Visa: Adapting to a world of fintechs

• Main Authors: TULI, Kapil R., MITTAL, Sheetal, BONCIMINO, Christopher
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Credit cards; Financial technology; Digital transfer services; Innovation focused strategy; Disruptive technologies; Collaborative innovation; Radical innovation; Finance and Financial Management; Marketing
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/329; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-20-BATCH%20%5BPDF-Pic%5D/SMU-20-0031%20%5BVisa%20Fintech%5D/SMU-20-0031%20%5BVisa%20Fintech%5D.pdf?CT=1607507271613&OR=ItemsView
• Institution: Singapore Management University

This case describes Visa Inc’s (Visa) challenges in light of the growing influence of financial technology companies (fintech) in the payments space. In 2018, Visa had firmly established its leadership in the industry with its ubiquitous network of merchants, customers, and financial institutions in 200 countries. However, the rise of fintech over the past two decades had led to an explosion of new competitors and new methods of payment. While Visa found it easier to collaborate with the big tech (e.g. apple) and payment ecosystem (e.g. Paypal) companies in adopting new technologies and offering new payment solutions, it found it challenging to partner with emerging fintech’s (e.g. TransferWise and Paytm) fast evolving business models. In less-mature markets, the emerging fintech’s low go-to-market cost often bypassed the need for expensive physical payments infrastructure. And, in mature markets, new technologies leapfrogged the traditional card payment infrastructure by building direct connections with merchants and customers through alternate networks. How should Visa proceed vis-à-vis these start-ups that were seeking to redefine the payments industry? Should it preserve its legacy position by competing against these fintechs or should it seek collaborations with them to avail of mutually beneficial market opportunities? Or should it take the lead as a facilitator, actively invest in the start-ups, partner with them, and drive innovation in the payments industry? Students will gain an understanding of the unique multi-dimensional ecosystem of the payments industry, its ongoing transformation because of radical innovation, and the consequent challenges posed to legacy business models. They will also get to deliberate on the interdependence of key stakeholders versus their ability to reinvent themselves as new competition, and how an unwillingness to cannibalise and resistance to open-market innovations may inhibit a firm in becoming future-ready.