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How This Fintech IPO Will Win in a Competitive Industry

By Matthew Frankel, CFP® - Mar 11, 2021 at 7:03AM

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There's no shortage of competitors in the payments space, but this fast-growing company thinks it will continue to thrive.

Payments company Payoneer has built up an impressive customer list that includes some of the largest companies in the world. However, the financial technology, or fintech, space is getting far more competitive than it was just a few years ago. Now that Payoneer is set to go public through a merger with FTAC Olympus Acquisition (FTOC), how will the company continue to grow its business and create shareholder value?

In this Fool Live video clip, recorded on March 1, contributor Matt Frankel, CFP, sits down for a chat with Payoneer CEO Scott Galit to find out about the fintech's future growth ambitions. 

Matt Frankel: So, you just mentioned acquisitions as a way to grow going forward. I'm curious as to whether you see Payoneer's growth growing its existing business lines like cross-border payments, all the stuff you mentioned earlier, or adding new products and services and growing a financial ecosystem, I guess you'd say.

Scott Galit: A bit more of the latter. I think the acquisition we made last year is a pretty good illustration of how we think about this. We have lots of customers that are selling across different channels and that were asking us to help them with their web stores and the way they manage their online stores that consumers are buying from. We hadn't been able to provide that for them, and so for a few years we had thought that this was an area for us to focus on. We decided that it would be best to acquire a really sophisticated technology platform that we could build around and deliver more for our customers. So that's how we did it. We bought a company named Optile based in Munich, Germany, last year. Literally closed February right before COVID, and that has been the catalyst for us to launch our merchant services for our customers. We started with our large customers and we're going to roll out some services later this year for small customers. I think that's more the way we'll think about it going forward and again, there's a lot of different opportunities. That's part of what so fun about being a global platform with so many great customers around the world. They have a lot of opportunities and a lot of challenges, and so we really think of ourselves as being their best partners. That means us helping them across an increasingly broad range of their opportunities and needs.

Frankel: You just mentioned the challenges of your customers. What do you see as your biggest challenges going forward? The fintech space has become, let's say a lot more competitive over the past few years, in particular. Even with the SPAC boom we're seeing a ton of fintechs going public and everyone has the solution. What do you see as your biggest challenges in maintaining your leadership and what you do?

Galit: First what I'd say, it's really us focusing and executing. It's making sure that because we have so many different opportunities and we have so many customers in so many different places. It's making sure that we continue to be thoughtful and strategic, make the right decisions, focus on the right customers, and then execute well on delivering what our customers and new potential customers need. I think going back to your comment about lots of Fintech companies coming out with the solution. I think about it along the lines of all of commerce is being changed and all commerce in general involves money, and all people and businesses have a wide range of financial needs. So when I think about Fintech, I think about it as being among the biggest categories in the entire world from a business perspective. I think there's tons of room in cross-border payments, multiply that by a factor of 100 when you get into just Fintech overall in how big the universe of opportunity is, just how much the world is changing. I've read estimates that there will be trillions of dollars of new market value created by Fintech companies and I don't know whether that's true or not. But what you can see happening is that in an increasingly digital world, consumers and businesses are looking for increasingly digital ways to buy, to manage their money, and to engage in really all of their activities. It's not surprising that we're seeing the financial infrastructure be remade and that Fintech companies are actually among the folks that are actually looking to do that for consumers and businesses. I think there's a long way to go for Fintech. I think you've seen it in the private markets with investment and I think we'll see in the public markets as well, that there's still lots and lots of room for growth and opportunity.

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