As 2021 draws to a close, it’s safe to say that this year has been full of ups and downs. With the world very cautiously emerging from the global pandemic, one thing has remained constant: the innovation and growth the fintech industry continues to bring. While the year has been a whirlwind for most, the fintech sector has seen many challenges and opportunities that will no doubt continue into the next 12 months.
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 hear from Samantha Seaton, Ralph Dangelmaier, Luke Massie and David Liu on their 2021 thoughts, plus a look ahead to 2022. Will there be a Happy New Year? Read on…
Samantha Seaton is CEO of Moneyhub Enterprise, an Open Banking and Open Finance platform. she believes that the pandemic has helped to “expedite the adoption of technology, both from consumers and businesses.”
She said: “On the consumer side, we saw cash become a thing of the past, and payments including new technologies such as QR based payments become increasingly popular. With card fees high for businesses, many also considered alternatives. For example, we partnered with cashless payments provider, Evershare, to develop a solution that supported charitable donations during a time when they were struggling and experiencing a critical drop in donations as invaluable fundraising activities were stopped. Through a combination of QR codes and regulated Open Banking payments, people are now able to make socially distanced cashless donations from their mobile banking app directly to the charity’s bank account.
“The payments world is quickly evolving and we hope within the next year, variable recurring payments will have launched within the market. VRPs will bring significant benefits to consumers, giving more control over their money and offering them protection from unwanted fees.
“Moneyhub took part in the FCA Sandbox and discovered significant demand for VRPs, which will revolutionise the way we send money between friends and family whilst making it much easier to pay small businesses and potentially completely replacing Direct Debits and Card on File. We already work with banks that are ahead of the curve so their customers benefit from this faster, safer and more cost-effective approach to money management. Whilst there have been delays more widely, when the VRP deadline comes, we are excited to see this technology used within the wider marketplace.”
Ralph Dangelmaier, CEO of BlueSnap, found that a key channel that gained ground in 2021 was mobile commerce.
“Predicted to reach $3.56 trillion globally by the end of 2021, m-commerce now makes up more than 70% of total e-commerce sales,” he said. “In an increasingly competitive market, online retailers must be ready to meet their customers whenever and wherever they choose to shop – including on their mobile devices. This means now is the time to stress test digital marketplaces to ensure a user-friendly experience, no matter which device a customer uses to access them.
“Mobile sites should be easy to navigate and even easier to checkout. Simple fixes like integrating your website with social media channels can turn casual scrolling into casual shopping.These channels also offer a great way to reach customers at the start of their purchase journey and a well-timed seasonal ad campaign or personalised offer can make all the difference in getting customers to hit the buy button.”
In terms of the future, Ralph believes localisation of payments will become critical as global merchants navigate hike in interchange fees.
“When it comes to e-commerce, the pandemic has brought the world closer than ever before. But cross-border selling is set to remain as complicated as ever in 2022. With a rise in interchange fees looming in the US next April and a hike in fees for transactions between the UK and European Economic Area post-Brexit kicking in this fall, merchants around the world are facing an unenviable choice. Absorb these increased costs or pass them on to customers in the price of products or services – a move that could deter future sales. With cross border sales predicted to account for 20% of global eCommerce in 2022, the impact of higher fees will be felt across the business community in the form of decreased authorisation rates and increased costs.”
“ By partnering with paytech providers, sellers can avoid cross-border fees altogether in 2022. That is, merchants can leverage a network of local banks through these payment processors to route transactions via banks in the same region as the cardholder. By localising transactions in this way, merchants not only reduce cross-border fees from card issuers but increase payment authorisation, since banks are more likely to approve purchases that are made locally. With every business looking to capitalise on the explosion of e-commerce post-pandemic, effectively localising global payments is now a must for international sellers.”
Luke Massie, CEO, VibePay, a payments platform helping consumers and businesses get paid faster, believes that the super app race in Europe will heat up in the new year.
He said: “As fintechs look at the success WeChat and CashApp have had in Asia and the US, we can expect to see more businesses enter the European super app race in 2022 as they look to capitalise on this enormous opportunity.
“The super app race is crucial as we currently have fragmented services across the spectrum which are leading to a painful user experience. In 2022 we will see major progress to solve this issue by bringing together social media, social commerce, banking, payments and more. This will be a mammoth task, but the opportunity is there thanks to Open Banking and PSD2, which have given European fintech founders a platform to build big. We’re looking forward to being part of this race next year and seeing what the European fintech industry can deliver.”
He also believes that embedded finance will become more prominent.
“Having built upon Open Banking, fintechs will no longer have to focus on the foundations,” Luke continued. “Instead, 2022 will be the year of solutions and experience; the elements which will really move the needle for consumers.
“We will see embedded finance move to the forefront, adding a huge amount of value in the financial ecosystem, such as the post-transaction experience in payments, where sellers can interact with customers, fans, or subscribers in the same place real-time payment was made. For end consumers it can mean being able to do more with their transactions, whether that’s sharing with friends, splitting payments or unlocking responsible consumer lending opportunities. This is what the impact of embedded finance can have, opening up a whole new dimension for payments and the possibilities within it.”
Finally, David Liu, CEO and founder at payments services provider, Truevo, believes that new payment methods have been the craze of the year.
“The more surprising trend and probably the fastest growing for 2021 by far has been BNPL (buy now pay later). Many people have been stuck at home and wish to purchase items they might not be able to afford. With BNPL, customers enjoy being able to buy a more expensive item that they might not be able to pay for in one go and split the cost of their purchase over instalments. This isn’t a new concept, but it has been repackaged, modernized, and has made a proper comeback.”
On the future of the industry, David said: “Over the last few years, most fintechs have been focusing on experience and creating new ways of solving old problems for the average consumer. Now, we are seeing a new wave of fintech more focused on niche markets, where they deliver specialised solutions for a certain sector. As a result, fintechs that understand the need for personalised, good products at a low cost and serve their customers really well will be profitable. I expect to see more hyper-targeted fintechs that chase profits and excellence over numbers.”