More retail banks today are staying ahead of the technology curve by joining forces with fintech startups. Just this week global giant JPMorgan Chase announced their acquisition of Silicon Valley-based fintech firm WePay, a startup that helps online marketplaces and crowdfunding websites like GoFundMe process payments faster. JPMorgan is banking on the acquisition to help their 4 million small-business customers accept payments faster.
Why are banks choosing to partner over developing the technology in-house? Fintech has the edge when it comes to user experience, technology and innovation, whereas banks have scale, money, trust and customer reach. Well-chosen alliances are mutually beneficial for all stakeholders, including customers. And the trend is looking upwards for financial services companies with JP Morgan among the top ten biggest spenders in fintech.
Investors believe WePay is a smart move as they have bulked up considerably in the past year, adding support for Apple Pay and Android Pay for mobile checkout and introducing offline services to ward off competition from mobile point of sale providers such as Square. And with software-enabled payments growing at four times the industry average, embedding payment acceptance still remains a pain point for many software providers. WePay’s APIs allows for simple integration of payments for global software platforms.
“With WePay, Chase is taking the work out of payments for both our business clients and the software providers who serve them,” said Matt Kane, CEO of Chase Merchant Services, in a release. “We are powering payments for growth, so businesses can accept payments instantly, get paid faster, and never lose a sale. And we’ll give ISVs a payment facilitator-like experience without the overhead or increased fraud risk.”
The acquisition marks an important move in which the banking giant has committed to expanding in the thriving fintech sector.
“This is the first acquisition we’ve brought of this kind,” Kane said. “Small business across JPMorgan is an enormous strategic focus for us. We know it’s the lifeblood of the economy as well as one of the biggest growth sectors that we have.”