This month at The Fintech Times our focus switches to reflection as we look back at developments over the last 12 months. 2022 has certainly been a challenging year for everyone with global economic activity experiencing a severe slowdown, with inflation higher than seen in several decades.
What lessons were learnt over the last 12 months? Leaders at Carta Worldwide, FinTech Wales, AAZZUR, Hokodo and Brite Payments share their 2022 takeaways.
Sarah Williams-Gardener, FinTech Wales
2022 has been an extremely positive year for Welsh fintechs, says Sarah Williams-Gardener, CEO at FinTech Wales.
“We’ve seen great success and growth from a number of our startup, scaleup and enterprise members with activity both nationally and globally. We have gone from a thriving fintech cluster to a critical cluster as part of Team GB’s position on the global stage.
“We must however not become complacent, and continuously seek to grow and connect our community. FinTech Wales’ accelerator programme, The Foundry, in particular, is making huge steps to attract and support startups within Wales, and is also a significant factor in attracting international companies from all over the world to develop in Wales.
“Whilst there’s much uncertainty ahead, there has never been more of a need for fintech solutions than there is now. Highlighted in our annual report are the positive contributions Welsh fintech are providing to tackle the cost of living crisis. We also formed part of the solution to continue to reduce the devastating effect of Covid-19, and are working with partners across multiple sectors to support the future for a sustainable world.
“We can’t, however, assume that people know that such incredible innovation is being developed and delivered from Wales, and we therefore must be louder and prouder to promote the achievements of Welsh fintechs to highlight the strengths we have in the region.”
Philipp Buschmann, AAZZUR
“Year 2022 was the best year my company, AAZZUR, has had…but also the hardest,” says Philipp Buschmann, founder and the CEO of embedded finance company AAZZUR.
“2022 reminds me in many ways of 2001; where the expectations of investors jarred with dotcom companies. Then as now, the core, the foundations of the better companies kept improving.
“Even new Web2.0 and digital economy companies started being founded but if you read the news back in 2001/2 you could see articles calling the internet a temporary fad. Now we have some voices asking if BaaS (for example) is really a transformative technology. Yes, it is, and yes, it is still nascent.
“So, looking back at 2022 is insightful. On the fintech space we have a mini-repeat of an investor led washout; whilst many companies enjoyed growth. So, what I have learned is that regardless of one’s positioning and growth, industries move in waves. We will keep riding. The swell is just beginning.”
Richard Wray, Carta Worldwide
Richard Wray is chief operations officer at Carta Worldwide, a paytech and global digital payments company. He suggests fintechs are learning to work more with regulators.
“Fintech has always held disruption at its core and is known for moving fast, and occasionally breaking things. In stark contrast, regulation has largely been cautious, slow, and unable to match the relentless pace of fintech innovation.
“This has created problems – from a runaway BNPL market to acquirers overcharging merchants and crypto firms going under and losing customer’s money. In 2023, we’ll see a step change in regulation including new rules to consumer credit across Europe to cover BNPL, the PSR stepping in to protect merchants, and MiCA to regulate crypto assets.
“Fintechs, previously resistant to more regulation, are now demanding rules to bring stability and order to a market that has faced a year of uncertainty and upheaval. The mistakes we’ve made collectively as an industry over the past year, largely the result of bypassing due regulatory diligence, have taught us that we must learn to work with regulators rather than around them, to ensure we continue to operate in the best interests of our customers.”
Louis Carbonnier, Hokodo
The co-founder and co-CEO of fintech Hokodo, which provides BNPL solutions to the B2B market, Louis Carbonnier, talks about the importance of being unique.
“This year at Hokodo we worked hard to complete our Series B fundraise. With interest rates rising, the cost of living crisis worsening, and many countries around the world heading into a recession, successful fundraising for fintechs will – temporarily – become a much rarer thing than it has been in recent years.
“However, one of the takeaways for us and other fintechs is that, if you have a unique proposition, a fortified product market fit, and the right team behind you, it’s certainly not impossible to complete a fundraise even when times are tough.
“The other takeaway from 2022 is that crises bring opportunities along with the more obvious threats. In the case of Hokodo, we’re going to face several headwinds in the coming months including more expensive financing, heightened risk of non-payment and slower growth of B2B trade.
“However, at the same time, our clients are willing to move more decisively to digital solutions, e-commerce is gaining ground vs. offline sales, and offering trade credit to customers has become a stronger differentiator due to the global funding crunch, which drives higher demand for our solution. As a result, we’ve never seen as much inbound interest!”
Lena Hackelöer, Brite Payments
“It’s clear that consumer demand for services like ours is increasing, ” says Lena Hackelöer, CEO and founder of Brite Payments, an A2A provider of instant payments and payouts, powered by open banking.
“That was a big takeaway from this year, but it’s also made us question what comes next on the path towards widespread adoption,” she says. “If you ask me, now is the time for more collaboration between fintechs and legacy financial institutions, including banks. As a sector, we really need to move towards a more effective model of coopetition, not competition.
“Building off the back of the rise of A2A payments, 2022 was the year it became obvious how much consumers really value convenience. So many things in our everyday lives have become instantaneous – why not payments? As a sector, we need to acknowledge that this demand for real time experiences is not going to go away. Delivering solutions that offer security, convenience, and real-time response will require much greater collaboration from numerous parties.
“2022 has reaffirmed the importance of open banking in delivering such solutions, which is why it’s so crucial we work to uphold and improve it in the years ahead. To this end, it is time to evolve the regulatory framework to improve the stability and ease of access to the bank APIs that facilitate open banking-based services.”