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 Bjorn Ovick, Nick Daniel, Nanda Kumar, Dorel Blitz, Andrea Himmelbauer and Estella Shardlow on their 2021 thoughts, plus a look ahead to 2022. Will there be a Happy New Year? Read on…
Bjorn Ovick, Head of Fintech Business and Growth at Skyflow, a data privacy vault for sensitive data, said:
“This year we’ve seen an expansion of open data standards and the flow of data across the fintech ecosystem. API-based platforms like Plaid and Square are paving the way for a variety of new applications and use cases. In turn, the ability to share data in a secure way that preserves privacy has become critically important, especially as data breaches and ransomware attacks become more and more common.
“For consumers, the expanding array of new fintech products is driving a growing acceptance of applications designed to perform a specific transaction or task extremely well. Products like Venmo, once bundled with other services by big banks, are now successful standalone platforms and new companies are constantly popping up to fill increasingly specific roles. At the same time, consumers expect the leading data privacy and security that they get from Apple and Netflix in every new product.
“In 2022, we’ll see the major financial networks take hits from the adoption of real-time payments by major retailers like Amazon, Apple, and Target. The real-time payments systems have matured, and the retailers certainly have the clout and the incentives to move consumers to using something other than a traditional credit card.
“We’ll also see the success of many new players who were once thought too niche to get any traction. Startups offering new products in narrower categories — from mortgage-backed loans to overdraft protection — will benefit from the openness of consumers to new ways of handling their finances. These startups are picking apart the services and offerings of large traditional financial services providers for whom most users have very little loyalty.
“With high profile attacks and breach disclosures continuing into next year, data privacy will increasingly become a competitive differentiator as companies face pressure from weary consumers and more stringent data privacy laws across the globe. We’ll see even more pressure on financial services companies to be more open about their responsibility for data privacy, and more active in ensuring it.”
Estella Shardlow, Consumer Attitudes and Technology expert at Stylus believes the creation of niche fintechs has been a huge trend this year.
She said: “Besides the explosion of virtual currencies (the NFT market’s now worth more than $7bn), it’s been interesting to watch fintech disruptors rise to very real consumer needs this year and understand the nuance needs of different cohorts. This includes the rise of niche banking apps that target specific cohorts or life stages, moving away from a ‘one-size-fits-all’ approach to banking. Look at the gamified, goal-oriented budgeting tools helping
“Gen Z pay down student debt, like US app Charlie, or September-launched Firstly which is designed for Gen X’s juggling act of financial responsibilities when they’re, say, simultaneously covering their kids’ tuition fees, trying to build their own pension pots and covering elderly parents’ care costs.
Other exciting neobanks around the world are targeting underserved communities – from Latin America’s female-focused Jefa, which rewards women for health expenditures, to Majority for newly arrived US immigrants, to GajiGesa empowering the country’s vast unbanked population unlock wages on-demand.
“Continuing this trend of ‘humanising’ finance, we’re also seeing some new fintechs adopt more mindful language regarding money and harnessing tech to coach better financial wellness. California-based fintech Happy Money has replaced the word debt with ‘sad money’ in its brand messaging. The rise in people avidly following ‘finfluencers’ on social media shows the appetite for frank, plain-speaking financial education.”
She continued: “In 2022, I expect to see fintech empowering individuals to monetise their online influence and get paid in new ways.
“With the pandemic increasing economic uncertainty and a growing global gig economy, tech will have an important role to play to shore up workers’ financial security. This means new solutions to overhaul clunky payroll systems and reduce dependency on payday loans. Clair, a New York-based start-up, this summer attracted $15m of investment for such a concept.
“The movement towards decentralised finance will continue to gather pace. Platforms such as Roll and MeToken are enabling creators to issue their own social tokens, powering digital community currencies. As the virtual economy workforce grows – think: people making a living from virtual asset design or cryptocurrency trading – this requires new financial products and services, which use different metrics to assess one’s capital and credit viability. There’s a substantial opportunity here.
“But there is a major sticking point for this sector to address: sustainability. The e-waste generated by cryptocurrencies will be under scrutiny, and innovators must apply themselves to decarbonising crypto in order to scale and win over eco-minded consumers. Beyond offsetting initiatives, this is about blockchain innovations that use less energy from the outset. Voice’s new private blockchain and Tezos’proof of stake (PoS) network suggest the shape of things to come.”
Nick Daniel, Co-Founder and Director of Business Development at Vyne, a specialist account-to-account payments platform powered by open banking for merchants, said:
“2022 is the year for the cardless economy. We have already seen a huge increase in adoption for payments through Open Banking and it’s evident that consumers want an easier way to pay – this is where cardless checkouts come in and it’s going mainstream.
“In light of the Amazon and Visa news. In 2022 we may see more payment strikes. Merchants will tire of high-cost card fees. Some may make public statements to pressure lower fees or some simply may abandon them all together and switch to alternatives such as account-to-account payments.
“Consumers are increasingly turning their backs on businesses that go against their values. They’re demanding transparency on everything from employment to manufacturing to environmental impact. 2022 will be the year of consumer exodus for the businesses that don’t truly understand their audience’s beliefs and values, and ensure they adhere to them. Some larger corporations will feel the strain of this changing dynamic, as smaller companies gain the advantage of growing with their audiences.”
Nanda Kumar, CEO of SunTec thinks that “fintechs have been growing consistently during the last decade with increasing emphasis on banking services offered digitally.”
He continued: “Various factors have contributed to this rise. The recent exponential evolution of technology coupled with the increasing adoption of the internet and mobile have fostered this growth. In addition, the new growing set of customers – millennials – who are comfortable with the convenience a fintech offers have also influenced this growth.
Fintechs have been growing rapidly in North America, Western Europe, India, China and the Far East, attracting the largest share of investments. Finextra Research indicates that since 2019, close to 1,200 fintechs have processed their IPOs.
“The fintechs have imagined the possibility of extending end-to-end banking services in the digital-only model. The low overhead of having a purely online operation, low transaction fees and higher interest rates provide a unified digital solution to clients. The use of artificial intelligence and machine learning helps them personalize their offerings – faster onboarding, tailored products, prices, benefits etc. In fact, fast-tracking payments modernization is one of the most telling contributions delivered by the fintechs. The introduction of contactless payments, mobile wallets, and BNPL have disrupted existing standards and introduced new norms for the payments industry.
“Another important trend that we have seen is the move to sustainability across the board. Businesses realize they have to scale and become efficient but not at the cost of the planet. We have seen some early signs of this with fintechs during the pandemic.
“Finally, while fintechs offer very compelling solutions to customers, they still do not command the same levels of trust as that of the traditional banks. These complementary strengths – innovation and trust – has resulted in many banks and fintechs partnering to offer innovative solutions to the banks’ vast customer base.
“Banking in the future will be vastly different from what we have been used to in the pre-pandemic days. Banks and fintechs will have to collaborate effectively to offer services to customers and to grow their respective businesses. Fintechs bring to the collaboration a deep specialization which is vertical; Banks on the other hand are horizontal and have enjoyed customer trust over the years. This therefore becomes a win-win partnership.
“The future of business is in collaboration and anyone ignoring that will perish.
“The new open banking regulations that many countries are introducing will help banks integrate better with fintechs. The new banking platforms from fintechs will allow banks to offer a large portfolio of solutions in partnership with its ecosystem. Banks and fintechs will want to own customer journeys and digital-first and digital-only banks will be common and banks will host digital frontends for customer engagement. The growing open banking adoption fuelled by favourable regulations will foster banks’ partnership with fintechs.
“The Fintech ecosystem is pivotal to creating a low carbon economy and achieving the UN’s Sustainable Development Goals (SDGs). Some of the purpose-built fintechs are devising business models to support the development of promising carbon removal technologies and help tackle climate change. The reach and operating model of fintechs also will enhance financial inclusion and support SMEs in getting access to credit and other banking services. We also expect fintechs to adopt various modes of cloud deployment – private, public, hybrid and multi-cloud – which will further enhance innovation and co-participation.”
Dorel Blitz, VP Strategy & Business Development at Personetics, said:
“2021 has been defined by record-breaking growth. In the UK, investment into fintech hit £17.7 billion in the first half of the year alone and globally, in the last three months, 33% of all total new unicorns have been fintech-focused. We’ve also seen a huge number of fintech IPOs as well as influential M&As. The growth opportunity for fintechs is greater than ever but has made market competition hotter, the challenge for fintechs this year has been standing out and prioritising customers.
“I’ve long been a believer that fintech should make the world a better place but what’s been really unique about 2021 is the growth of ‘green fintechs’ or ‘fintechs for good’. Next year, I expect to see many more solutions that prioritise financial wellbeing and allow people to make more sustainable choices with their money, for example by showing the carbon footprint of their spending.”
On the future, they said: “We’re going to see the fintech and banking world adopt the ‘Netflix effect in 2022’. Modern consumers want an experience where banks and fintechs can think on their behalf and like Netflix, provide automatic recommendations based on the individual. The burden of finance is increasingly moving away from the customer to the latest tech which can automate the ‘busy work’ of managing personal finances and actually help customers with their overall financial wellbeing. This development doesn’t hinge on a single technology but a combination of technologies together that use data to understand customers on a deeper scale.
“I’m also excited to see how technology starts to democratise wealth management by helping people with their investments and trading. There are currently millions of underserved customers who don’t have the means for their own financial advisor who will benefit from a hybrid model where data is helping relationship managers make more informed decisions and open up wealth management to a larger audience – just like Robinhood has expanded retail investing.”
Andrea Himmelbauer, Mettle’s first Culture and People Lead, said:
“Next year will see even more of a shift towards remote and hybrid working environments. The lockdowns have changed the working world and employees want the freedom and flexibility to choose where they work.
“With advancements in productivity tools and more support from businesses, this trend will continue to grow. But, there will be a challenge attached to this new working model – maintaining your culture and ensuring productivity and innovation remains when employees are split between working from home and the office. It is a conundrum that businesses are going to have to face.
“We’ll also see blockchain move beyond the cryptocurrency hype and instead be used to add more transparency into transactions. Think of smart contracts where all participants can be immediately certain of the outcome. This cuts out the middle-man where there is no intermediary’s involvement and no time lost with this process. Setting up specific conditions means that workflows can be automated and actions triggered the minute they are met.
“Sustainability will come to the fore but the responsibility lies with each business to understand how sustainable their practices really are. We’d all love the products and technologies we use to contribute to our environmental and sustainability goals, but at the moment, that isn’t the reality. There needs to be a more open conversation around sustainable technology, and businesses holding themselves to account.
“Finally, next year we’ll see the ownership of data changing rapidly. The decentralisation of data ownership will give the power back to consumers. They will have the choice of who sees their data, when and why. This, to me, is the biggest trend as data underpins so much of what we do today.”
This article is part of our 2021 December series, View from the Top, to see others like it and our special edition from December 2020, please click here.
