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 have you learned from 2022? That’s the question we posed to The Fintech Times community. Let’s hear from Integral, Cassini, Liberis and Plaid.
Vikas Srivastava, Integral
Vikas Srivastava is chief revenue officer at Integral, a fintech delivering SaaS FX solutions to banks, brokers, and fund managers. He looks back on the lessons learned in software-as-a-service.
“SaaS has become mainstream and the preferred way for financial services firms to acquire technology. Our research from 2021 showed that almost 70 per cent of the respondents expected their FX trading flows to be either entirely in the cloud or a hybrid of cloud and on-premise and we’ve seen this trend accelerate further in 2022.
“The underlying reasons for this are manifest: flexibility and ease of integration, technology infrastructure improvements, and cost. The essential configurability of cloud-based SaaS systems means it is becoming the industry’s preferred technology solution for FX workflows.
“Another key trend we’ve seen is greater industry collaboration when it comes to cloud technology, for example, the London Stock Exchange’s recently confirmed partnership with Microsoft, which will move their infrastructure to the cloud.
“Thirdly, the return of meaningful volatility to currency markets, perhaps for the first time in over a decade, has made it much harder for firms to obtain optimal pricing. While this will have been problematic for some, those with access to SaaS solutions that provide broad connectivity to liquidity sources and automated workflows have found the volatility to be quite manageable.”
Ripsy Bandourian, Plaid
Ripsy Bandourian, head of Europe for Plaid, says 2022 has not only challenged people but businesses as a whole.
“Business leaders from startup founders to Fortune 500 CEOs are looking for new ways to navigate the environment and increase efficiencies,” she says.
“As a result, more customers are asking Plaid to solve a broader range of needs through our platform, network and partner ecosystem, including identity verification, onboarding and conversion; money movement; fraud prevention; and deeper insights to help build even better decisioning and connected experiences.
“Next year, we’re doubling down on offering integrated solutions that enable our customers to deepen relationships with customers, improve operations, and reduce risk and spend.”
Liam Huxley, Cassini
Cassini Systems, a provider of pre- and post-trade margin and collateral analytics for derivatives market participants, says there are three lessons to take away from 2022.
Volatility isn’t going away. Long-term and short-term strategic planning are key to sustainable growth. Firms need to look outside of their existing internal structures and begin to cultivate a larger ecosystem that supports both their growth and their clients’ needs.
Liam Huxley, founder and CEO of Cassini, says: “We have seen time and time again that proper planning is the major difference between firms that fail and those that succeed. As the financial market transitions into 2023, companies cannot afford to repeat the same mistakes of the past.
“The reality is, if you haven’t adopted a data-driven strategy by now that focuses on alpha-generating strategies despite market volatility and continuing regulation, you’re already behind.”
Rob Straathof, Liberis
Liberis is a global embedded finance platform providing small businesses with accessible and responsible finance. Rob Straathof, CEO of Liberis, shares his lessons from 2022.
He says: “Just because there’s a lot of funding going into a sector doesn’t mean it’s a long-term viable market with sustainable margins. Or perhaps, because there is so much funding going into those markets, the margins rapidly become negative due to the sheer amount of VC money looking for growth, not margins. Examples are BNPL for consumers, embedded insurance, revenue finance for ecomm.
“High growth isn’t success. Growth with sustainable long term unit economics is success. The fallacy of ‘growing into profitability’ only works when you are a price setter, or when you have a sustainable competitive advantage with customer loyalty, not merely transactional engagement such as lending or insurance. Many industries aren’t suitable for this strategy, and lending is certainly one of them.”