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 Jed Rose, Keren Moynihan, Ion Fratiloiu, Max Alvisini and Dominic Bonhamon their 2021 thoughts, plus a look ahead to 2022. Will there be a Happy New Year? Read on…
Jed Rose, GM EMEA at Airwallex, thinks that2021 was the year of fintech funding and the rise of e-commerce and digital payments.
“2021 had some of the biggest fintech valuations to date. From the likes of Klarna ($45.6b) to N26 ($9b) and even Airwallex ($5.5b), investment continued to pour into the space. According to Boston Consulting Group’s “State of FinTech” Q3 report, the majority of investment can be segmented into two categories, payments and accounts products. These two categories each received more than $7.5b in investments and accounted for 45% of all investments in Q3.
“The events of the pandemic have accelerated changes that were already in motion – with the way businesses interact and sell to consumers, cementing the ongoing demand for e-commerce and digital payments. Since e-commerce has gone more digital, the need for fast and reliable cross-border payments has become top of mind for merchant’s who are considering or already have a global presence. The pandemic really demonstrated the adaptability of some merchant’s who reacted quickly and shifted their business model to a digital-first approach as well as the payment revolution.
“For 2022, the consumerisation of B2B payments has not only sparked a conversation around the use of innovative tech to facilitate frictionless, real-time payments, but also emphasised the role compliance and regulation will play. The challenge for businesses will be around removing unnecessary friction – poor user experience, slow transfers, high FX fees, etc – and making it easier for businesses to grow without borders through deploying further innovation and new technologies, such as machine learning, to speed up B2B payments without compromising security or breaching regulatory guidelines. This will be a necessity for the long-term sustainability of both traditional players and disruptive fintech companies.
“Finally, just like today’s consumers, businesses want (and need) a seamless payment experience. Embedded finance was designed to streamline the entire financial process for consumers, while also creating operational efficiency for businesses. By using embedded finance, businesses can create a holistic experience for the end-user and customers can easily send and receive money in near real-time, without having to sacrifice a poor user experience.”
Keren Moynihan, CEO of Boss Insights, a company that offers Business Data as a Service via API.
“If 2020 was the year we entered the digital era, 2021 is the year we created products specific to customers,” she said.
“One major customer that was previously underserved is getting a lot of attention: The Small and Medium Enterprise. They represent the greatest opportunity over the next few years.
In terms of the future, Keren believes: “A customised experience in financial services will be the main focus and access to real-time data on customers will be the key to delivering on that promise.”
Yobota’s Head of Sales, Ion Fratiloiu, said that ““2021 has been an eventful year for fintech, dominated by a number of trends that will no doubt influence the future of financial services.”
He continued: “First and foremost, we cannot ignore the rise of Banking-as-a-Service (BaaS): over the past year, banks, brands and technology companies alike have collated their expertise and united under one common goal – offering customers access to bespoke financial services whenever and wherever needed.
“Buy now, pay later (BNPL) solutions have also seen a huge rise in 2021, having become increasingly prevalent in the mainstream. Driven by demand from consumers looking for more convenient ways to finance purchases, it has been exciting to see how businesses have adapted to and embraced this new model. From partnering with established providers to creating their own solutions, businesses across the banking and financial services sphere have taken notice of the importance of offering a compelling customer experience at the point of sale.
“Finally, an annual review cannot be complete without paying heed to the achievements of open banking. Growing uptake has resulted in a number of surprising use-cases: from fostering financial inclusion to launching new products and services, open banking has allowed fintechs to offer greater support to customers and deliver a range of exciting offerings.”
“In fintech, collaboration will be the name of the game, and 2022 will no doubt be a year for exciting partnership announcements.”
Massimiliano Alvisini, Senior Vice President Europe CIS & Africa, Western Union said:
“The global pandemic isn’t over – and in the space of 18 months, it has condensed and turbo-charged developments that otherwise would probably take a number of years to materialise. In the case of the payments sector, the obvious legacy of the pandemic had been the rapid acceleration of the drive to digital solutions. At Western Union, we had the strategy in place to deal with this development, so when the pandemic hit, we were ready.
“However, digitisation is a very broad term. In essence, as Earnings research and other data from payment companies show, customers want above all else flexibility: they are becoming increasingly “agnostic” in use of payment platforms and channels, as they use different means of payment for different purposes. They also want trust, since the changing market and social environment arising from Covid-19 has seen a rise in cyber security fraud threats – and this is a challenge that Western Union is carefully analysing and responding to.
“We are then navigating a totally new environment, where customers constantly evaluate transparency, speed, and flexibility to make their money transfer decisions like never before.
“The digital revolution that is changing our sector rapidly will continue to do so. However, this poses two key challenges: how do we ensure, as a sector, that we fulfil the promise of a connected world, amongst emerging digital and other divisions? And how we continue to meet demand to transfer money and payments in real-time, on a global scale, while upholding fraud, privacy, and compliance? These are the critical themes for our sector next year and beyond.”
Dominic Bonham, Director of Bonham & Brook, thinks that the global pandemic igniting rapid transformation of digital infrastructure, leaving “physical cash on life-support.”
He continued: “A Visa survey showed that approximately 33% of businesses have either ceased to accept cash, or accept less of it. On the macro, rather than micro, scale, an influx of capital from Covid stimulus checks injected enormous capital into Crypto. Speculative? Certainly. Will technology change the world forever? Obviously. Gartner, a technology research consultancy, suggests that decentralised finance is almost at the peak of inflated expectations in the Hype Cycle of Emerging Technologies regardless of the value of cryptocurrencies themselves. Decentralised finance has seen the technology make some speculative assets a key lynchpin of global finance. The Total Value Locked/TVL of DeFi grew by 14x in 2020, and quadrupled again in 2021 to a value of $117 billion. More speculative aspects of the crypto space will die a death. However, clearly, the underlying technology has only just begun its transformation of finance.
In terms of the future, he said: “Some trends last decades. AI continues to shape and mould our global experience at an accelerating rate. As the cost to leverage the technology becomes lower, expect it to transform nearly every facet of the market. Open Banking data will continue to create new financial products for new audiences long neglected by traditional finance. On the topic of AI, its capabilities should multiply once Quantum Computing allows it to out-compete classical computing in real-life applications. Widespread adoption of Quantum Computing is a long way away. But expect breakthroughs to be frequent and Qubit processing records to fall more swiftly as the year progresses.
“Finally, the Metaverse has an enormous PR problem with Mark Zuckerberg at the helm, however, expect increasing amounts of marketing and money to be thrown at it. FinTech will be at the forefront of this, as Facebook’s scaled back Crypto plan meshes with the rest of the sector to cope with its transactions. Process automation will become more widespread as Robotic Process Automation/RPA reaches maturity. Unicorns like UI Path and Automation Anywhere will allow back-office banking and enterprise businesses to automate manual labour intensive processes, freeing up brain power for more exciting pursuits. Moreover, consumers will benefit from reduced human error and boosted efficiencies.”
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.