China in 2019

August: Bitcoin hit its highest levels in 13 months

52
Source: Company information, Press releases
Blockchain technology could
overcome challenges in banking
Blockchain adoption by banks

For many years, banks around the world have been trying to overcome limitations imposed by
traditional monetary policies. The current system has security issues and is costly to maintain. The
simple matter of sending money abroad currently takes days, sometimes weeks, with middlemen
collecting substantial fees. Regulations require banks to record everything from stock trades to
money transfer, resulting in huge compliance costs.

Using blockchain technology can result in significant savings since no third-party clearing is needed.
In fact, a report from Santander InnoVentures claims that by 2022 blockchain technologies are
expected to reduce banks’ infrastructural costs by US$15–20 billion a year by replacing ACH1
transaction processing.

In a study on 200 banks around the world titled “Leading the pack in blockchain banking - Trailblazers
set the pace” from September 2016, IBM found that 15% of banks expect to have blockchains in
commercial production in 2017, with the number increasing to 66% by 2020. Most of these banks
were medium-sized to large institutions and will be focusing on three areas:

▪ Reference data

▪ Retail payments

▪ Consumer lending

Many Top U.S. and European banks are now investing a significant amount of resources to explore
the potential of blockchain technology by forming partnerships with start-ups or creating innovation
labs.
One such example is the consortium started by R3, which has attracted 43 global banks including JP
Morgan, Northern Trust, Goldman Sachs, BNY Mellon, Citigroup, Bank of America, Morgan Stanley,
and Wells Fargo in the U.S. Their goal is to develop common standards for the adoption of
blockchain technology in the traditional banking system. In October 2016, R3 along with eight
member banks announced a successful test of a blockchain platform for bond transactions.

53
1: Automated Clearing House – an electronic network for financial transactions in the U.S.
Source: IBM
Bank of America holds around 40
blockchain-related patents
Key blockchain developments in the banking industry (1/5)

The Hyperledger project is another example of a collaborative effort between

banks including ABN Amro, ANZ, BNY Mellon, State Street, and Wells Fargo,
1 among others. It aims to create a cross-industry open standard for distributed
ledgers.

2 Bank of America has around 40 blockchain-related patents.

BNY Mellon, along with Deutsche Bank, Santander and UBS, are aiming to
launch their own commercial-grade blockchain system by 2018. The banks have
3 partnered with London-based blockchain start-up Clearmatics to advance what
they are calling "the Utility Settlement Coin concept”.

JP Morgan has developed a blockchain for the crypto network Ethereum in

partnership with EthLab. Called “Quorum”, the solution facilitates payments and
the trading of derivatives and features an updated consensus mechanism for
transaction authentication. According to Amber Baldet, program lead for the
4 division, the bank is not looking to monetize the platform but is instead using it
to connect with developers in the open-source community. Badet also said that
Quorum could be a step towards connecting private institutions via distributed
networks.

As part of the R3-distributed ledger consortium, BNY Mellon has developed the
“BDS 360” test solution, which uses blockchain technology to create a backup
5 record of its brokerage transactions. The system functions alongside the bank’s
existing transaction records system to create another parallel dataset to be
used in case of the primary set not being available.

54
Source: Company information, press releases
Ripple might challenge SWIFT as the
global settlement standard
Key blockchain developments in the banking industry (2/5)

In January 2016, 11 global investment banks including Barclays, BMO Financial

Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal
6 Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo used blockchain
technology to do mock trades with each other, marking a big step towards
adoption of the technology in mainstream finance.

In March 2016, JP Morgan launched a distributed cryptoledger called “Juno”.

7 Juno allows consensus for the authentication of a transaction to be reached
through an election-type system.

In September 2016, Goldman Sachs filed a blockchain patent for foreign

8 exchange trading, focusing on ways to cut out the middle man with transaction
costs.

In September 2016, Barclays made its first ever blockchain-based trade finance
9 transaction, using the platform of the start-up Wave.

In September 2016, Barclays, BMO Financial Group, Credit Suisse,

Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD
Bank, UBS, UniCredit and Wells Fargo collaborated to launch the Global
10 Payments Steering Group (GPSG) in association with Ripple. This is seen as a
potential challenge to SWIFT, the current global standard for processing
international settlements between banks.

In October 2016, ICICI Bank signaled the arrival of blockchain technology in India
by executing transactions in international trade finance and remittance using
11 blockchain technology in partnership with Emirates NBD, a Middle Eastern
banking group.

In October 2016, Bank of China and HSBC announced plans to launch mortgage
services using blockchain in Hong Kong. According to Duncan Wong, VP of
12 financial technologies at Astri, a government-backed research institute: “To the
best of our knowledge, this will be the first production-grade [blockchain]
mortgage system to integrate with a bank.”

55
Source: Company information, press releases
Some national banks plan to issue
digital versions of their currencies
Key blockchain developments in the banking industry (3/5)

In October 2016, eight financial firms including JP Morgan, Credit Suisse,

Barclays and Citi completed a successful test of a smart contract prototype built
by blockchain start-up Axoni. The solution manages affirmations and post-trade
lifecycle processing for OTC equity swaps. The test showed that Axoni’s software
13 was capable of handling complex post-trade services such as margin payments
and corporate action processing. It also automated lifecycle management and
synchronization tasks behind single stock, index and portfolio swaps, which are
usually time-consuming.

In November 2016, the National Bank of Ukraine announced plans to issue a

blockchain-based digital version of its currency in 2017. At first the currency will
14 circulate alongside its physical version. Riksbanken in Sweden is also
considering the same move.

Nine global banks including State Street, U.S. Bank, Wells Fargo, BBVA, Danske
Bank, Royal Bank of Scotland, Scotiabank and Société Générale are testing
blockchain and smart contract technologies to see if they can improve the
15 syndicated loan market. They are seeking to prove that processing loan data
exclusively on a blockchain could eliminate the cost for each to maintain their
own lending system.

In Jan 2017, Chinese banks started using blockchain technology to increase

16 transparency and combat fraud in the Chinese financial sector.

In Jan 2017, the Indian central bank, Reserve Bank of India, in partnership with
MonetaGo, domestic banks and other financial institutions, tested blockchain
17 technology for trade applications. Moreover, other private banks including ICICI
Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank have also started testing
blockchain technology solutions to use in their operations.

In Feb 2017, BSP, the Philippine Central Bank, announced its plans to officially
18 regulate local Philippine Bitcoin exchanges as remittance companies and
recognize Bitcoin as a legitimate payment method.

56
Source: Company information, press releases
Ripple is being used in tests in
Japan and England
Key blockchain developments in the banking industry (4/5)

In March 2017, a consortium of Japanese banks representing over 30 percent of

19 all banks in Japan, announced plans to use blockchain technology in
collaboration with Ripple to make domestic and international payments.

In March 2017, the Bank of England partnered with Ripple to test blockchain-
20 based technology that would make cross-border payments and the movement
of currencies faster.

In April 2017, ANZ Banking Group, BNP Paribas, BNY Mellon, DBS Bank, RBC
21 Royal Bank and Wells Fargo teamed up with Swift to develop a way of using
blockchain to help banks monitor their overseas accounts.

In May 2017, Norwegian bank Skandianbanken started rolling out a new feature
22 which allows customers to integrate their Bitcoin wallets into their account.

In October 2017, The Monetary Authority of Singapore (MAS) and The

23 Association of Banks in Singapore (ABS) formed a consortium to harness
blockchain technology for more efficient inter-bank payments.

In October 2017, Fujitsu announced its plans to work with Mizuho Financial
Group, Sumitomo Mitsui Financial Group (SMFG) and Mitsubishi UFJ Financial
24 Group (MUFG) to conduct a joint field trial of a person-to-person (P2P) money
transfer service using blockchain.

In November 2017, State Bank of India announced its partnership with

25 BankChain and Intel to deploy blockchain solutions.

In May 2018, Goldman Sachs announced its plan to start operations in Bitcoin
26 trading. In the beginning, Goldman Sachs will use its own funds to trade Bitcoin
futures on behalf of clients.

In September 2019, Seven Indian Banks including Axis Bank, YES Bank, ICICI,
27 Union Bank of India, Federal Bank of India and Canara Bank joined JP Morgan's
blockchain platform.

57
Source: Company information, press releases
The U.S. now allows banks to hold
cryptocurrency as assets
Key blockchain developments in the banking industry (5/5)

In July 2020, OCC, the U.S. regulator of national banks, allows banks to hold
28 cryptocurrency assets for safekeeping.

In September 2020, Ziglu, an-FCA authorised Electronic Money Institution,

29 launched peer-to-peer payments for supported cryptocurrencies.

India's Supreme Court removed a ban imposed by the RBI on banks from
30 allowing their systems to be used for cryptocurrency related payments.

In September 2020, Mode Banking, an app that allows users to buy bitcoin,
31 announced plans to go public with a GBP40 million listing in October 2020.

58
Source: Company information, press releases
Blockchain disruption potential
goes beyond payments
Future of blockchain (1/2)

When blockchain first emerged, it was considered elusive and sometimes even illegal. Its use in
mainstream banking wasn’t even considered a possibility. However, the results of a recent survey by
the World Economic Forum (WEF) show that most experts now believe that blockchain will become
mainstream by 2025.
One of the main drivers of blockchain technology growth is the fact that the infrastructure required
for rapid blockchain adoption is already present. Technology advancements in smartphones,
embedded sensors, large computing power and machine algorithms are all expected to enhance this
growth. Moreover, most banks and government authorities have realized that blockchain technology
has the potential to strengthen the global financial system by reducing costs, enhancing
transparency, saving time, and cutting down risk.

You all have read about Bitcoin, merchants building their own networks,
PayPal and PayPal look-alikes. Payments are a critical business for us —
and we are quite good at it. But there is much for us to learn in terms of
real-time systems, better encryption techniques, and reduction of costs and
'pain points' for customers.

Jamie Dimon, CEO, JP Morgan Chase

We have already discussed the use of blockchain to facilitate payments. However, there are more
opportunities for banks to use the blockchain technology to improve services. For example, UBS is
exploring a range of applications such as smart bonds, cross-border payment transactions and a
digital representation of physical currency.
Another area which may be disrupted by blockchain technology is transactions between parties at
different banks, with Lehmann saying that the bank could potentially replace the traditional letter of
credit with a blockchain alternative. In fact, Bank of America Merrill Lynch, HSBC, and the Infocomm
Development Authority of Singapore have already developed a blockchain-enabled application that
could be used by exporters and importers to share information among themselves and with their
banks. This would then enable them to execute a trade deal simply through a series of digital smart
contracts, thus significantly reducing the cost of international trade.

59
More blockchain solutions expected
in the future
Future of blockchain (2/2)

In the coming years, banks and other financial institutions are expected to collaborate among
themselves and with FinTech companies to enhance interoperability of various blockchain solutions
across the financial ecosystem.
According to a Cognizant study, the main focus areas of new product development would be

▪ International payments

▪ Trading activities

▪ Custody services

▪ Customer behavior analysis

I don’t know what’s going to succeed. What I’m certain of is that we are
going to see blockchain solutions, peer-to-peer solutions emerging in our
industry and we want to be close to that development.

Jamie Dimon, CEO, JP Morgan Chase

60
Source: Cognizant
Case study: Ant Financial
Ant Financial, the most highly valued FinTech company in the world, is the
holding company of Alibaba’s financial products. It operates in various
business areas including digital payments (Alipay), business finance (Ant
Micro Loan), marketplace lending (Ant Check Later), wealth management (Ant
Fortune), online banking (Mybank), and insurance and credit reference
(Sesame Credit).
Key factors behind Ant Financial’s success include diversified businesses,
robust government support, and a strong international presence.

61
Ant Financial operates on a larger
scale than most other players
Overview

Ant Financial is a holding company for eCommerce giant Alibaba’s financial products. It includes
multiple financial businesses operating in areas such as
▪ Digital payments: Alipay

▪ Business finance: micro loans (Ant Micro Loan)

▪ Personal finance:
− Marketplace lending: Ant Check Later

− Wealth management: Ant Fortune

▪ Online banking: Mybank

▪ Insurance and credit reference: Sesame Credit

Alipay, its flagship payment product, is referred to as the PayPal of Mainland China but operates on a
much larger scale compared to its U.S. counterpart. In February 2014, Alipay announced for the first
time that its mobile payments volume was greater than the volume of both PayPal and Square
combined. Since then, the company has achieved a share of about 58% of third-party online
payments in Mainland China as per estimates by Credit Suisse and over 80% of third-party mobile
payments as per Citigroup. Ant Financial filed for a US$200 billion IPO in Hong Kong and Shanghai in
August 2020.

Competitor comparison: Ant Financial key business segments

Segment Ant Financial Competitors

Digital payments
▪ Annual active users: 1300m1 ▪ Annual active users: 346m2
▪ No. of merchants monthly: >80m1 ▪ Total payment volume: 222bn3

Wealth
management ▪ Annual active users: 330m4 ▪ Active users: 9.9m

Online banking
▪ Cumulated borrowers: 7m5 ▪ Cumulated borrowers: 4.5m

Insurance
▪ Cumulated users: 380m ▪ Cumulated users: 400m

Credit reference ▪ People in credit reference

▪ Cumulated users: 190m6 system in the U.S: 250m

1: As at Jun 2020 2: 1Q2020 3: 2Q2020 4: As at June 2017 5: As at March 31, 2018 6: As at July 62
2018
Source: Company information, China Internet Watch
Ant Financial thrives on Alibaba’s big
data and government funding
Key success factors (1/2)

Diversified businesses and big data:

Ant Financial owns a larger number of businesses compared to other similar companies, both
domestic and international. The main reason for these diversified holdings is that each of them is
integrated into Alibaba’s huge eCommerce ecosystem and derives benefits from its huge distribution
network.

Moreover, Alibaba’s wealth of historical data on merchants and on consumers gave its businesses
access to a large customer base at the time of their launch and has provided them with faster
customer conversion, moderation of credit risk, and a scalable online infrastructure. The company
grew to a valuation of US$150 billion after its latest funding round in May 2018.

Government investment:
Another reason driving Ant Financial's large-scale success is the involvement of state financial
institutions as investors. China Investment Corporation (CIC), the US$740 billion sovereign wealth
fund and the country’s national social security fund are now among the company’s biggest
shareholders, giving it access to a considerable amount of money to fund its aggressive expansion
plans. In May 2018, the company secured the world’s largest private fundraising round for an
internet company at US$10 billion, giving it a valuation of around US$150 billion.

Financial cloud platform:

In 2010, when cloud computing was just beginning to rise and companies like Amazon and Google
were conducting tests and proof-of-concepts, Alibaba set up its cloud division called Ali Cloud. The
platform experienced rapid growth aided by the fact that foreign cloud providers were barred from
entering mainland China. In 2013, Alibaba verticalized the platform with the launch of the Ali Finance
Cloud, which is now central to the growth of its financial services business. The value proposition of
the platform is that it aims to be a one-stop shop for all financial solutions including risk
management, deposits, mobile apps, infrastructure as a service, platform as a service, know your
customer (KYC), etc. Ant Financial also sells this cloud-based solution to other banks in Mainland
China.

63
Source: Bloomberg, CLSA Research
Ant Financial taps into the huge
offline payments market
Key success factors (2/2)

Offline payment services:

Online-to-offline (O2O) mobile payments is another area of growth, primarily due to its higher
transaction value compared to online payments.

According to an HSBC report in 2015, the Chinese O2O market valued over US$150 billion in 2015,
with consumers expecting a seamless experience between physical stores, websites, and mobile
applications. With 400 million users, the e-wallet Alipay is now widely used in Chinese retail outlets,
drug stores, and restaurants. Users can link their bank accounts to the service and make purchases
in-store by having a cashier scan a QR code within the Alipay app.

In order to fuel international expansion, in 2016 the company announced its plans to partner with
one million offline merchants in Mainland China and overseas over the next 3 years to facilitate the
use of Alipay in other global markets. The company’s ambitious plans in this space put it against
players such as Apple Pay and Samsung Pay, both present in Mainland China, and the established
domestic payment network UnionPay.

International expansion:
International expansion is a new but important strategic goal for the current stage of Ant’s growth,
and the main focus is on Asia. Apart from acquiring a significant stake in Indian payments giant
Paytm, Ant Financial has also invested in Singapore-based security technology company V-Key and
partnered with Thai payment firm Ascend. It also has digital wallet licenses in countries such as
Thailand, Indonesia, the Philippines, and Vietnam. In Europe, Alipay has partnered with the Swiss tax
refund company Global Blue, which allows Chinese tourists to credit value tax refunds on their
overseas purchases directly to their Alipay accounts.

64
Source: HSBC
Alipay excels PayPal in all metrics
Alipay vs. PayPal

Even though both Alipay and PayPal have achieved remarkable success, the scale of operations of
Alipay has helped the company offer an attractive value proposition to its users. The fact that Alipay
is building on the Alibaba ecosystem also gives it a much larger user base and scale when compared
to PayPal, which operates as a standalone company. Moreover, PayPal is still focused on its primary
business of payment processing while Alipay has diversified into other related areas as well.

PayPal scores over Alipay in terms of international acceptance and worldwide popularity. PayPal has
built a robust brand in the U.S., Europe and Asia over the years. On the other hand, Alipay has been
predominantly focused on the Chinese market, with international expansion coming into focus only
recently. For example, in Hong Kong, where over 30 retail chains accept Alipay payments, only users
with linked Mainland Chinese bank accounts can use Alipay wallets for their purchases.

Alipay vs. PayPal: Key metrics

1,7001
Payment
volume in
billion US$ 7122

13003
Active users in 3464
millions

5005
Mobile
payments 2106
users

Source: Company information, Annual reports, Press releases

1: Data as at 2016 2: As at Dec 2019 3: As at Jun 2020 4: As at 1Q2020 5: As at Sep 2019 6: As at 65

Jun 2019
Source: Company information, Press releases
Consumer insights
Online payment methods (e.g. PayPal, Amazon Payments) have the highest
use in Germany, the UK, Mainland China and the U.S. compared to any other
form of payments such as credit/debit cards, and prepaid cards. PayPal is the
most favored brand in terms of online payment in the eyes of the surveyed
population in the U.S., the UK, and Germany, whereas Mainland China has a
completely different story, with Alipay, Wechat Pay and UnionPay taking the
first three spots in the chart.
Cash still dominates financial transactions at the POS in the U.S. the UK and
Germany, but in Mainland China, mobile payments have already taken the
lead. The most widely used mobile payment provider in Mainland China is Ali
Pay, whereas Apple Pay leads in the UK and the U.S.

66
Online mode (like PayPal) is mostly
used for online payments
Online payment (1/2)

A Statista survey on online & mobile payments in 2020, part of the Statista Global Consumer Survey,
examines the behavior of the residential online population in 55 countries who used online or
mobile payments at least once in the last 12 months. For this report we focus on the U.S., the UK,
Germany, and Mainland China.
It covers the following topics: online payment methods used, mobile payments, P2P payments, the
purpose of use, and brands.

More exciting results of this survey can be found in the Statista Global Consumer Survey.

Usage of online payment methods by type in %

U.S. UK Germany Mainland China

Invoice
100
80
Prepaid cards / vouchers Cash in advance
60
40
20
Online payment 0 Cash on delivery

Direct debit Credit card

Debit card
“How have you conducted online payments in the past 12 months?”; Multi Pick; U.S.: n=4,173, UK: n=2,093, Germany: n=2,094,
Mainland China: n=2,098
Source: Statista Global Consumer Survey, as at September 2020

Online payment methods (e.g. PayPal, Amazon Payments) have the highest use in all countries, i.e.
Germany, the UK, Mainland China and the U.S. compared to any other form of payments such as
credit/debit cards, direct debit, and prepaid cards. Credit cards have the second highest use in the
U.S. and Mainland China whereas Debit cards were the second choice for respondents from the UK
for making payments online in the 12 months prior to the survey.

Payment by invoice is only prevalent in Germany as an online payment method in the group of these
four countries.

67
Germany shows the highest online
payment usage with 75%
Online payment (2/2)

When it comes to the use of online payment through companies such as PayPal, Amazon Pay, Google
Wallet, Masterpass, etc., German online consumers lead the way with a usage rate of 77%. The
Statista Global Consumer Survey, which compares 55 countries based on interviews among more
than 700,000 consumers, shows that the UK and India follow with 72% and 67% respectively.
The U.S., which is usually the leader in new business models, is placed at a lowly 17th rank with a 57%
usage. Generally, the field is dominated by European countries and India.

Share of respondents who used online payments1 in the last 12 months

Germany 77%
UK 72%
India 67%
Italy 65%
Spain 65%
Poland 65%
Australia 63%
Mainland
62%
China
Ireland 62%
Austria 61%
Portugal 61%
Finland 61%
Malaysia 58%
Belgium 58%
Hungary 57%
Vietnam 57%
U.S. 57%

“How have you conducted online payments in the past 12 months?”; Multi Pick; Statement: “online payments (e.g. PayPal,
Amazon Pay)”; n=31,335
Source: Statista Global Consumer Survey, as at September 2020

Looking at user demographics, there are quite a few differences depending on the country. In India,
for example, online payment methods users are middle-aged and live in middle to high-income
households. More men than women use online payment methods in India. In the U.S., the age profile
of online payment methods users are young adults.

68
1: Online payments such as PayPal, Amazon Pay, Google Wallet, Masterpass etc
The most widely used online
payment brand is PayPal
Online payment: brands

PayPal is the most favored brand in terms of online payment in the eyes of the surveyed population
in the U.S., the UK, and Germany with 90–95% of respondents using the service, followed by Amazon
Pay (16–22%). While Apple Pay has also established a strong presence in the U.S. and the UK, it does
not feature amongst the top five in Germany. Sofortüberweisung, nowadays renamed as Klarna, is a
bit stronger in Germany.

However, Mainland China has a completely different story, with Alipay, Wechat Pay and UnionPay
taking the first three spots in the chart with 95%, 87% and 45% usage, respectively.

Top 5 brands in the field of online payments

U.S. UK Germany Mainland China

90% 95% 95% 95%

30% 38% 42% 87%

21% 20% 22% 45%

20% 16% 14% 32%

19% 16% 13% 24%

“Which online payment services have you used in the past 12 months?”; Multi Pick; U.S.: n=2,366, UK: n=1,502, Germany:
n=1,618, Mainland China: n=1,294; Residential online population, conducted online payments in the past 12 months
Source: Statista Global Consumer Survey, as at September 2020

Rank 6–10 goes to:

▪ U.S.: Visa Checkout (17%), Masterpass (3%), Stripe (2%), Skrill (1%), 2Checkout (1%)

▪ UK: Masterpass (3%), Skrill (2%), Stripe (2%), Neteller (1%), Trustly (1%)

▪ Germany: paydirekt (8%), Apple Pay (6%), Skrill (4%), BillPay (3%), Trustly (2%)
▪ Mainland China: Bestpay (17%), Baofu (6%), lakala (5%), 99Bill (4%), 1qianbao (4%)

69
Mainland China leads the use of
mobile payments at POS
Mobile payments at POS (1/2)

While mobile payments are already very popular in Mainland China with nearly 82% of respondents
using them, they are still rarely used in the U.S., the UK, and Germany. The second most prominent
payment method at the POS in Mainland China is cash.
A lot of people in Germany, the UK, and the U.S. still use cash to pay at the POS. Credit/debit cards
are also widely used, whereas checks and prepaid cards / vouchers and checks are used by few.

Usage of payment methods by type at POS1

U.S. UK Germany Mainland China

Cash
100
80
60
Prepaid card / vouchers Check
40
20
0

Mobile payment (via

Credit card
smartphone)

Debit card
“How have you paid in stores, restaurants and other points of sale in the past 12 months?”; Multi Pick; U.S.: n=4,173, UK:
n=2,093, Germany: n=2,094, Mainland China: n=2,098
Source: Statista Global Consumer Survey, as at September 2020

When comparing countries, it becomes obvious that mobile payments at the POS are mostly used in
emerging countries, with Kenya (86%) Mainland China (82%), India (62%) and Nigeria (59%) and
leading the ranking.
All western countries are far behind in terms of usage. The U.S., which is usually the leader in new
business models, comes 39th with a usage of 16%.

70
PoS: The point of sale (POS) or point of purchase (POP) is the time and place where a retail
transaction is completed
Kenya leads in terms of mobile
payments at POS
Mobile payments at POS (2/2)

Share of respondents who used mobile payments1 in the last 12 months

Kenya 86%
Mainland
82%
China
India 62%
Nigeria 59%
Vietnam 55%
Thailand 55%
Malaysia 54%
Indonesia 50%
Denmark 46%
Taiwan 44%
Saudi Arabia 40%
Singapore 39%
Japan 37%
Philippines 35%
South Korea 33%
Peru 32%
Argentina 31%
Poland 30%
Russia 28%
United Arab
28%
Emirates
Sweden 28%
Colombia 27%
Portugal 25%
Pakistan 23%
Romania 22%
Chile 22%
Australia 22%

1: Mobile payments (via smartphone) at POS

“How have you paid in stores, restaurants and other points of sale in the past 12 months?”; Multi 71
Pick; Statement: “mobile payments (via smartphone)”; n=34,380
Source: Statista Global Consumer Survey, as at: September 2020
Mainland China has a whole new
set of mobile payment providers
Mobile payments at POS: brands

ApplePay is the most frequently used brand in the mobile payments (via smartphone) business in the
UK and U.S. with 49–61% of respondents using the service, followed by Google Pay (32–37%). In
Germany, PayPal and Google Pay are the most popular mobile payment methods with 57% and 40%
usage, respectively.
However, Mainland China, the global leader in mobile payments (via smartphone) at POS, has a
completely different story, with Alipay, WeChat Pay and UnionPay taking the first three spots in the
chart with 93%, 85% and 29% usage, respectively.

Top 5 brands in the field of mobile payments (via smartphone) at POS

U.S. UK Germany Mainland China

49% 61% 57% 93%

37% 32% 40% 85%

19% 12% 33% 29%

14% 8% 23% 15%

7% 5% 8% 11%

“Which of these services have you used in the past 12 months to pay in stores, restaurants or other points of sale with your
smartphone?”; Multi Pick; U.S.: n=684, UK: n=437, Germany: n=213, Mainland China: n=1,721; Residential population,
conducted mobile payments at POS in the past 12 months
Source: Statista Global Consumer Survey, as at September 2020

Rank 6–10 goes to:

▪ U.S.: Microsoft Wallet (6%), Bitpay (2%), other (16%)

▪ UK: Chase Pay (4%), Bitpay (4%), Boon. (2%), other (5%)

▪ Germany: Bitpay (6%), Boon. (5%), Other (6%)

▪ Mainland China: Bestpay (11%), baifubao (4%), lakala (3%), 1qianbao (3%), 99Bill (3%)

72
28% of U.S. onliners would like to
use mobile payments at all times
Mobile payments at POS: U.S.

Situations in which Americans would like to use mobile payments1

I would like to pay with

28%
my smartphone all the time

Food and drinks in restaurants 15%

Everyday purchases (e.g. food) 15%

Food and drinks in

12%
bars and cafés

Aadmission tickets 10%

Minor purchases
10%
(e.g. decoration items)

Public transportation tickets 8%

Travel booking 7%

Major purchases
6%
(e.g. washing machine)

I don't want to pay

32%
with my smartphone at all

1: Question: “In what situations would you like to be able to pay with your smartphone (without 73
debit/credit card or cash)?”; basis: all respondents, n=4,173
Source: Statista Global Consumer Survey : United States, as at September 2020
In the UK, 26% want to use mobile
payments at all times
Mobile payments at POS: UK

Situations in which people from the UK would like to use mobile payment1

I would like to pay with

26%
my smartphone all the time

Food and drinks

16%
in bars and cafés

Everyday purchases (e.g. food) 16%

Public transportation tickets 15%

Food and drinks in restaurants 15%

Minor purchases
13%
(e.g. decoration items)

Aadmission tickets 10%

Travel booking 6%

Major purchases
4%
(e.g. washing machine)

I don't want to pay

34%
with my smartphone at all

1: Question: “In what situations would you like to be able to pay with your smartphone (without 74
debit/credit card or cash)?”; basis: all respondents, n=2,093
Source: Statista Global Consumer Survey : United Kingdom, as at September 2020
20% of Germans onliners would like
to use mobile payments at all times
Mobile payments at POS: Germany

Situations in which Germans would like to use mobile payments1

I would like to pay with

20%
my smartphone all the time

Public transportation tickets 17%

Everyday purchases (e.g. food) 13%

Food and drinks

13%
In bars and cafés

Food and drinks in restaurants 13%

Aadmission tickets 11%

Minor purchases
11%
(e.g. decoration items)

Travel booking 7%

Major purchases
6%
(e.g. washing machine)

I don't want to pay

39%
with my smartphone at all

1: Question: “In what situations would you like to be able to pay with your smartphone (without 75
debit/credit card or cash)?”; basis: all respondents, n=2,094
Source: Statista Global Consumer Survey: Germany, as at September 2020
60% from Mainland China want to
use mobile payments at all times
Mobile payments at POS: Mainland China

Situations in which people from mainland China like to use mobile payments1

I would like to pay with

60%
my smartphone all the time

Everyday purchases (e.g. food) 22%

Food and drinks in restaurants 20%

Minor purchases
18%
(e.g. decoration items)

Food and Drinks

16%
In bars and cafés

Public transportation tickets 16%

Major purchases
14%
(e.g. washing machine)

Travel booking 12%

Admission tickets 11%

I don't want to pay

1%
with my smartphone at all

1: Question: “In what situations would you like to be able to pay with your smartphone (without 76
debit/credit card or cash)?”; basis: all respondents, n=2,098
Source: Statista Global Consumer Survey: Mainland China, as at June 2020
Mainland China leads in the usage
of bank transfer services
P2P payments: consumer insights (1/2)

Direct bank transfer still leads as the most widely used P2P money transfer tool in Mainland Chain,
the UK, and Germany. The U.S. is the only country where direct money transfer services (e.g. PayPal)
are more frequently used, namely by 44% of respondents.

Usage of P2P payments in %

U.S. UK Germany Mainland China

29
66
Bank transfer
47
81

Using a direct 44
money 31
transfer service 41
(e.g. PayPal)
39

41
24
Not at all
35
11

“How have you transferred money to friends and acquaintances in the past 12 months?”; Multi Pick; U.S.: n=4,173, UK:
n=2,093, Germany: n=2,094, Mainland China: n=2,098
Source: Statista Global Consumer Survey, as at September 2020

When it comes to the use of a direct money transfer service such as PayPal, the Philippines onliners
lead the way with a usage rate of 64%, followed by Kenya, United Arab Emirates and Denmark with
61%, 53%, and 52%, respectively.

Noticeably, two developing economies, Philippines and Kenya, are ahead of developed countries
from Europe and North America in terms of direct money transfers.

77
Philippines leads the chart in using
direct money transfer services
P2P payments: consumer insights (2/2)

Share of respondents who used direct money transfer in the last 12 months

Philippines 64%
Kenya 61%
United Arab
53%
Emirates
Denmark 52%
Vietnam 52%
Saudi Arabia 52%
Portugal 44%
India 44%
U.S. 44%
Indonesia 43%
Colombia 42%
Israel 41%
Germany 41%
Spain 40%
Ireland 40%
Norway 40%
Mainland
39%
China
Morocco 38%
Thailand 37%
Peru 36%
Italy 35%
Argentina 35%
Malaysia 35%
Singapore 33%
Dominican
33%
Republic
Finland 33%
Greece 32%

“How have you transferred money to friends and acquaintances in the past 12 months?”; Multi 78
Pick; Statement: “using a direct money transfer service (e.g. PayPal)”; n=38,343
Source: Statista Global Consumer Survey, as at June 2020
Statista Global Consumer Survey:
online & mobile payments 2020
About the study

This Statista survey among internet users aged 18 years or older on online & mobile payments in
2020 is part of the Statista Global Consumer Survey and focuses on the residential online population
in 55 countries who used online or mobile payments at least once in the last 12 months. In this
report, we focus on the U.S., the UK, Germany, and Mainland China. The survey covers the following
topics: online payment methods used, mobile payments, P2P payments, purpose of use, and brands.

The Statista Global Consumer Survey compares 55 countries based on interviews among more than
7000,000 consumers on more than 50 industries and topics and over 6,500 brands. Thus, it offers a
global perspective on consumption and media usage, covering the offline and online world of the
consumer. It is designed to help marketers, planners and product managers understand consumer
behavior and consumer interactions with brands. It is an intuitive expert tool to investigate and gain
insight into consumer behavior, drawn from an exclusive, global survey.

The Statista surveys and the Consumer Market Outlook Team has carried out Mobile-optimized
questionnaires (e.g. avoiding grid-questions where possible, limited number of items, etc.) with item
randomization. We comply with the guidelines set out by the professional associations ESOMAR,
BVM, ADM, and DGOF to, in particular, maintain scientific standards pertaining to the collection,
analysis, and protection of data as well as the processing of personal information.

Questions? U.S.: [email protected] EU: [email protected]

Method Online survey

Source Statista
Panel provider Cint
Number of respondents U.S.: 25,114, UK: 12,570, Germany: 12,561,
Mainland China: 12,549
Age of respondents 18 years and older
Type of respondents Residential population who used online
payments and/or mobile payments in the
last 12 months
Survey time period U.S.: 13 Jul to 21 Aug 2020
UK: 14 Jul to 31 Jul 2020
Germany: 22 Jul to 20 Aug 2020
Mainland China: 11 May to 29 Jun 2020

79
Competitive landscape
The U.S. leads in the number of FinTech companies globally. Specifically, most
of the prominent U.S. FinTech companies are located in California and New
York. We have a closer look at some of those prominent U.S. FinTech start-ups:
Venmo, Stripe, Ondeck, Lending Club, Prosper, SoFi, Betterment, and
Wealthfront.
Although they offer services in the same segments, their specific conditions
and features vary a lot. For example, in the marketplace lending segment, SoFi
offers personal loans with no origination fees whereas its 1-6% for
LendingClub and Prosper.

80
Prominent U.S. FinTech companies
located in California and New York
Overview of selected U.S. FinTech companies

Location of selected FinTech companies in the U.S.

Alaska Hawaii

Overview of selected FinTech companies in the U.S.

Company Segment Headquarter Size

Venmo Digital Payment New York Payments processed1: US$101bn2

Stripe Digital Payment San Francisco Payments processed: undisclosed

Ondeck Alternative Lending New York Funded loans: US$13bn3

Lending Club Alternative Lending San Francisco Funded loans: US$17bn3

Prosper Alternative Lending San Francisco Funded loans: >US$16bn3

SoFi Alternative Lending San Francisco Funded loans: >US$50bn3

Betterment Personal Finance New York AUM4: >US21bn3

Wealthfront Personal Finance Palo Alto AUM6: US$11.5bn4

1: Transaction value 2: Financial year 2019 3: Data from company website as on September 81
2020 4: Assets under management 5: As at Aug 2020
Source: Company information, Press Releases
OnDeck and Lending Club business
loans vary in all specifics
Comparison: Alternative Lending – Crowdlending

Term loans

KPIs OnDeck Lending Club

Interest rate types Fixed rate Fixed rate

Origination fee (first loan) 2.5%–4% 1%–6%

Annual interest rate From 9.99%, excl. fees 6.16%–35.89%, incl. fees

Term 3–36 months 1–5 years

Amount Up to US$500,000 US$5,000–US$300,000

▪ Min. 1 year in operation ▪ Min. 2 years in operation

Min. requirements
▪ Min. revenue US$100,000 ▪ Min. revenue US$75,000

Source: Company information

Lines of credit

KPIs OnDeck Lending Club

Interest rate types Fixed rate Variable rate

6.75%–22.35% based on Wall St
Interest rate From 13.99% onwards
Journal Prime Rate
Additional fees Monthly fee: US$201 Draw fee: 1–3% per draw

Term Not defined 25 months per draw

Amount Up to US$100,000 US$5,000–US$300,000

▪ Min. 1 year in operation ▪ Min. 2 years in operation
Min. requirements
▪ Min. revenue US$100,000 ▪ Min. revenue US$75,000

Source: Company information

82
Note: All data are based on company information as at September 2020
1: Waived with initial draw of US$5,000
Only SoFi offers personal loans with
variable interest rates
Comparison: Alternative Lending – Marketplace Lending

Personal loans: Borrower fee structure

KPIs Lending Club Prosper SoFi

Interest rate types Fixed rate Fixed rate Fixed

Origination fee 1–6% 1–5% 0%

Annual rate, incl.

5.99%–35.89% 5.99%–36.00% Fixed: 5.99% – 17.88%1
origination fee
No fee, but no 0.25%
Check payment fee US$7 US$5 automatic payment
discount
5% of instalment or 5% of instalment or
Late payment fee Not specified
US$152 US$152

Term 3 or 5 years 3 or 5 years 3 to 7 years

Amount US$1,000–US$40,000 US$2,000–US$35,000 US$5,000–US100,000

Source: Company information

Personal loans: Investor fee structure

KPIs Lending Club Prosper SoFi

Min. investment per
US$25 US$25
loan SoFi only provides loan
investment opportunities
1% of payment for high net worth
Service fee 1% annual servicing fee4
amount3 individuals with no
openly specified fee
Up to 30% of collected
Based on fee structure structure
Collection fee amount of >15 days
of collection agency
due payments

Source: Company information

Note: All data are based on company information as at September 2020

1: With automatic payments discount of 0.25%, Rates as at September, 2020 2: Higher amount 83
would be deducted 3: For all payments received within 15 days of due date 4: Accrued daily,
based on outstanding loan principal
Wealthfront & SoFi have free offers
for small accounts
Comparison: Personal Finance – Robo-Advisors

Robo-advisor fee structure

1
KPIs Betterment Wealthfront SoFi

Minimum balance US$0 US$500 US$500

Account balance
▪ Basic account: 0.25% 0% 0%
<US$10k
▪ Account incl. one
expert call: 0.40%2
▪ Account incl. unlimited
Account balance
expert calls: 0.50%2 0.25% 0.25%
>US$10k

For accounts with a min. ▪ SoFi borrowers get

balance of US$100,000: wealth management
For a referral
Additional fees/ ▪ Account incl. one for free
additional US$5,000
incentives expert call: 0.40%2 ▪ US$300 for referrals
are managed for free
▪ Account incl. unlimited and US$100 for the
expert calls: 0.50%2 referred customers

Note: All data are based on company information as at September 2020

1: While SoFi promotes that they do not use a robot, their wealth management offering largely
resembles that of robo-advisors 2: Requires a min. balance of US$100,000, also includes 84
additional account monitoring
Source: Company information
Venmo is a person-to-person
payment service owned by PayPal
Venmo: business overview (1/2)

Venmo is a mobile person-to-person payment service that allows users to transfer money and send
payments to other users. Users link their debit and credit cards online and can transfer money to all
recipients.
The company was founded in 2009 by Andrew Kortina and Iqram Magdon-Ismail and is
headquartered in New York. After 3 years, the app was launched in 2012 and acquired by Braintree
in the same year. PayPal acquired Venmo through its US$800 million acquisition of payments
processing start-up Braintree in 2013.

Until now the service is available in the U.S. only and PayPal is providing all money transmissions.
Funding sources for payments are the balance on the Venmo account, credit/debit cards, or a U.S.
bank account. Payments to businesses can only be made if they include Venmo as a payment option
in their own check-out, a transfer of money via the Venmo app is not possible.

Venmo's revenues come from charging merchants for the use of Venmo in their check-out and by
charging for the use of credit cards.

▪ Year founded: 2009

▪ Number of employees: >2001

▪ Total funding: US$1.3 million2

▪ Payments processed3: US$101 billion (FY2019)

▪ Number of partner apps: 114

Fee structure5:
Fees within Venmo app:

▪ Credit card use: 0% of transaction value

▪ Receiving funds: 0% of transaction value

▪ Credit card use: 3% of transaction value

Fees for using Venmo in other apps’ check-outs6:

▪ Fee for the user: 0% of transaction value

▪ Fee for the merchant: varying depending on pricing model

Fees to transfer money out of Venmo:

▪ Fee for the user: 1% of transferred amount; at least US$0.25 for each instant transfer.

1: As stated in Forbes at Feb 2017 2: As at Sep 2020 3: Transaction value 4: As at July 2016 5:
Company information as at Sep 2020 6: In case a merchant has included Venmo as a payment 85
option in their check-out
Source: Company information, Forbes, Crunchbase, PayPal, Business Insider
Venmo offers users payment
services with a social element
Venmo: business overview (2/2)

USP:
Besides fund transfer services, Venmo also advertises the possibility to connect with people. As the
peer-to-peer economy started to grow, Venmo seized the opportunity to position the platform as a
social network.

Unlike to other mobile payment services, Venmo offers to keep transactions public to the user’s
network of friends. With the option to add details to the transaction, it resembles a social network.
Since paying via Venmo is free – as long as users don‘t choose credit cards as a payment method – it
is a widely used service.

The default setting is public, which means that

almost all transactions are shown in the user’s feed
and to their network. Few users opt to keep
transactions private.

Venmo is often used to split bills at restaurants, pay

for joint birthday presents, or to pay rent and other
expenses as it reduces the effort for their users (no
cash involvement, instant money transfer, no
administrative effort, no fees).

Businesses that use Venmo in their check-out, on the

other hand, benefit from the social media value of the
posts in the user streams, which can lead to word-of-
mouth recommendations in item-specific conversations in
the Venmo app.

86
Source: Company information
In 2016, Venmo didn’t reach goal of
US$20bn in processed volume
Venmo: timeline (1/2)

2009
Founded by Andrew Kortina and Iqram Magdon-Ismail

2012 March: Opened to the general public

Bought by Braintree for US$26.2 million

January: Venmo Touch was launched, a feature that eliminates the

2013 need for users to re-type their card numbers
February: The ‘Nearby Payments’ feature was launched to allow users
2014 to pay people in neighboring areas, using Bluetooth technology
May: Announcement of the launching of the fingerprint unlock
2015 feature
August: Announced launch of three new support upgrades: live chat,
an in-app help center, and 24/7 support coverage
August: Beta version for groups launched to allow users to create an
account for their group or club
February: US$1 billion in payments made through the platform
2016
surpassed
June: Beta version closed to allow all users to make purchases using
the service

July: New feature to allow users to pay in other apps as well

September: First major video promotional campaign on cable

networks and the internet

September: Venmo integrations for Siri and iMessage in iOS 10

October: PayPal CEO Dan Schulman announced that Venmo was

expected to process US$20 billion in payments by the end of 2016
With US$17.6 billion processed in payments in FY 2016, Venmo did
not reach this goal

87
Source: Company information
Venmo launched its own physical
debit card in 2017
Venmo: timeline (2/2)

2017 May: Opening for its beta for select U.S. PayPal merchants announced
to accept Venmo as a mobile payment option
June: Testing of an own physical debit card linked to the Venmo
account to allow users to make purchases in brick-and-mortar stores

July: Venmo users transmitted US$8 billion in Q2 2017

August: Launch of Venmo Codes, a feature that allows users to scan

their unique codes to make and receive payments
October: Expansion of features to enable users to make payments
online

2018 June: Launch of a Mastercard branded debit card

June: Discontinued web support for making payments and charging

users

2019 April: PayPal announced that Venmo had crossed 40 million users

August: Launched instant transfers to bank accounts, an alternative

feature to its standard bank transfer services
October: Launched its first rewards program that pays cash back to
customers when they use their card at participating merchants
October: Partnered with Synchrony Financial, a consumer financial
services company, to launch a credit card for Venmo users in 2020
October: Increased its fee from a flat 25 cents to 1% when Venmo
account holders transfer money quickly to their bank accounts
May: Rolled out a new design to enable users to complete the
2020 transaction in fewer taps
June: Announced plans to launch a crypto transaction system as an
alternative to crypto exchanges
July: Launched a new feature for businesses to accept payments
separately from the individual owner’s account

88
Source: Company information
Stripe is an interface between
merchants and payment providers
Stripe: business overview

Stripe is a B2B payment provider that offers payment solutions for businesses to accept payments
online and via mobile apps. It lets merchants process credit card payments directly from their own
websites, simply by inserting a few lines of code. Stripe’s clients include Twitter, Kickstarter, Shopify,
Salesforce, and Lyft. Additionally to payment services, Stripe offers:
▪ Payments services for platforms to receive money from customers and transfer it to the respective
third parties

▪ Data analysis capabilities

▪ Buy-buttons for selling products easily in apps

▪ Prevention of fraud with machine-learning-based algorithms

With offices in nine global locations, Stripe is currently operating in 25 countries.

▪ Year founded: 2009

▪ Number of employees: <2000 (November 2019)

▪ Total funding: US$1 billion (Nov 2019)

▪ Valuation: US$35 billion (Sep 2019)

▪ Number of business customers: >100,000 (June 2018)

USP:
Stripe simplifies payment-related transactions by providing technical and banking infrastructure.
They offer a lot of payment methods, like credit/debit cards, bank accounts, wallets, or digital
currencies. Stripe's biggest advantage is Stripe.js, a feature that enables the direct, encrypted
transfer of credit card data to Stripe without being saved or transferred to the merchant server.
Additionally, Stripe offers the possibility to handle subscription payments. In addition to an easy
incorporation of the Stripe code by developers, users of Wordpress or Magento can use open-source
plug-ins to incorporate Stripe.

Stripe also offers a free data portability, in case the client decides to switch to another payment
processor, reducing the fear of being permanently locked-in with Stripe.

Fee structure1:
▪ 2.9% of transaction value plus US$0.30 per successful transaction for domestic credit and debit
cards

▪ An additional 1% for international cards and another 1% conversion fee if charge currency differs
from payout currency

▪ 0.8% of transaction value for ACH3 and Bitcoin transactions, max. US$5

89
Source: Company information, Crunchbase, Wall Street Journal
Stripe went from company
foundation to launch in 2 years
Stripe: timeline (1/3)

October: The company was founded by John Collison and Patrick

2009
Collison

2010 January: Received seed funding from Y Combinator

Received US$2 million from PayPal, as well as Sequoia Capital,

Andreesen Horowitz and SV Angel in a later round

2011 Officially launched to the public

October: Launched Connect, allowing third-party services to integrate

2012 Stripe data and capabilities
January: Released the first version of Stripe Checkout, an embeddable
2013 payment form for desktop, tablet, and mobile devices

June: Integrated Alipay into its services

2014 June: Announced its integration with Apple Pay

September: General Catalyst announces the GC Stripe Platform Fund,

investing up to US$10 million in businesses built on Stripe
January: Launched machine-learning-based fraud protection for all
2015 users
July: Received US$100M in Series C-2 funding from American Express,
Visa, Kleiner Perkins Caufield & Byers, and Sequoia Capital
September: Partnered with Twitter to launch Relay, a service that
enables developers to create native app buying experiences
February: Launched Atlas, a platform to let start-ups incorporate
2016
more easily in the U.S. and also access to various services
July: Announced the expansion of Stripe Connect to marketplace
businesses based in the UK, Ireland, and the Nordics
November: Received US$150M Series-D investment from Capital G
and General Catalyst

90
Source: Company information
Business expansion to various
European countries in 2017
Stripe: timeline (2/3)

April: Acquired Indie Hackers, a knowledge sharing company to

2017 strengthen relationships with entrepreneurs
April: Started offering Atlas business creation toolkit to U.S.
entrepreneurs
May: Announced partnership with Targeted Victory, to offer Targeted
Victory’s client a secure way to process donations
May: Launched upgrades such as a new payment-routing
infrastructure for Stripe Connect
June: Launched Sigma, a new analytics tool to help corporate
customers track payments data
June: Launched in Germany, Austria, Switzerland, Netherlands,
Belgium, and Luxembourg
July: Announced that merchants who used Stripe would now be able
to use Alipay and WeChat Pay on their websites and apps
December: Launched its payment gateway and processing service in
India
January: Announced that it was disallowing the use of Bitcoins as a
2018
payment method on its platform
March: Acquired Index, a point-of-sale software company, for an
undisclosed sum
April: Launched Radar for Fraud Teams, an expansion of its AI-based
Radar service that helps identify and block fraudulent transactions
April: Launched Billing, a service that uses machine learning to
simplify the recurring billing process
May: Signed an MOU with JCB, a global payment company, to allow its
merchants to accept payments from JCB card members
April: Launched Stripe Billing in Europe, to simplify the recurring
2019
billing process for SaaS and subscription-based companies
September: Raised $245 in additional funding, mainly to expand to
international markets

91
Source: Company information
Further expanded its network to
Malaysia and Mexico in 2019
Stripe: timeline (3/3)

September: Launched Stripe Capital to enable faster access to funds

2019 for ecommerce companies
September: Launched the Stripe Corporate Card to enable payments
in more countries
September: Raised $250 million in additional funding from various
investors including General Catalyst, and Sequoia among others

October: Launched its products and services in Malaysia

October: Partnered with Payments Network Malaysia Sdn Bhd

(PayNet) to make FPX available to businesses in the country
October: Launched its products and services in Mexico, after a pilot
run with companies such as Cornershop, Homely, Urbvan and others

92
Source: Company information
OnDeck provided over US$13bn in
loans to global customers
OnDeck: business overview

OnDeck provides a platform for small business lending. The company uses its proprietary technology
and analytics to analyze data points from various sources to assess the creditworthiness of small
businesses. It follows a direct lending business model.
To date, the company has deployed over US$6 billion to more than 50,000 customers in 700
different industries across the U.S., Canada, and Australia.

▪ Year founded: 2007

▪ Number of Employees (2019): 742

▪ Interest and finance income (2019): US$428.4 million

▪ Net interest income (2019): US$383.8 million

▪ Total assets (2019): US$1,304.6 million

USP:
OnDeck offers term loans up to US$500,000 with a term of 3–36 months and lines of credit up to
US$100,000. OnDeck decides on loan eligibility based on data about business operations of a
company, which are processed by an algorithm. These algorithms replace loan officers and enable
entrepreneurs to get their money after a shorter waiting time. The decision is made by the algorithm
in minutes, and an approved loan will be payed out within 24 hours to two working days. OnDeck
requires the business to have a minimum revenue of US$100,000 and to operate for at least a year
before the loan application.

Fee structure1:
One-time origination fee for term loans per business:
▪ First loan: 2.5–4%

▪ Second loan: 1.25–3%

▪ Third loan: 0–3%

Interest rates:

▪ Term loans: starts from 9%, with average rates of 47.3% AIR2

▪ Lines of credit: starts at 13.99% with an average rate of 32.4% APR3

1: Company information as at November 2019 2: Annual interest rate – in annualized terms, 93

excluding fees 3: Annual percentage rate – in annualized terms, including fees
Source: Company information
In 2014, OnDeck was listed on NYSE
– only 7 years after its foundation
OnDeck: timeline (1/3)

2007 Ondeck was founded by Mitch Jacobs

2010 Surpassed US$100 million in capital lent to small businesses

2013 January: Surpassed US$350 million in total loan volume

February: Secured US$42 million in series D financing

May: Secured US$17 million in series D funding

September: Received funding commitments for credit facilities

totaling over US$130 million

2014 January: Surpassed US$825 million in total loan volume

March: Secured US$77 million in a growth investment round led by

Tiger Global Management
June: Partnered with SCORE, a provider of small business mentoring
workshops and education services, to mentor main street businesses
December: Listed on the NYSE: ONDK and closed its IPO selling
11,500,000 shares and with total gross proceeds of US$230 million
January: Announced the general availability of its platform for small
2015 business loans, after a one-year pilot
April: Partnered with Prosper Marketplace to enable both companies
to service loans
April: launched its services in Australia, thus making its first foray
outside North America
April: Expanded its services in Canada to offer up to CAD$150,000 in
small business loans

July: launched a mobile app

94
Source: Company information
In 2017, OnDeck formed several
strategic partnerships
OnDeck: timeline (2/3)

August: Formed a forward purchase agreement to sell up to US$500

2015 million in marketplace loans
September: Partnered with Intuit to launch QuickBooks Financing
Line of Credit for small businesses with a US$100 million lending fund
October: Expanded its product suite to include an expanded range of
term loans, increased line of credit range and lower interest rates

2016 May: Closed a US$250 million asset-backed securitization transaction

May: Expanded a line of credit up to CAD$50,000 to Canada and a

term loan up to CAD$250,000 in May
December: Closed a US$200 million asset-backed revolving debt
facility with Credit Suisse
January: Formed strategic partnership with WEX1 to provide access to
2017 its product suite of loans to WEX customers
February: Partnered with Wave to launch "Lending By Wave" small
business financing solutions to the customers of Wave
April: OnDeck Canada partnered with Lightspeed, a cloud-based
point-of-sales platform for independent retailers and restaurants
August: Partnered with Payment Source to offer their customers
access to the OnDeck’s lending platform
October: Partnered with Ingo Money, an instant payment company,
and Visa to enable real-time loan funding to small businesses
December: Added a BlackRock-managed fund to its platform of
financing partners
October: Created a new subsidiary called ODX to pursue partnerships
2018 with other banks
October: Announced its entry into the small-ticket equipment finance
lending sector
April: Launched the Same-Day ACH transfer functionality for SME to
2019 receive funds on the same day they draw on their lines of credit

95
1: WEX is a corporate and small business payment solutions provider
Source: Company information
Joined the U.S. PPP1 to provide
small business relief loans
OnDeck: timeline (3/3)

July: OnDeck Canada partnered with credit union Coast Capital

2019 Savings to offer small businesses faster access to credit
July: Partnered with restaurant management platform Upserve, to
provide its customers with online financing options
October: Partnered with Investors Bancorp, a U.S. bank, to enable it to
use OnDeck's loan origination platform
April: Partnered with Utah-based Celtic Bank, to provide small
2020 business relief loans through the Paycheck Protection Program

96
1: Paycheck Protection Program
Source: Company information
Lending Club originated almost
US$60 billion in loans
Lending Club: business overview (1/4)

Lending Club is an online credit marketplace connecting borrowers and investors. It offers a
proprietary technology platform that automates various aspects of operations starting from data
gathering, a borrower application process, credit approval and scoring to loan funding, investing, and
fraud detection. All loans are made by WebBank, similar to Prosper.
The company’s primary products include
▪ Personal loans from US$1,000 to US$40,000
▪ Auto refinancing for outstanding balances of US$5,000 to US$50,000
▪ Patient financing loans from US$499 to US$50,000 for some medical specialties
▪ Business loans between US$5,000 and US$300,000 with a term of 1–5 years
▪ Business lines of credit between US$5,000 and US$300,0001
The company was founded in 2006 and is headquartered in San Francisco, California.

▪ Year founded: 2006

▪ Number of employees (2019): 1,5382

▪ Total net revenue (2019): US$758.6 million2

▪ Net loss (2019): US$30.7 million2

▪ Total loans originated: US$59.6 billion3

Lending Club offers term loans up to US$500,000 with a term of 3–36 months.

Personal loan terms are fixed to 3 or 5 years similar to Prosper, but Lending Club has more personal
loan categories:
▪ Credit card refinancing
▪ Debt consolidation
▪ Home improvement
▪ Car financing (repairs or purchases)
▪ Major purchase
▪ Home buying
▪ Green loan
▪ Business
▪ Vacation
▪ Moving and relocation
▪ Medical expenses
▪ other
All loans have fixed fees apart from the business lines of credit and a special form of patient financing
loans.

97
1: Each draw needs to be payed back within 25 months 2: December 31, 2019 3: As at Jun ‘20
Source: Company information
Fees depend on type of product
and borrower rating
Lending Club: business overview (2/4)

Businesses need to be in business for two years with a minimum revenue of US$75,000 to qualify for
business loans or lines of credit.
Private investors can invest in personal loans. Institutional investors can additionally invest in patient
financing and business loans.

The minimum investment per loan is US$25, but investors have to transfer US$1,000 to Lending Club
to open an account. Investors see rate, risk rating, term, FICO score1, loan amount, loan category,
current funding percentage, as well as amount and time left.

Investors can choose to open a retirement account or an investment account. Investor notes on
loans can be traded on a note trading platform.

As loans are payed back on a monthly basis, investors receive a monthly cash flow of 2–5%. Lending
Club advertises that 98% of their portfolios with more than 100 investments in different loans of
similar size realize positive returns.

Fee structure:
Borrowers (personal loans):
▪ Origination fee: 2–6%, the average for Grade A loans is 3.46% as at Q1 2017
▪ APR3,4: 6.95%–35.89% depending on the borrower rating

Borrowers (auto-refinancing):
▪ Origination fee: 0%
▪ APR2,3: 2.24%–19.99% depending on the borrower rating

Borrowers (patient financing):

▪ APR2: 4.99%–24.99% depending on the borrower rating. Additionally no-
interest plan offered with 0% APR3 for determined period and
26.99% variable APR3 after that

Borrowers (business loans):

▪ Origination fee: 3.49% - 7.99% depending on the borrower rating
▪ Total annualized rate: 9.77%–35.98% depending on the borrower rating

Investors:
▪ Collection fee: Up to 30% on the amount of any payments successfully
collected on pre- and post-charged off loans

1: Credit score created by the Fair Isaac Corporation 2: Annual percentage rate 3: includes 98
origination fee
Source: Company information
More than 45% of loans from
Lending Club are for refinancing
Lending Club: business overview (3/4)

Lending Club currently advertises average returns for investors from 4.53% to 5.74%1. Lending Club
uses a rating scale for loans from A (low risk) to G (high risk) with according estimated returns, incl. an
adjustment for estimated future losses1.

5.57% 5.74% 5.31%

4.53% 4.69%

1.53%

A B C D E F+G

Average interest rates from Q3 2019 are 11.50% for 3-year loans and 14.35% for 5-year loans, which
means 12.74% on average for all loans2.

Reported loan purpose in %3

Refinancing Home improvements, cars and major purchases Other

Credit card payoff Business

0,60%
45,47% 22,69% 22,66%
8,58%

1: Based on Adjusted Net Annualized Return ("Adjusted NAR") of all loans issued 15 months or
more June 30, 2019, company information as at October 2019 2: All loans combining 3 and 5- 99
year loans 3: As at September 30, 2019
Source: Company information
Automated investment strategies
are based on risk preference
Lending Club: business overview (4/4)

USP:
Similar to other lending marketplaces, Lending Club performs at a lower internal cost than traditional
lending institutions and provides advantages for all counterparts: the possibility to receive a loan for
borrowers that usually do not get one and solid returns to investors.

Borrowers get answers on their potential rates in minutes without an impact on their credit score.
Interest rates are fixed and thus borrowers have a fixed monthly fee to pay. More than 60% of
borrowers therefore use Lending Club loans to refinance their debt or pay off their credit card debt,
which usually has very high interest rates.

Lending Club also makes it very easy for investors to dip into the personal loans market. Loans are
divided into US$25 notes that are sold to investors. Lending Club publishes detailed information
about the loans on the daily basis. It also provides vast anonymized information about prospective
borrowers.

In the Lending Club app investors can see their account value, returns and their holdings. The status
of their holdings is also displayed, giving investors a chance to quickly get an overview of how much
of their invested money is currently at high risk, i.e. where payment is delayed or a note defaulted.

An additional feature is the possibility to invest via the app. Here investors have two options:

▪ Manual selection: Investors can see all potential loans with all relevant information and can sort
and filter the selection. Investments are done by clicking on the “+“ button and then proceeding to
the check-out.

▪ Automated investments: Depending on the chosen strategy, an algorithm will automatically

invest in loans. The strategies are completely based on different borrower ratings. Investors can
choose to weigh low-risk ratings (A+B) or high-risk ratings (D to G) or invest in the current platform
mix. Projected returns for the different strategies are shown as well. Investors can also customize
their strategy with their own grade mix.

100
Source: Company information
Lending Club exceeded US$3bn in
personal loans in 2013
Lending Club: timeline (1/3)

2006 Lending Club was founded

May: Launched its P2P lending service on Facebook to help users

2007 borrow and lend money directly among each other
August: Closed US$10.26 million in Series A funding led by Canaan
Partners and Norwest Venture Partners
December: Announced the availability of its P2P lending service
across all 50 states in the U.S.
March: Closed a US$12 million Series B round of funding led by
2009 Morgenthaler Ventures
April: Closed a US$24.5 million investment round led by Foundation
Capital
October: Announced the availability of personal loans in North
2010 Carolina and Kansas
August: Announced the closing of a US$25 million investment round
2011 led by Union Square Ventures
September: Announced strategic investments by Peter J. Thomson,
Director of Thomson Reuters Corporation and Thomvest, a VC firm

2012 November: Exceeded US$1 billion in personal loans

2013 May: Divested a minority stake to Google

December: Exceeds US$3 billion in personal loans

March: Entered into the business lending with the launch of a new
2014 platform
April: Acquired Springstone Financial, a provider of education and
patient financing
May: Partnered with Union Bank to enable it to purchase personal
loans through the Lending Club platform

101
Source: Company information
In 2014, Lending Clubs IPO1 raised
over US$1 billion
Lending Club: timeline (2/3)

July: Recorded over US$5 billion in consumer and business loans

2014
since inception
November: Launched a new education and patient financing product
with no interest financing for a period of 6, 12, 18 or 24 months
November: Launched the "Super Prime" loan product offering aimed
primarily at borrowers with high credit quality
December: Announced the closing of its IPO1 with a total sale of over
US$1 billion
January: Partnered with SCORE, a provider of small business
2015 mentoring, to provide financing to small business owners
January: Partnered with Google to facilitate low-interest financing for
its eligible partners
February: Partnered with Alliance Partners to enable its members to
offer personal loans to their customers through Lending Club
April: Partnered with Citi and Varadero Capital L.P. to facilitate up to
US$150 million in loans
June: Partnered with Opportunity Fund, a non-profit lender, to
enhance small business lending
July: Opened its marketplace to investors in Arkansas, Iowa, and
Oklahoma
October: Opened its marketplace to investors in Missouri, South
Carolina, and Tennessee
December: Announced an increase in interest rates for new loans by
an average of 0.25%
May: CEO Renaud Laplanche had to leave the company after an
2016 internal review revealing personal investments
May: Lending Club admitted to the SEC that they doctored loan
applications worth US$22m in order to sell them to a single investor
Scandal leads to plummeting share prices and puts pressure on
Lending Club to keep investors on the platform,

102
Source: Company information
Loan originations declined in the
first quarter of 2017
Lending Club: timeline (3/3)

June: Appointed Scott Sanborn as CEO and President and Hans Morris
2016
as Chairman of the Board of Directors
October: Announced the launch of an auto refinance product which
helps consumers save money
November: Secured a US$1.3 billion purchase program from Credigy,
a subsidiary of National Bank of Canada
March: While the 2016 annual report showed a slow but steady
2017 recovery, loan originations declined again in the first Quarter of 2017

May: Appointed former PayPal executive Steve Allocca as its President

October: Shut down five of its investment funds with a total value of
US$376 million
February: Partnered with Alliance Partners to enable its members to
offer personal loans to their customers through Lending Club
April: Partnered with Citi and Varadero Capital L.P. to facilitate up to
US$150 million in loans
April: Partnered with Opportunity Fund and Funding Circle to increase
2019 its reach to more small business owners

April: Opened a new office in Lehi, Utah

August: Launched the Select Plus Platform that identify opportunities

to approve borrowers who fall outside the current criteria
February: Acquired Radius Bancorp, and its wholly owned subsidiary
2019 Radius Bank
June: Expanded its LCX platform to make it easier for investors to
analyze, price, and bid on loans at the time a loan is originated

103
Source: Company information
Prosper funded over US$9 billion
small business loans
Prosper: business overview (1/2)

Prosper Marketplace is an online peer-to-peer lending marketplace.

The company’s flagship loan product allows borrowers to list loan requests between US$2,000 and
US$35,000 with a fixed term of 3 or 5 years. Individual investors are able to invest with a minimum of
US$25 per selected listed loan. Prosper handles the servicing of the loan on behalf of the matched
borrowers and investors.

The company also launched the Prosper Daily app in March 2016 to provide budgeting and spending
tracking services, alerts for potential fraudulent charges, and credit monitoring. The Prosper
marketplace lending platform is owned by Prosper Funding LLC, which is a subsidiary of Prosper
Marketplace. Prosper loans are made by WebBank.

▪ Launch: 2005

▪ Number of Employees (2018): 4151

▪ Loans funded (2019): >US$16 billion2

▪ Total operating revenue (2018): US$97.9 million1

▪ Net loss (2018): US$39.9 million1

Fee structure1:
Borrowers:

▪ Origination fee: 1–5% depending on the borrower rating

▪ Annual percentage rate : 5.99%–35.99% depending on the borrower rating

▪ Check payment fee: US$5 per check payment

▪ Failed payment fee: US$15 fee

▪ Late payment fee: 5% of the unpaid instalment amount or US$15

Investors:

▪ Annual servicing fee: 1% annual servicing fee, accrued daily

▪ Returns: 3.5% - 7.0% for All Ratings-Platform

1: As of December 31, 2018 2: Company information as at Nov 2019 3: Includes late fees, post
charge-off principal recovery, servicing fees, interest on charge-offs and estimated principal loss 104
on charge-offs from such loans, based on data from May 1 to May 31, 2018
Source: Company information
Next to loans, Prosper offers
identity theft protection
Prosper: business overview (2/2)

USP:
Borrowers get low, fixed-rate loans and can check their potential interest rates in minutes without
any impact on their credit score. Investors can consider borrowers’ credit scores, rating, histories,
loan amount, yield, the category of the loan, as well as the current funding status of the loan and the
time left.

Prospers loan categories are:

▪ Debt consolidation

▪ Home improvement

▪ Auto and vehicle

▪ Baby and adoption

▪ Small business

▪ Special occasion

Prosper administrates the transactions with handling the servicing of the loan, collecting and
distributing the borrowers payment. Signing up to Prosper is uncomplicated and the service
guarantees no hidden fees or penalties. The funds can be transferred directly to the borrowers
account for no additional fee. The company does not only position its services as a quick and modern
lending solution, but also emphasize that they create an opportunity to invest in each other in a way
that is financially and socially rewarding.

A new Prosper product is “Prosper Daily” that offers the possibility to synch all financial accounts to
Prosper and is free of charge.

User can monitor their accounts and classify their

spending for further analysis of all transactions.
The app additionally offers credit score tracking
and alerts in case of card & bank fraud.

The premium version (monthly fees apply) offers

additional security features, such as

▪ Instant alert if users cards are used in a location

other than his phone’s location
▪ Several identity theft warning services

▪ Surveillance of black market sites to identify if

personal information has been stolen

▪ Identity theft insurance

105
Source: Company information
Surpassing US$2 billion in personal
loans in 8 years
Prosper: timeline (1/2)

2006 February: The company launched its operation

2008 October: Stopped all lending on its site because of scrutiny by the SEC

April: Reopened for business after a six month shutdown imposed by

2009 the Securities and Exchange Commission (SEC)

2011 January: Announced interest rates cuts on its P2P loans

June: Secured US$17.2 million in funding from existing and new

investors.

2012 February: Surpassed US$300 million in P2P consumer loans

January: Raised US$20 million from Sequoia Capital and other existing
2013 investors
September: Raised US$25 million in a funding round led by existing
partner Sequoia Capital and new investor BlackRock

2014 April: Surpassed US$1 billion in personal loans

May: Announced a US$70 million investment round led by Francisco

Partners

October: Surpassed US$2 billion in personal loans

January: Acquired American Healthcare Lending, a healthcare service

2015
lending marketplace, for US$21 million
February: Signed an exclusive WIB Endorsed Program partnership
with Western Independent Bankers (WIB)

April: Announced a US$165 million Series D financing

April: Partnered with OnDeck to develop new solutions and expand

on their existing referral arrangement

106
Source: Company information
Added crypto trading to its SoFi
invest platform
Prosper: timeline (2/2)

September: Partnered with Radius Bank to offer a new personal loan

2015
option through its platform
September: Acquired BillGuard for approximately US$30 million in
cash plus an undisclosed stock component

2016 March: Launched its first mobile app, Prosper Daily

March: Partnered with HomeAdvisor to offer home improvement

financing through the HomeAdvisor website

May: Laid off 171 people and shut down its Salt Lake City office

October: Announced the launch of new app feature called Credit Card
Optimizer to provide consumers with additional financial information
February: Signed a deal with institutional investors to purchase up to
2017 US$5 billion worth of loans through the Prosper platform
May: Announced the closing of the first securitization from the
Prosper Marketplace Issuance Trust worth US$495 million
September: Raised US$50 million in a Series G round from an
investment fund co-managed by FinEX Asia
January: Partnered with WeWork to give its employees and members
2018
access to its debt restructuring solutions
October: Partnered with home improvement platform Kukun to give
customers a better understanding of their home improvement needs
January: Sold its first unsecured consumer loan ABS deal valued at
2019 $171 million

February: Launched two new products SoFi Money and SoFi Invest

September: Sold its first unsecured consumer loan ABS deal valued at
$171 million
November: Partnered with BBVA USA, to offer a Home Equity Line of
Credit solution

107
Source: Company information
SoFi funded US$19 billion in loans
and has US$3 million AUM1
SoFi: business overview (1/3)

SoFi is a U.S.-based provider of lending and wealth management (Social Finance Inc.). It also offers
term life insurance in partnership with Protective Life. Founded in 2011 by Mike Cagney, Dan Macklin,
James Finnigan, and Ian Brady, the company is headquartered in San Francisco, California.
The company’s borrowing products include

▪ Personal loans

▪ Student loan refinancing (for federal & private loans)

▪ Parent loans

▪ Parent loan refinancing

▪ Mortgages and mortgage refinancing

▪ Year founded: 2011

▪ Number of Employees: 14002

▪ Total funding: US$2.5 billion3

▪ Total number of customers: >1000,0003

▪ Loans funded: >US$50 billion3

Service offerings:
Wealth manager Social Finance offers portfolio management, private placement – opportunity to
invest in SoFi loans for high net worth investors, asset allocation, risk-evaluation, consulting,
investment banking, and financial advisory services.

All SoFi loans are originated by SoFi Lending Corp or SoFi Mortgage LLC, depending on the loan
product and state.

Borrowers can get a personal loan of US$5,000 to US$100,000 with fixed interest rates for a term of
3, 5, or 7 years. Student loan refinancing works for a term of 5, 7, 10, 15 or 20 years and are available
with a fixed or variable interest rate. Parent loans have a fixed interest rate and a 5- or 10-year term.
Similar to other of SoFi’s refinancing products, the Parent refinancing loan has the option for a fixed
or a variable rate and a term of 5, 7, 10, or 15 years. Mortgages work with a minimum down payment
of 10% and have a maximum value of US$3 million.

1: Assets under management 2: As at Dec 2018 3: As of Sep 2020 4: Company information as at 108
Sep 2020
Source: Company information, Crowdfund Insider, Forbes, Crunchbase, Bloomberg
SoFi offers fixed & variable rates –
wealth mgmt. is free for members
SoFi: business overview (2/3)

Fee structure1:
Personal loan (fees incl. a discount of 0.25% for automatic payment 2):

▪ Origination fee: 0%

▪ Fixed rate3: 5.99% – 17.88% depending on term and borrower rating

▪ Other fees: 0 (origination fees, closing costs, or prepayment penalties)

Student loan refinancing (fees incl. a discount of 0.25% for automatic payment 2):

▪ Origination fees: 0% in most states

▪ Fixed rate3: 3.375%–6.740% depending on term and borrower rating

▪ Variable rate3: 2.615%–6.540% depending on term and borrower rating and the 1-month
LIBOR4 (therefore these ranges may vary monthly).

Parent loan (fees incl. a discount of 0.25% for automatic payment 2):

▪ Origination fee: 0%

▪ Fixed rate3: 4.25% – 8.00% depending on term and borrower rating

Parent Plus refinancing loans (fees incl. a discount of 0.125% for becoming a member):

▪ Origination fees: 0% in most states

▪ Fixed rate3: 3.46%–5.59% depending on term and borrower rating

▪ Variable rate3: 1.81%–5.59% depending on term and borrower rating and the 1-month
LIBOR4 (therefore these ranges may vary monthly).

Mortgage & mortgage refinancing:

▪ Origination fees: 0%

▪ Interest rates: Vary depending on loan term, rating, and down payment
Wealth management:

▪ Account balance up to US$10,000: Free, US$500 minimum balance5

▪ Account balance over US$10,000: 0.25% annual fee

▪ Fee for borrowers with SoFi loans: 0%

1: Company information as at Sep 2020 2: Discount does not apply for every non-automated
payment, increasing the APR 3: Rates as at Sep, 2020 4: London Interbank Offered Rate 5: Or a 109
monthly automated transfer of US$100
Source: Company information
SoFi is a social community with
several benefits for its members
SoFi: business overview (3/3)

USP:
SoFi positions itself as a social community – as social finance. Next to their lending and wealth
management business, they offer community events, e.g. dinners, happy hours, panel sessions,
networking opportunities, etc. to connect “members” – as they call their customers – to each other.
Furthermore, customers that already have a loan receive a rate discount on additional SoFi loans and
do not pay for SoFi wealth management.
Additionally, SoFi offers their members the following:

▪ Career advisory for career transitions, job search, personal branding, incl. personal meetings with
the advisors

▪ Unemployment protection – a program borrowers can apply to in case they lose their job through
no fault of their own. After successful application, loan payments will be suspended for three
months and can be extended up to 12 months.

▪ Entrepreneur program to support the launch of an own company with mentorship and resources,
access to investors, and a peer network. Additionally, SoFi offers to defer student loans for 6
months to use the free resources to grow a new business.

SoFi actively promotes referrals as customers receive up to US$300 for each new customer they
referred, with the new customer receiving up to US$100.

SoFi wealth management offers low fees and is free for SoFi
borrowers. In contrast to other FinTech wealth management
companies, SoFi offers a more individual wealth management
approach with personalized advice. But similar to other FinTech
players, the portfolio is based on ETF funds that are actively
curated by SoFi’s finance specialists. According to SoFi, their
advisors do not receive commissions and support SoFi
customers in planning and reaching their financial goals. SoFi
portfolios are automatically rebalanced.

SoFi’s portfolio is built on a mix of ETFs following over 20

indexes and includes U.S. stocks, international stocks, high yield
bonds, real estate, short-term treasury bonds, and stock
markets of countries and regions. Based on the user’s risk
preference, money is invested in different percentages in stocks
and bonds to match this risk preference.

In the SoFi Wealth app, users can see their risk preference, the
respective allocation, and the single investments classified by
asset class.

110
Source: Company information
SoFi received >US$155 million
funding in first 3 years
SoFi: timeline (1/3)

2011 SoFi was founded

September: Raised US$77.2 million in series B funding led by Baseline

2012 Ventures and joined by DCM and Renren Inc
May: Extended its refinancing options to include doctors who have
2013 completed residency and graduated from 82 selected schools
June: Secured a US$41 million lending facility from The Bancorp, a
financial holding company
October: Announced that it had reached US$500 million in debt and
equity
December: Closed its first ever securitization of post-graduate
student loans with the sale of US$152 million of Senior Notes

2014 April: Secured US$80 million in Series C funding

July: Closed a US$251 million securitization of refinanced student

loans for graduate borrowers
October: Surpassed US$1 billion in funded loans across student loan
refinancing. Also announced the expansion to Mortgages
February: Secured US$200 million in Series D funding led by Third
2015 Point Ventures

February: Announced the launch of its Personal Loans product

March: Launched its mobile mortgage app to enable homebuyers

April: Surpassed US$2 billion in funded loans across mortgages,

personal loans, and student loan refinancing
June: Closed a US$411.9 million securitization of refinanced student
loans with Goldman Sachs and Morgan Stanley
September: Surpassed US$4 billion in funded loans across
mortgages, personal loans, and student loan refinancing

111
Source: Company information
SoFi improved account protection
with two-step verification in 2017
SoFi: timeline (2/3)

September: Raised US$1 billion of primary capital in a funding round

2015
led by the SoftBank Group
December: Surpassed US$6 billion in funded loans across mortgages,
personal loans, and student loan refinancing
March: Launched a hedge fund called SoFi Credit Opportunities Fund
2016 to buy off its own loans along with some from its competitors
March: Surpassed US$1 billion in student loan refinancing issued to
borrowers via corporate and association partnerships
June: Completed the sale of US$380 million worth of bonds backed by
consumer loans
September: Acquired BillGuard for approximately US$30 million in
cash plus an undisclosed stock component
September: Launched SoFi at Work, a benefit program for companies
to help their employees reduce their student loan burden
November: Partnered with Fannie Mae to launch a new loan option
called ‘The Student Loan Payoff ReFi’
November: Partnered with Protective Life Corp to add life insurance
to its range of offerings
December: Announced plans to raise US$500 million to expand
product and geographic reach
February: Acquired mobile banking startup Zenbanx to offer checking
2017 accounts, credit cards, and international money transfers services
February: Raised US$500 million in a financing round led by private
equity firm Silver Lake Partners
April: Introduces two-step verification feature to improve account
protection
May: Partnered with dv01to provide all SoFi product offerings to dv01
investors
May: Launched SoFi Wealth, a digital wealth management platform, to
allow U.S. investors to invest as little as $500

112
Source: Company information
SoFi added crypto trading to its
platform in 2019
SoFi: timeline (3/3)

May: Partnered with JetBlue airlines to offer referral points if JetBlue's

2017 TrueBlue members choose to refinance their student loans with SoFi
October: Launched a new Medical Resident Student Loan Refinancing
product, specially for medical residents and fellows
January: Partnered with WeWork, a coworking space provider, to
2018 provide them with access to its products and services
April: Partnered with Korn Ferry (KF), a consulting firm, to provide its
members with access to KFs career development platform

2019 February: Launched two new products SoFi Money and SoFi Invest

May: Received over $500 million in equity financing led by Qatar

Investment Authority (QIA)
September: Partnered with LA Stadium and Entertainment District at
Hollywood Park to acquire the exclusive naming rights

September: Added crypto trading to its SoFi Invest platform

April: Acquired Galileo Financial Technologies, a financial services API

2020 and payments platform, for US$1.2 billion
May: Launched Samsung Money by SoFi, a new mobile-first money
management platform, in partnership with Samsung Electronics
July: Relaunched its exchange-traded fund (ETF), the SoFi 50 ETF,
which now reflect the most popular equities among SoFi members

113
Source: Company information
Wealthfront sets an account
minimum of US$500
Wealthfront: business overview (1/2)

Wealthfront is an online automated investment service that provides data-driven and customized
solutions. Even though it primarily caters to individuals, it also services charitable organizations and
corporations. Founded by Dan Carroll and Andy Rachleff in 2008, the company is headquartered in
Palo Alto, California and was formerly known as kaChing Group. The platform launched 3 years later
in 2011.

Wealthfront offers investing strategies based on modern portfolio theory and invests in public equity
and fixed income markets globally, as well as in mutual funds and exchange traded funds. To do this,
Wealthfront invests in ETFs that track the indexes for the chosen asset classes in their portfolio.

▪ Year founded: 2008

▪ Number of Employees (2019): 138 (July 2019)

▪ Total funding (2020): US$204.5 million1

▪ Assets under management (2018): >US$11.5 billion1

▪ Valuation (January 2019): US$500 million

Service offerings:
▪ Individual accounts

▪ Joint accounts

▪ Trust accounts

▪ Traditional IRAs2

▪ 401(k) rollovers

▪ Roth IRAs3

▪ SEP IRAs4

▪ College savings plans

The sectors and regions covered include:

▪ U.S., international, and emerging markets stocks and bonds,

▪ Short-term Treasuries

▪ Inflation-protected bonds

1: As of Sep 2020 2: Individual Retirement Account – contributions usually made with pre-tax
assets, 3: Special type of IRA: contributions are made with post-tax assets, making withdrawals 114
tax-free 4: Special type of IRA suited for small business and self-employees
Source: Company information, Credio
Biggest USP: A universal 0.25%
annual fee on investment
Wealthfront: business overview (2/2)

Fee Structure1:
▪ Advisory fees (annual): 0.25% irrespective of trading amount

▪ Fund fee2: 0.07-0.16%

▪ Trading and advisory commissions: 0

USP:
Wealthfront makes its offering attractive by charging a universal advisory fee of 0.25% irrespective of
the amount invested, although they require a minimum investment of US$500. In addition, it does
not charge any other fees for trading commissions, withdrawal fees, minimum fees, or transfer fees.
Also, Wealthfront builds on personal recommendations, as referrals of friends are incentivized by an
additional US$5,000 capital that is managed for free.

Wealthfront generates up to 2% of annual tax saving through dividend-based rebalancing, daily tax-
loss harvesting, and direct indexing. Direct indexing is available for accounts with a minimum
investment of US$100,000.

Based on Wealthfront general portfolio, the

portfolio of each user is customized based
on their own risk tolerance. Wealthfront
claims to determine the individual risk
tolerance by very few questions, as they
combine the questionnaire with behavioral
economics research. As competitor
Betterment, Wealthfront automates
investments and rebalances each users
portfolio automatically. A stream shows
every customer the activity on their
account, e.g. deposits and investments
made or other optimization as tax loss
harvesting.

In order to offer customized financial advice, Wealthfront established “Path“. Customers have to
answer some questions and link their financial accounts to Wealthfront to get an individual overview
on their financial situation. “Path” shows how much can be spent in retirement each month, based
on current savings and spending. Additionally, it shows the possible changes with a different saving
amount and offers advice in which account to allocate how much of the savings.

1: Company information as at October 2019 2: Also called an “expense ratio,” this fee is charged 115
by companies who run the investment funds.
Source: Company information, Credio
Wealthfront launched new products
or features every year
Wealthfront: timeline (1/2)

2008 Wealthfront was founded by Dan Carroll and Andy Rachleff

2011 December: Launched Online Financial Advisor service

October: Added automated tax-loss harvesting to its suite of

2012 investment services

2013 June: Reached US$250 million in AUM1

December: Introduced the Wealthfront Tax Optimized U.S. Index

Portfolio, an advancement to its tax-loss harvesting service

2014 January: Closed 2013 with US$538 million in AUM1

February: Launched its app for the iPhone

April: Introduced the Wealthfront Single-Stock Diversification Service

June: Crossed US$1 billion in AUM1

July: Launched the Wealthfront Single-Stock Diversification Service for

2015
Facebook
September: Launched Wealthfront for the Workplace that offers an
account to employees with up to US$100,000 managed for free

October: Launched the Touch ID feature for its iPhone application

December: Launched its new Direct Indexing Platform available at

three levels: Wealthfront 100, 500 and 1000
March: Launched Wealthfront 3.0 to integrate artificial intelligence
2016 and modern APIs to the existing platform
June: Entered the college savings market with the launch of its 529
College Savings Plan.

116
1: Assets under management
Source: Company information
Wealthfront launched college
savings as new product line
Wealthfront: timeline (1/2)

March: Integrated with PeerStreet, a platform for investing in real

2017 estate backed loans
March: Introduced ‘Path’, an automated financial planning tool, to
provide a better financial planning experience for its clients
April: Launched lending facility where customers are able to borrow
funds against their investment accounts
June: Launched Advanced Indexing, a new PassivePlus investment
strategy feature, aimed at increasing a client’s after-tax return
January: Launched Home Planning for Path, an app-based, new
2018 financial planning service
January: Announced a US$75 million funding round led by Tiger
Global Management

April: Cut its expense ratio by half for its Risk Parity Fund to 0.25%

December: Launched free automated financial planning for everyone

February: Wealthfront Cash Account, offering a 2.24% interest rate

2019 and FDIC insurance that covers balances up to $1 million
June: Adding checking features to its Cash Account, without charging
2020 a fee or keeping an account minimum
September: Launched Autopilot, a service that automates savings
plans and eliminates the need to manually monitor accounts

117
Source: Company information
List of U.S. FinTech Startups
SoFi and Kabbage are the two most well-funded fintech start-ups in the U.S..
Each of the companies have raised around US$2.5 billion in funding since
2011. SoFi is backed by key investors such as SoftBank, Silver Lake Partners,
Peter Thiel and others and was last valued at US$4.5bn in Q1 2017. Similarly,
Kabbage is backed by BlueRun Ventures, Guggenheim Securities, ING Group,
Lumia Capital and others.
Avant and Commonbond are two other key FinTech start-ups who managed to
get more than US$1.5bn each in funding.

118
Many FinTech start-ups cluster in
New York and California
Overview (1/2)

Location of selected FinTech start-ups in the U.S.

Alaska Hawaii

Overview of selected FinTech companies in the U.S.

Company Headquarter
Addepar Mountain View, California
Affirm San Francisco, California
Avant Chicago, Illinois
Betterment New York City, New York
Bizfi New York City, New York
BlueVine Redwood City, California
Classy San Diego, California
Coinbase San Francisco, California
CommonBond New York City, New York
ConsenSys New York City, New York
Credible San Francisco, California
Credit Karma San Francisco, California
Digital Asset Holdings New York City, New York

119
Source: Company information
San Francisco is the location of
many Californian start-ups
Overview (2/2)

Company Headquarter
Earnest San Francisco, California
Equidate San Francisco, California
Finova Financial Palm Beach Gardens, Florida
Flint Redwood City, California
FutureAdvisor San Francisco, California
itBit New York City, New York
Kabbage Atlanta, Georgia
Kensho Cambridge, Massachusetts
Lending Club San Francisco, California
Lending Home San Francisco, California
LendUp San Francisco, California
Lenny Credit Santa Monica, California
Motif Investing San Mateo, California
NerdWallet San Francisco, California
New Credit America Portland, Oregon
OnDeck New York City, New York
Pave New York City, New York
Payoneer New York City, New York
PaySimple Denver, Colorado
Plaid San Francisco, California
PledgeCap New York City, New York
Point Palo Alto, California
Prosper San Francisco, California
Ripple San Francisco, California
Robinhood Palo Alto, California
SoFi San Francisco, California
Square San Francisco, California
Stripe San Francisco, California
Tipalti San Mateo, California
TrueAccord San Francisco, California
Upstart San Carlos, California
Venmo New York City, New York
Wealthfront Palo Alto, California
WePay Redwood City, California
Zibby New York City, New York

120
Source: Company information
Coverage of FinTech areas by U.S.
start-ups (1/2)
Coverage (1/3)

Digital Alternative Alternative Personal

Payments Financing Lending Finance
P2P
Digital Mobile Crowd Crowd Crowd Marketpl. Robo- Money
Company Comm. Paym. Funding Investing Lending Lending Advisors Transfer
Affirm ✓
Avant ✓
Betterment ✓
Bizfi ✓ ✓ ✓
BlueVine ✓ ✓
Classy ✓
Coinbase ✓ ✓
CommonBond ✓
ConsenSys ✓ ✓
Credible ✓
Credit Karma ✓ ✓ ✓
Digital Asset
✓
Holdings
Earnest ✓ ✓
Equidate ✓
Finova Financial ✓
Flint ✓
FutureAdvisor ✓
itBit ✓
Kabbage ✓ ✓ ✓
Lending Club ✓ ✓ ✓ ✓
Lending Home ✓ ✓
LendUp ✓
Lenny Credit ✓ ✓ ✓ ✓
Motif Investing ✓
New Credit America ✓ ✓ ✓
OnDeck ✓ ✓ ✓
Pave ✓
Payoneer ✓ ✓ ✓

121
Source: Company information
Coverage of FinTech areas by U.S.
start-ups (2/2)
Coverage (2/3)

Digital Alternative Alternative Personal

Payments Financing Lending Finance
P2P
Digital Mobile Crowd Crowd Crowd Marketpl. Robo- Money
Company Comm. Paym. Funding Investing Lending Lending Advisors Transfer
Paysimple ✓
PledgeCap ✓
Point ✓ ✓ ✓
Prosper ✓
Ripple ✓
SoFi1 ✓ ✓
Square ✓ ✓ ✓ ✓
Stripe ✓
Tipalti ✓ ✓ ✓
Upstart ✓ ✓ ✓ ✓
Venmo ✓
Wealthfront ✓
WePay ✓
Zibby ✓

1: While SoFi promotes that they do not use a robot, their wealth management offering largely 122
resembles that of Robo-Advisors
Source: Company information
FinTech companies covering other
areas
Coverage (3/3)

Company Description of business model

Provides an investment management platform that handles users
Addepar assets by analysing the financial goals and objectives and provides
advices to the users

Kensho Provides data analytics and machine learning solutions

Personal finance website to compare financial products offered by

Nerd Wallet
different service providers

Provides API to financial service providers to connect user accounts

Plaid
with their banking accounts

Robinhood A free stock trading application over mobile platform

Applies machine learning capabilities to automate debt-recovery

TrueAccord
services for businesses

123
Source: Company information
SoFi and Kabbage received the
highest funding so far
Funding & key investors (1/5)

Funding in
# Company million US$ Key investors
Baseline Ventures, DCM Ventures, Discovery Capital,
East West Bank, Innovation Endeavors, Institutional
1 2,500 Venture Partners, Jeff Seibert, Lakestar, Marco Rossi,
Morgan Stanley, Peter Thiel, QED Investors, Renren
Inc., Ron Suber, SGVC
BlueRun Ventures, Guggenheim Securities, ING
Group, Lumia Capital, Mohr Davidow Ventures,
Recruit Strategic Partners, Reverence Capital
2 2,500 Partners, Santander InnoVentures, Scotiabank,
SoftBank Capital, SV Angel, The TCW Group,
Thomvest Ventures, Victory Park Capital, Western
Technology Investment, Yuan Capital, and individuals
August Capital, Balyasny Asset Management, DFJ
Growth, General Atlantic, Hyde Park Venture
3 1,600 Partners, Jefferies, JP Morgan Chase, KKR, Origin
Ventures, QED Investors, RRE Ventures, Tiger Global
Management, Victory Park Capital, and individuals
August Capital, Barclays Investment Bank, Charles
Stonehill, MacQuarie Capital Funds, Nelnet,
4 1,600 Neuberger Berman Group, Social Capital, Tribeca
Venture Partners, Victory Park Capital, and
individuals
Deutsche Bank, Fortress Investment Group,
Foundation Capital, Goldman Sachs, GV, Institutional
Venture Partners, RRE Ventures, SAP Ventures,
5 1200
Google Ventures, First Round Capital, Industry
Ventures, Peter Thiel, Khosla Ventures, SF Capital,
Sapphire Ventures
Jefferies, Khosla Ventures, Lightspeed Venture
6 1000 Partners, Morgan Stanley, Spark Capital, and
individuals
Allen & Company, American Express, Andreessen
Horowitz, CapitalG, Chris Dixon, General Catalyst
Partners, Khosla Ventures, Kleiner Perkins Caufield &
7 1600
Byers, Paua Ventures, Playfair Capital, Redpoint,
Sequoia Capital, Square Peg Capital, SV Angel, Thrive
Capital, Visa, Y Combinator, and individuals
Frontier Tech Ventures, Index Ventures, IT Ventures,
Machine Shop Ventures, New Enterprise Associates,
8 1700 QueensBridge Venture Partners, Ribbit Capital,
Social Leverage, Susa Ventures, Slow Ventures,
Vaizra Investments

124
Source: Company information
SoFi and Kabbage received the
highest funding so far
Funding & key investors (2/5)

Funding in
# Company million US$ Key investors
CapitalG, Felicis Ventures, FF Angel, Founders Fund,
QED Investors, Ribbit Capital, Susquehanna Growth
9 868
Equity, SV Angel, Tiger Global, Valinor Management,
Viking Global Investors
Acequia Capital, Barclays Investment Bank, Biz
Stone, Citi Ventures, GGV Capital, Goldman Sachs, JP
Morgan Chase & Co., Khosla Ventures, Kleiner
Perkins Caufield & Byers, Morgan Stanley, Rizvi
10 590.5
Traverse Management, Sapphire Ventures, Sequoia
Capital, Silicon Valley Bank, Sozo Ventures,
Starbucks, Tiger Technology Global Management,
Visa, and individuals
83North, Citi Ventures, Correlation Ventures, Kima
Ventures, Kreos Capital, Lightspeed, Lightspeed
11 692.5
Venture Partners, Menlo Ventures, Rakuten, Silicon
Valley Bank
Bank Of Tokyo - Mitsubishi UFJ, BBVA Ventures,
blockchain Capital, Digital Currency Group, Draper
Fisher Jurvetson (DFJ), Fueled, FundersClub, Interplay
Ventures, Mitsubishi UFJ Capital, Propel Venture
12 547.3
Partners, QueensBridge Venture Partners, Red Swan
Ventures, Ribbit Capital, Sozo Ventures, SV Angel,
Union Square Ventures, USAA, Valor Capital Group,
Y Combinator, and individuals
Accel Partners, Atlanticus, BBVA Ventures, BlackRock,
Breyer Capital, Credit Suisse, Crosslink Capital, DAG
Ventures, Draper Fisher Jurvetson (DFJ), Fidelity
13 415.5
Ventures, Passport Capital, Phenomen Ventures,
Sequoia Capital, Suntrust, TomorrowVentures, USAA,
Volition Capital, and other individuals
Amidzad Partners, BlackRock, Canaan Partners,
CapitalG, Coatue Management, Corigin Ventures,
DST Global, FinSight Ventures, Flint Capital,
14 392.2
Foundation Capital, Gold Hill Capital, Kleiner Perkins
Caufield & Byers,Silicon Valley Bank, Thomvest
Ventures, Union Square Ventures, and individuals
AFSquare, Bronze Investments, Data Collective,
Kapor Capital, Kleiner Perkins Caufield & Byers, QED
15 361.5 Investors, Soma Capital, Radicle Impact, Susa
Ventures, Thomvest Ventures, Victory Park Capital, Y
Combinator, and individuals

125
Source: Company information
SoFi and Kabbage received the
highest funding so far
Funding & key investors (3/5)

Funding in
# Company million US$ Key investors
BoxGroup, Felicis Ventures, Goldman Sachs,
16 309.3 Homebrew, New Enterprise Associates, Spark
Capital

C4 Ventures, Maxfield Capital, Residence Ventures,

17 308
Seer Capital

Blumberg Capital, Curo Capital, CURO Financial

Technologies, Entrepreneurs Roundtable
18 286
Accelerator, MissionOG, Tribeca Venture Partners,
Victory Park Capital
Anthemis Group, Bessemer Venture Partners, Citi
Ventures, Francisco Partners, Globespan Capital
19 275 Partners, Kinnevik AB, Menlo Ventures,
Northwestern Mutual Life, Red Swan Ventures and
Reinmkr capital
83North, Carmel Ventures, Charlie Federman,
Crossbar Capital, Greylock Partners, Susquehanna
20 270
Growth Equity, TCV, Vintage Investment Partners,
Wellington Management, and individuals
American Pacific Ventures, ASBC LLC, Blumberg
Capital, Burch Creative Capital, Felix Investments, ff
Venture Capital, JCB Investments, Panorama Point
21 245.8
Partners, SGVC, Signatures Capital, Streamlined
Ventures, Sway Ventures, Thrive Capital, Valor Equity
Partners, White Sand Capital, and individuals
DAG Ventures, Dragoneer Investment Group, Duff,
Ackerman and Goodrich, Greylock Partners, Index
22 204.5
Ventures, Ribbit Capital, Social Capital, Spark Capital,
and other individuals
Acequia Capital, Cowboy Ventures, DHVC, First
23 165.9 Round, FJ Labs, Foundation Capital, Renren and
Ribbit Capital

24 160 Metropolitan Equity Partners, Comvest Partners

Al Hamra Group, Compound, CoVenture,

25 155 Metamorphic, MHS Capital, Refactor Capital, Silicon
Valley Bank, and individuals

126
Source: Company information
SoFi and Kabbage received the
highest funding so far
Funding & key investors (4/5)

Funding in
# Company million US$ Key investors
Providence Strategic Growth, Susquehanna Growth
26 145.3
Equity
Khosla Ventures, Kleiner Perkins Caufield & Byers,
New Enterprise Associates, Third Point Ventures,
27 144.1
Collaborative Fund, CrunchFund, Founders Fund,
and individuals

28 129 SGVC, Wicklow Capital

Balderton Capital, Foundation Capital, Goldman

Sachs, Ignition Partners, JP Morgan Chase & Co.,
29 126.5
Norwest Venture Partners, Renren Inc., Wicklow
Capital
Abstract Ventures, Accenture, AME Cloud Ventures,
Avant Global, blockchain Capital, Camp One
30 121.6 Ventures, CME Ventures, Core Innovation Capital,
CRCM Venture Capital, Digital Currency Group, FF
Angel, GV, IDG Capital Partners, and individuals
Atlas Venture, Battery Ventures, Black River
Ventures, Correlation Ventures, FFL Startup
31 119.1
Accelerator, FinSight Ventures, First Round, FJ Labs,
Maveron
ABN AMRO, Accenture, ASX Limited, BNP Paribas,
Broadridge, Citigroup, CME Ventures, Deutsche
32 142.2 Börse, DTCC, Goldman Sachs, IBM, ICAP, JP Morgan,
PNC Financial Services Group, Santander
InnoVentures
Core Innovation Capital, iGlobe Partners,
33 105 Institutional Venture Partners, RRE Ventures, Silicon
Valley Bank
Ceyuan Ventures, Marc Bell Ventures, Urizen
34 88.5
Ventures, Peter Thiel, Richard Chen
August Capital, FTV Capital, Highland Capital
35 74.2 Partners, Ignition Partners, SV Angel, Webb
Investment Network, Y Combinator
Accel Partners, Breyer Capital, Experiment Fund, F-
Prime Capital Partners, General Catalyst Partners,
36 67.5
Goldman Sachs, GV, New Enterprise Associates,
Promus Ventures, Work-Bench

127
Source: Company information
SoFi and Kabbage received the
highest funding so far
Funding & key investors (5/5)

Funding in
# Company million US$ Key investors
Bullpen Capital, Galileo Partners, JMI Equity, Mithril
37 65.5 Capital Management, Rethink Impact, Salesforce
Ventures, Venture51, zipdragon ventures

Khosla Ventures, TenOneTen Ventures, and other

38 47.1
individuals

RRE Ventures, Liberty City Ventures, Canaan

39 30.5
Partners, Jay W. Jordan II and Ben Davenport

Andreessen Horowitz, Ribbit Capital and Bloomberg

40 30.4 Beta, Vikram S. Pandit, Laurence Tosi, Matt
Humphrey and Brad Greiwe
Cap-Meridian Ventures, Carthona Capital, Cthulhu
41 25.3 Ventures, Dean Dorrell, Dean Dorrell, Itamar Novick,
others
Canvas Ventures, F-Prime Capital Partners, Great
42 21.5 Oaks Venture Capital, Madison Angels, Sequoia
Capital, Y Combinator
Digicel, Kortschak Investments, Peninsula Ventures,
43 20.4 Storm Ventures, SVG Partners, True Ventures,
Verizon Ventures

44 10 SK Group

45 1.3 Its now called as Forge, part of PayPal

46 0.9 NA

47 Undisclosed NA

Marc Bell Ventures, Structure Capital, Charlie

48 Undisclosed
Cheever, Ignacio Vilela, Adeyemi Ajao, Scott Banister

128
Source: Company information
U.S. Banks with FinTech Activities
A number of U.S. banks have made FinTech investments, with Goldman Sachs
leading the pack with 20, followed by CapitalOne (13) and Citigroup (12).
Additionally, the banks have also started innovation hubs focused on various
areas such as mobile banking, blockchain and cryptocurrencies, wearables,
Internet of Things, next-generation commerce, authentication, biometrics
integration, augmented reality, and big data.

129
Major U.S. banks adopt and invest
in Financial Technology
Overview

Location of selected U.S. banks with FinTech activities

Alaska Hawaii

Overview of selected FinTech companies in the U.S.

Company Logo Headquarter # FinTech investments

Bank of America Charlotte, North Carolina 4

Capital One McLean, Virginia 13

Citigroup New York 12

Goldman Sachs New York 20

JP Morgan Chase New York 6

Morgan Stanley New York 5

SunTrust Atlanta 2

Wells Fargo San Francisco 8

Source: Company information 130

Goldman Sachs has most FinTech
investment
FinTech investments

Company FinTech investments

▪ Visible Alpha ▪ Context Relevant
Bank of America
▪ Bill.com ▪ Symphony Communications

▪ Feedzai
▪ Warwick Analytics
▪ Chain
▪ MultiSense
▪ Transactis
▪ Paribus
Capital One ▪ Paydiant
▪ Adaptive Path
▪ Credit Kudos
▪ Level Money
▪ Pariti
▪ BankOns
▪ WealRo
▪ Betterment ▪ FastPay
▪ BlueVine ▪ M-DAQ
▪ C2FO ▪ TradeIt
Citigroup
▪ Chain Core ▪ Plaid
▪ Clarity Money ▪ Square
▪ DocuSign ▪ Linkable Networks

▪ Square ▪ Digital Asset

▪ Bluefin Payments ▪ Plaid
▪ Revolution Money ▪ Nubank
▪ Billtrust ▪ Fundation
▪ Dataminr ▪ MoMo
Goldman Sachs
▪ Kensho Technologies ▪ CompareAsia
▪ Context Relevant ▪ Financeit
▪ Circle Internet Financial ▪ AG Delta
▪ Perseus ▪ Honest Dollare
▪ Symphony ▪ Droit Financial Technologies

▪ Motif Investing ▪ CAN Capital

JP Morgan Chase ▪ Square ▪ InvestCloud
▪ Prosper ▪ Avant
▪ Avant
▪ Moneytree
Morgan Stanley ▪ Workday
▪ ZhongAn
▪ Affirm

SunTrust ▪ Credibly ▪ LightStream

▪ Zumigo ▪ Jewel Paymentech

▪ EyeVerify ▪ Roostify
Wells Fargo
▪ Kasisto ▪ Gridspace
▪ Alpha Payments Cloud ▪ Splice Machine

131
Source: Company information
Major U.S. banks founded
innovation hubs for FinTech
Innovation hubs & focus areas

Company Innovation hubs Focus areas

Blockchain, payments, cloud computing,
Bank of America NA
big data, wealth management

Mobile banking, augmented reality,

▪ Arlington credit rating, artificial intelligence,
Capital One ▪ New York
authentication, personal financial
▪ San Francisco
management, big data

▪ Israel Mobile banking, blockchain and

▪ U.S. cryptocurrencies, wearables, Internet of
▪ Germany
Citibank Things, next-generation commerce,
▪ Singapore
▪ Brazil authentication, biometrics integration,
▪ Spain augmented reality, big data

Payments, big data, blockchain, cloud

computing, crowdfunding, financial
Goldman Sachs NA comparison, trading platforms, security,
regulatory compliance, data
management

Mobile banking, biometrics, lending, big

JP Morgan Chase ▪ New York data, blockchain, robotics, wealth
management

Mobile payments, ATM technologies,

▪ Atlanta
SunTrust video banking, blockchain, artificial
▪ Georgetown
intelligence

Mobile payments, big data, credit,

Innovation Lab:
▪ San Francisco deposits, Person-to-person payments,
biometric security (voice, eye and
Wells Fargo FinTech accelerators: fingerprints), artificial intelligence, virtual
▪ California reality, wealth management, video
▪ Kansas banking, drive-through banking,
▪ New York wearables, risk solutions, cloud

132
Source: Company information
Appendix

133
Glossary

Term Abbreviation Explanation

The total market value of assets that a wealth

Assets-under-management AUM management/investment company or financial
institution manages on behalf of its investors.

A distributed ledger technology that can be

used to execute, store, and verify transactions
of every kind. Its main uses are in money
Blockchain BC
transfer, buying and selling stocks, insurance
contracts, and buying and selling physical
goods or energy.

A concept of funding a small business venture

Crowdfunding N/A through a network of individuals either
through social media or related websites.

A digital or virtual currency designed to work

as a medium of exchange that uses
Cryptocurrency N/A cryptography to secure and verify
transactions. For example: Bitcoin, Ethereum,
and Ripple.

A marketable security that tracks an index, a

commodity, bonds, or other assets like an
Exchange Traded Funds ETFs
index fund. It trades like a common stock on a
stock exchange.

The application of technology in the financial

services industry to offer digitally enhanced
Financial Technology FinTech products in the areas of Digital Payments,
Alternative Financing, Alternative Lending, and
Personal Finance.

The same as P2P lending including

Marketplace Lending ML
crowdfunding.

Any device including a smartphone, tablet, or

Mobile point-of-sale Mobile POS wireless device that is enabled to accept credit
or debit card payments.

134
Glossary

Term Abbreviation Explanation

A virtual wallet that lets businesses and
Mobile wallets N/A individuals send and receive money through
mobile devices.

The strategy of converting online customers to

Online-to-offline commerce O2O commerce
making purchases from a physical store.

An upfront fee charged by a lender for

Origination fee N/A
processing a new loan application.

A system of debt financing that allows two

individuals or an individual and a small
Peer-to-peer lending P2P lending business to borrow and lend money without
the use of a financial institution as an
intermediary.
A system of money transfers between two
individuals typically through an online channel,
Peer-to-peer payments P2P payments including online banking, mobile banking,
transfers through digital payment companies,
etc.
Digital platforms that provide automated
wealth management services mainly driven by
Robo-Advisors N/A
proprietary algorithms. This process requires
little or no human intervention.
An electronic contract based on blockchain
technology that monitors contractual rules
Smart contract N/A
and clauses and can trigger pre-defined
events automatically.

135
Authors
Dev Mehta
Founder and Director, Agile Intel Research

Dev Mehta has over 10 years of experience working for market

research, legal, and consulting companies. He worked in various
sectors such as Defense, Digital Marketing, FinTech, Insurance,
and Consumer Goods.
Dev Mehta completed his Post Graduate Diploma from Massey
University New Zealand, majoring in Business Management and
a Masters in Marketing Management from Middlesex University,
London.

Sofia Zavialova
Analyst, Statista

Sofia Zavialova graduated from Turku School of Economics at

University of Turku (Finland) with a focus on strategy
development and international business. She gained a vast
experience in market research and analysis from her work in
several Research institutes in Finland and Denmark, working as a
Project Researcher. At Statista she works on projects related to
the digital economy.

Leonie Senn
Project Manager, Statista

Leonie Senn studied Business Information Systems (B.Sc.) at the

DHBW in Stuttgart and Business administration with the major
Strategy & Information at the University of Augsburg (M.Sc.).
Before joining Statista she worked as a consultant with EY for the
Transaction Advisory Services, where she worked on large Carve-
out and Integration projects.

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