Question

In class we discussed three non-traditional banking companies (Goldman Sachs, Mutual of Omaha and

BMW Financial) Identify two more non-traditional banking companies and conduct a similar analysis.

Provide a brief history, an overview of their business model and briefly comment on their recent financial

performance. Do you believe they are a successful institution? Why or why not.

Answer 1

Two other non traditional banking companies are apple pay and pay pal.

SInce the question has not told the basis of analysis that needs to be done so cannot comment on the same.

As far as the revenue model is concerned.

PayPal:

Founded in 1998 as Coinfinity, PayPal launched in 2001, went public in 2002 and was swiftly purchased by eBay for $1.5bn. One of the success stories of the dotcom boom, eBay made PayPal its default payment option. On an internet rife with scams, used by a public not yet savvy enough to spot a con, the PayPal logo became a sign of legitimacy.

If it hadn’t remained a subsidiary of eBay until 2014, it may be even bigger than it is now. The threat of a company levering technology to pull off a similar feat has since loomed.

From international transfers to trading platforms, many competitors have emerged to tempt customers away from the core services that banks offer. This has become particularly prevalent in the UK where, following the introduction of regulations designed to increase competition, a number of challenger banks were launched.

Paypal business model is exactly similar to that of a payment gateway business with the critical difference of being able to take payments in multiple currencies around the globe. People from around the globe can accept payments straight into their bank account just with an email id. Plus its acquisition of venmo business model has given it a large user base who use it pretty regularly at local stores, which it was lacking.

Every transaction that is successful passes through is subjected to TDR (Transaction Discounting Rate) which is the fee for processing the payment for paypal.

Apple Pay:

Apple Pay was launched in US on October 2014

Apple business model works by:
a. Creating a seamless, secure payment solution for consumers
b. Providing merchants access to a large mobile consumer base
c. Allowing the payments ecosystem to continue to do business as usual
d. Creating greater fraud protection by partnering with card networks to introduce industry standards around Apple's dynamic security code technology...
e. thus reducing fraud costs for card issuing banks...
f. for which they are willing to pay a small percentage of every transaction.