HomeBlogFinanceFintechs seek to score with college athletes

Fintechs seek to score with college athletes

It’s the first week of autumn, which means it’s officially football season in the US — the other kind of football. American football culture is rooted deeply in tradition, but the business of college sports has rapidly evolved over the past year after new rules allowed student athletes to be compensated for the use of their name, image or likeness, reversing more than a century of precedent. Last week, I looked at a few of the fintechs swarming college athletes with the hope of managing their newfound wealth.

If you enjoyed Sid’s analysis on the state of the neobanking industry last week, you should not miss the FT Banking Revolution conference tomorrow kicking off at 1pm BST. We will be talking about the path forward for open banking and financial inclusion as the global economic outlook darkens.

What do you think about the relaunch of our newsletter so far? Let us know at futureofmoney@ft.com. Happy reading!

The latest news

  • UK investors dealing with offshore cryptocurrency exchange FTX will not be eligible for public consumer protections if things go wrong, the Financial Conduct Authority warned in a statement on Monday.

  • Wall Street has emerged as the unlikely beneficiary of the hiring slowdown in Silicon Valley. After years of struggling to attract the technology talent necessary to keep up with innovation in the finance industry, Wall Street firms are recovering lost ground.

  • Bankers close to the UBS/Wealthfront deal said the steep decline in fintech valuations were a large factor in the Swiss bank’s decision to call off the acquisition.

Fintechs seek to score with college athletes

Activity across digital investing apps stalled this year, but the founders of a new crop of online investment apps have said they have a secret weapon that can help them attract and keep customers on their platform: student athletes.

In the year since the rules governing college sports changed to allow students to profit off of their name, image and likeness (NIL) in July 2021, college athletes have earned nearly $1bn, according to data from Opendorse. Athletes are projected to earn roughly $1.14bn in the second year of the programme and the market is only growing. Individual athlete earnings range from $3,335 to $53,000 per year, Opendorse said.

For new digital money manager apps such as Tiicker, Stackwell and Scout (which is still in its beta phase), NIL deals are not just a marketing opportunity, but also a sticky source of assets if they can convince athletes to keep their earnings on the platform.

“Student athletes, with the new regulations, actually have a pretty decent amount of money,” said Michael Haddix Jr, co-founder of Scout, a digital investment app that lets users select portfolios based on interests such as sneaker culture, fast food or ESG.

The app is designed to appeal to Gen Z broadly, but by signing up athletes to the platform and paying them to promote it the company can avoid costlier customer acquisition schemes such as sign-up bonuses or referral rewards.

“We’re leveraging some of the most influential people on campus,” said Haddix Jr, who is also a former NCAA basketball player and Goldman Sachs banker.

Since NIL deals are still a relatively new source of income, it remains to be seen whether these apps will be able to deter users from the financial pitfalls typical of college students and athletes. College students in the US tend to have very little discretionary income, but that has rarely stopped them from spending it all. College students spend an average of $27bn a year on non-discretionary purchases such as concert tickets and clothing, according to a study by ecampus.com.

“[When] young people get access to a lot of money, oftentimes you look back two to three years later and they don’t have much to show for it,” said Stackwell founder Trevor Rozier-Byrd.

But competition for this new emerging client segment is already getting crowded and fintechs are having to compete for each athlete.

Stackwell had to fend off multiple rival investment apps to secure deals with 30 student athletes across schools such as Harvard, Ohio State and Howard University earlier this year.

Being able to relate to student athletes on a personal level often helps close the deal, said Rozier-Byrd, a former Boston College track runner.

“They choose to work with us because of who I am,” he added.

Quote of the week

“Buy now, pay later firms are building business models really dependent on digital surveillance . . . These firms aren’t just lenders. They’re also advertisers. They’re also virtual mall operators,” said Rohit Chopra, director of the Consumer Financial Protection Bureau

CFPB director Rohit Chopra took aim at the buy now, pay later industry last week, as the consumer watchdog released a report detailing how the fast growing lending category is blurring the lines between commerce and financial services.

Retail heavyweights target interchange fees A coalition of more than 1,600 merchants, including Target and Walmart, are lobbying US lawmakers to allow retailers to bypass Visa and Mastercard in a bid to lower so-called swipe fees, the Wall Street Journal reports. It’s the latest challenge to the global payments duopoly, which has faced rising competition.

Bank of Walmart A challenger bank backed by Walmart will launch checking accounts for thousands of employees and a small percentage of its online customers in the coming weeks as part of a beta test. For the largest US retailer by annual sales, the move marks its long-awaited entrance into fintech, Bloomberg writes.

Monetising authenticity French social media company BeReal achieved breakneck growth this year by positioning itself as the anti-Instagram with its ad-and-filter free model. Now, company insiders are mulling over how to monetise the product without loosing the authentic feel that attracted its 15mn daily active users.

More on college athletes Want to dig deeper into the NIL deals reshaping US sports? Check out this documentary from the FT Scoreboard team here. And you can click here to subscribe to the Scoreboard newsletter for the latest on the business of sport.

Written by: Source link

Leave a Reply

Your email address will not be published.

© Copyright 2022 | Penny Stocks Now | All Rights Reserved.  Powered by Odoss