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Opportunities in FinTech Localization

The globalization of financial services is accelerating rapidly, particularly in the emerging and pre-emerging market spaces. As the financial systems of G7 nations continue to evolve, these markets will need to undertake significant financial infrastructure reforms in order to achieve and maintain connectivity to the global economy. Chief among these reforms will be implementing systems crucial to credit access, orderly capital flows and liquid financial markets. At the same time, a shift is clearly underway from an aid-based to a market-driven model in global development. Recent deals to this effect include:

· The $250 million capitalization of two strategic African investment funds by the U.S. Overseas Private Investment Corporation which will, among other things, "enable companies in a variety of industries to expand and potentially to tap the capital markets," and "support financial instrument innovation and capital market development by expanding the pool of available investment securities in Africa."

· Citibank India’s deployment of biometric ATMs which assist microfinance customers in Hindi, Marathi, Tamil, and Telugu.

· Italian software vendor SIA-SSB’s contract to establish a new interbank payment system for the Egyptian market through a €2 million deal funded by the European Union.

· Dutch IT firm LogicaCMG’s contract to implement an interbank real time gross settlement (RTGS) platform for the Banco Central de la Republica Dominicana (BCRD).

· SunGard’s contract to provide its BancWare financial analysis technology to Beirut-based BankMed.

This shift will create opportunities not only for financial technology providers, but will generate significant demand for globalization and localization solutions in this space. As such, we recommend that both industry players and financial sponsors explore strategic acquisitions or joint ventures as a means to benefit from this emerging trend. Some attractive candidates include publicly held LionBridge, privately-held TransPerfect, and privately-held, Beijing-based CSOFT (all three of which maintain existing financial services practices), while publicly-held SDL, and privately held (venture backed) Idiom Technologies and Welocalize provide solutions which are readily applicable to financial services.

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Private Equity Investing in Financial Technology

A community for discussing investments made in financial technology providers by the venture capital and private equity community.


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