There are plenty of defining years in the history books, and as 2020 draws to a close, it’s almost certain that the global pandemic will ensure that this year is featured prominently. With events cancelled, launches delayed, and country-wide lockdowns, the way we work has changed forever. Still, for financial technology and surrounding industries, this was also a year of challenge and opportunity.
This December, The Fintech Times is asking industry leaders for their ‘View from the Top’ to gain an insight into the decisions behind the last 12-months. Today, we’re looking at fintech in the US, hearing from Ken Moore, Mike Massaro, Ralph Danglemaier and Matthieu Soulé on their 2020 thoughts, plus a look ahead to 2021. Will there be a Happy New Year? Read on…
Considering that the US is one of the largest markets globally, it makes sense that it has a thriving fintech scene. Full of Major banks, financial services companies and a more start-ups than you can possibly count, the US is one of the largest fintech markets in the world. In this View from the Top, companies Mastercard, Flywire, BlueSnap and BNP Paribas outline their own 2020 experience.
Ken Moore is the Chief Innovation Officer at Mastercard where he is responsible for the company’s R&D initiatives globally. With over 20 years of experience in international financial services across retail and corporate banking, in his opinion, the fintech sector has managed to thrive during 2020.
“Despite the turbulence we’ve all faced as a result of this pandemic, the fintech sector has demonstrated enduring strength and innovation. Fintechs have taken the opportunity to inspire change and help customers quickly adapt to unprecedented circumstances.
“As the pandemic ushered in a new need for touchless experiences, fintechs incorporated more biometrics and increased security in their products – this will continue to be a focus area for the next generation of commerce. We saw new accelerators pop up globally within weeks of the pandemic hitting and startup ventures skyrocketed. In May 2020, VCs invested $3B globally in fintech startups, slightly higher than in May 2019 ($2.8B), according to Mastercard’s research with PitchBook. Brazil-based idwall a fintech in our Start Path network pivoted its business by extending its ID verification solution to enable telemedicine and verify registered medical practitioners.
“While fintech activity was on the decline heading into 2020, Covid-19 does not seem to have further accelerated that trend. Fintech is one of the few areas of the economy that has seen a dramatic surge this year. As we look to 2021, there are no signs of slowing down. We’ll see embedded fintech solutions that meet people where they are, new digital banking solutions for small businesses that support their growth, and fintechs focused on sustainability and financial inclusion. We’re proud of our history of partnering with fintechs and look forward to continuing to co-innovate with them to scale ideas that bring more people into the digital economy.”
Mike Massaro is the CEO of Flywire, a newly crowned fintech unicorn that solves complex payment problems for businesses and institutions. In his view buy now pay later schemes have a been a big trend this year.
“Today you can finance almost any consumer purchase with buy now pay later (BNPL) programs. The BNPL craze has taken the industry by storm and is also an incredible exemplar of embedded finance in action.
“In 2021 we will see the BNPL trend move horizontally to higher-value transactions and vertically to new markets. It will not just be e-commerce and retail that allows you to pay over an extended period, but as payments are digitised in new verticals, we will see BNPL spread to large sum healthcare or tuition payments for example where students and patients are offered tailored payment plans based on the buyers specific financial profile and needs.
“BNPL is at a tipping point in 2020 and we expect it to become increasingly ubiquitous in 2021.”
Ralph Dangelmaier is CEO of BlueSnap, an All-in-one Payment Platform designed to increase sales and reduce costs for B2B and B2C companies. With more than 30 years of experience in the payments industry, Ralph agrees that the buy now pay later boom and other forms of flexible finance will continue to trend.
“Online retailers are racing to adopt new methods of “buy now, pay later” (BNPL) to accommodate today’s consumer needs. This new digital, Millennial-friendly version of instalment payments offers more flexible payment options that allow consumers to stretch their dollars as the Covid-19 crisis continues to affect buying power. In fact, more than one in three consumers aged 18 to 37 say that the availability of a BNPL option has influenced their decision to complete a purchase. Shoppers are attracted to BNPL because it’s a cheaper option than paying the high-interest rates that credit cards carry.
“With continued success in the B2C market, the B2B market is catching on. BNPL solutions are solving for critical pain points for smaller firms by helping them manage their cash flow challenges. BNPL allows B2B organisations a lifeline, enabling them to pay back their invoices and instalments over a more extended period of time. Next-gen instalment providers, like Splitit, use automation, machine learning and big data to make better loan decisions in seconds.
“In 2021, we will see an increased appetite for this new type of financing by e-commerce sites, retailers and B2B businesses. The financial flexibility allows businesses and consumers to make the purchases they need.”
Matthieu Soulé is the Head of the Innovation Lab of BNP Paribas in Silicon Valley where he works with both early and late-stage startups. He thinks that while 2020 has brought challenges, start-up’s, in general, have been relatively sheltered.
“There’s been a lot of noise about new markets in emerging countries, however, I think we can take notice of what has happened in China in-depth and also look at the mergers market, both B2B and B2C, to understand this year’s successes. For us in the US it’s the insurance markets. But if we take a look at something like Igloo digital insurance based in Singapore, they’re looking to expand in South East Asia and Australia. What’s more, Asia and Indonesia are also looking to add products to the marketplace. So worldwide there are some big changes.
“When it comes to health insurance which has been a huge market for the US this year with Covid, we could see what’s happening in the US, Europe and China also extending to other geographies, which I think would be a very interesting trend. The idea of transparency and access – having a Dr. on-demand and knowing the price you’ll pay to speak with them – has been a huge turning point for the industry which is predominantly a big fish market. However, these small tech startups are helping to innovate and links between health and nutrition for instance are very interesting. For instance, could you pay less for insurance depending on your lifestyle?
“From my perspective in 2021, we’ll see a lot of new developments. I would say especially in the convergence between retail marketplaces and insurance products. I think using established markets like China, the US or Europe where you can launch a product to protect issues such as climate and sustainability for me will be a very useful thing. At the moment I’m working with areas of banking and insurance to demonstrate that these fields can have a positive impact on the planet, based on business and independence.”