Why PayPal should buy Pinterest

According to Bloomberg PayPal is interested in buying Pinterest: PayPal Holdings Inc. is exploring a $45 billion acquisition of social media company Pinterest Inc., in what could be the biggest technology deal of the year and move the payments company closer to its ambitions of becoming a “super app.” San Jose, California-based PayPal recently approached Pinterest about a potential deal, said people with knowledge of the matter, who asked not to be identified because the details are private. The companies have discussed a price of around $70 a share, the people said. PayPal is under pressure for several reasons. And to solve those, buying Pinterest might be the best option. Those issues are: Being commoditized: PayPal has become a commodity in B2C-payments as their competitors have a better UX (Apple/Google Pay) as they are an integral part of the platform Vertical integration through Embedded Finance: PayPal is losing B2B-business because non-financial companies are building their own solutions (e. g. Amazon Pay) Shopify’s potential: PayPal is facing competition from Shopify because Shopify’s business model (full-stack and partnerships) is better suited for the current environment Shift towards social commerce and losing access to social networks: PayPal is being cut out from social commerce (e.

The strategic danger of BaaS-FinTechs

Starling Bank is starting a BaaS-offering. From the press release: “Starling as a Service” will enable businesses to build their own financial products on Starling’s award-winning banking platform, such as savings or current accounts, integrated digital wallets, kids’ cards and debit cards. Starling handles the technical and regulatory demands behind the scenes, leaving businesses to take care of their customers with innovative embedded banking solutions. There are several reasons why this move makes sense: Diversification: Starlings recent annual report showed that lending was their biggest revenue driver. Marketplaces, however, although growing, played a smaller roll. This indicates a lack of competitive advantage given the fact that the latter category would be able to differentiate Starling from incumbents and neo-competitors. Escaping competition: Moving into BaaS is a great way to escape competition with Revolt, N26, and Co. Industry demand: There is an every increasing evidence that non-financial companies want to offer financial products. However, there are also three reasons why that move does not make sense: Building a bank and an API at the same time is hard Lack of long-term competitive advantage because building a bank is harder than building an API Lack of competitive advantage compared to platform-approaches like