One of the ironies of the fintech world is that the most exciting business models have avoided lending money. That’s not to say that innovative approaches to lending haven’t been tried. But shares in Funding Circle, which lends to small businesses and listed in 2018, have fallen by 90% to 50p. Klarna, the privately held Swedish lender, has seen a similarly steep decline in its valuation. Instead of lending, the value in fintech has been created by companies making it easier to move money around. In London, Wise, the exchange company, is the most obvious example. In the US there are PayPal and Block (formerly Square). Both have achieved peak valuations of more than $100bn. Amsterdam-listed Adyen is not far behind.
The world of payments is attractive because of the combination of large market size and network effects. If you can achieve widespread adoption, high
