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 Paul Yates, Liudas Kanapienis, Steven Walters, Peter Elmgren and Monica Eaton-Cardone on their 2021 thoughts, plus a look ahead to 2022. Will there be a Happy New Year? Read on…
Paul Yates, Product Strategy Director at iPipeline, believes that in 2021 “the ‘great acceleration’ in the Fintech market marches on unabated.”
“The need to meet consumer needs has also driven more customers into using FinTech solutions to offer different client experiences such as Surround Insurance, YuLife and Dead Happy. It also helped open and ‘embed’ financial products into underserved markets such as renters’, gig workers and non-standard homeowners with firms such as Collective Benefits, indeez, Goodlord and Ceta. Additionally, there has been much greater take-up of engagement tools that help ‘Predict and Prevent’ claims, such as Dacadoo.
“There has also been a focus on simplifying processes, especially with underwriting such as Zurich’s use of SSG’s Pre App Underwriting capability. And where these cannot be simplified, there has been new and growing use of AI-powered chatbots such as Meet Parker.
“Acceleration to the cloud will continue as firms demonstrate the true value of these platforms. The digitised carriers’ systems will be utilised to develop hyper-personalised consumer journeys and solutions. These will begin to flex and adapt to changing lifestyles and demands.
“Greater focus on improving the onboarding and underwriting journey for customers. This will involve better use of technology, data and NLP solutions to digitise the inefficient underwriting and medical evidence processes.
“Wellness continues to be a topic of interest and expect the term to be stretched from physical and mental, to financial, as new tools begin to make an impact. The continued adoption and integration of health and wellness profiling could improve both process and engagement.
“Data will continue to be a priority as it moves from predictive to prescriptive – using heuristic and mathematical optimisation tools to support how to make complex decisions
“Against these trends, I expect ESG to take centre stage in most strategies during 2022, where digitisation of process and efficiency gains are no longer seen as nice to have or delivering cost savings alone. This is the year where paper being replaced by digital processes is no longer a choice, but a hygiene factor.”
CEO of Ondato, Liudas Kanapienis, said:
“We can call 2021 the year of the rise of embedded finance and buy now, pay later. All the attention and activity seems to be focused on those areas and I’m confident that this will be the case for 2022 as well. Also, open banking seems to be finding its place as more and more interesting business cases based on open banking are introduced. I also expect larger mergers and acquisitions that started that will extend into 2022 with a focus on embedded finance and open banking. Everyone’s eyes will be on news coming from BNPL regulation, as changes there have the potential to impact and affect the BNPL business model.
“Regulation will keep evolving and expanding. It might get more complex to navigate and in 2022 this will become evident. The implementation of AML6 will kick off in Europe and we will see huge strides in the regulatory landscapes in the Middle East and Asia. We also see that, together with more widespread adoption and acceptance of crypto, the space will be not excluded. There will be further moves towards greater regulatory oversight and will become increasingly regulated across the globe.”
Steven Walters, CEO of Gallant Token thinks digital payments were one of the top trends of the year.
He said: “Stemming from the shutdowns, consumers and businesses were eager to provide a method of payment that removed any contact. This allowed various businesses to implement payment solutions such as the QR Code where you would scan to pay and NFC technology that used a tap of your phone to initiate payments. Leaders such as Google Pay and Apple Pay have these abilities built directly into the mobile devices. This not only allowed for payments to be made seamlessly in stores for consumers, but digital payments expanded greatly for P2P (Peer-to-Peer) transactions.
“Business owners and independent contractors as well as family members, were seeing a spike in utilization from platforms like Venmo, PayPal and CashApp. All of which allow someone to instantly send money from their account to another person for goods, services or gifting. As the digital payment methods skyrocketed, this also paved the way for digital banking or Neo banking. People grew accustomed to doing things at home/remotely, so now digital banking is taking off. Users can open an account from their phone without leaving the house.
“As 2022 approaches, some of the top trends that I see paving the way are around some of the topics buzzing right now. Blockchain technology and gaming integrations. Blockchain not only was a hot topic in 2020-2021, but cryptocurrency made a significant impact on various areas such as an example of El Salvador which made it a legal tender and the city of Miami Florida which produced their own coin. The growing adoption of blockchain and crypto is growing rapidly.
“As the CEO of Gallant Token, it was formed with this as a core vision, creating games that users will enjoy, but also be rewarded for playing. With over $160 Billion evaluation in 2020 and projections showing it will exceed that for 2021, you can expect to see the eSports, arena, and tournament games shifting towards the P2E (Play-to-Earn) model. Not only does integrating gamification with blockchain technology work, it makes sense. This is allowing the creators to develop an in-game ecosystem for the game as well as provide value to the player. Keep your eyes also on the metaverse topic, which will expand greatly in 2022. Some of the industry’s biggest leaders are investing into this technology and we will see it evolve as it continues to develop for real-world use cases and implementation.”
Peter Elmgren, Chief Revenue Officer at Riskified said: “the Covid-19 pandemic has shown the importance for merchants to successfully manage payment risk.”
He continued: The pandemic has forced shoppers to dramatically alter their shopping behaviours which resulted in huge demands for online shopping. The ability to order, pay and sometimes return items bought online as smoothly as possible is now expected by consumers across the world.
“However, it has been very challenging for retailers to manage these orders as the number of online frauds also dramatically increased. According to our data, a third (33%) of UK retailers said fraud is significantly hurting their profitability. In the UK, more than three quarters (82%) of retailers said that they have seen an increase in fraud attempts since the pandemic began, with Card Not Present (CNP) fraud having the biggest negative impact on revenues (60%) followed by Promo Abuse (48%).
“Merchants not only have to face the threat posed by online fraudsters but also provide a great experience to their honest customers. They must decide instantaneously which transaction to accept and which to deny. Retailers are forced to make a difficult trade-off of sacrificing growth for security or vice versa. And to make things worse, they also have to adapt to new policies implemented by payment gateways and banks who introduced considerable friction points and increased the risk of false declines by third parties. Bank declines were a huge source of missed sales opportunities – with Riskified’s data finding that 1 in 10 dollars spent online is declined during the payment authorisation process.
“As a result, the use of new technologies to smooth the payment process and reduce fraud has also become more prevalent.”
In terms of 2022, he said: “E-commerce will continue to become prevalent in consumers’ shopping behaviours. Despite a return to some kind of normality in most countries, and the reopening of physical shops, the shift toward online shopping seems permanent. Global eCommerce sales grew 28% to approximately $4.3 trillion in 2020 compared to 2019 and are expected to reach approximately $6.4 trillion by 2021, according to eMarketer.
“As the challenges retailers have faced in 2021 won’t go away, it will be crucial for them to inspire confidence among customers in their ability to combat online fraud. According to our recent survey, only 34% of all consumers trust retailers’ ability to prevent said fraud. In the UK specifically, more than a quarter (27%) of online consumers said their concerns over online shopping continue to grow and 51% of consumers believe that retailers will find it even harder to prevent fraud over the next year.
“However, merchants should not forget that fraud prevention measures can help to fight online fraud but often at the expense of customer friction. For example, two-factor authentication – which can stop a fair number of fraudulent transactions – can also cause frustrated customers to abandon their shopping carts. In our latest e-confidence report, this method was ranked as the most damaging to revenue for UK retailers.
“Technologies such as machine learning can help online merchants to better identify the individual behind online interactions without introducing unnecessary frictions for honest shoppers.”
Monica Eaton-Cardone is CCO and Co-Founder at Chargebacks911 and an active Women in fintech and trailblazer for female entrepreneurs.
She said: “The number of digital financial transactions has risen steadily in recent years, with COVID amplifying that growth exponentially. Digital payments and user habits, that may have taken years to adopt are now becoming more embedded in all routines. The pace of innovation is only going to increase now people are used to the digital way of paying, once converted they tend not to revert. The outcome: Customers expect the ability to make secure financial transactions anywhere, anytime, on any platform.
“We work across a great number of industries, so it’s easy to take the pulse of what is happening in the economy at large, and one major change versus 2020 that we have seen this year is that the travel industry is bouncing back. Although it is not back to pre-COVID levels, the travel industry is significantly up from where it was in 2020, and associated industries like hotels are going to be seeing the benefits from that.
“Unfortunately, we’ve also seen a surge in chargebacks since 2020 – they’re up 41%, and the industry that was hit the hardest was travel. This has meant airlines and travel agencies have not only had reduced revenue, but what little they have had has been partly swallowed up by chargebacks that are often not legitimate. I hope that this is spurring companies in the travel industry to invest in ways to prevent chargebacks.
“In the immediate term, there is likely to be a surge of chargebacks in the new year after the end of the holiday period. More people than ever will be doing their Black Friday, Cyber Monday and holiday shopping online, and it is far easier to initiate a successful chargeback in digital retail than in physical stores, so we can expect there be a great number of chargebacks after this season.
“Based on previous years, this surge is likely to start early in January, so companies need to take that into account now. Retailers may also experience a surge in chargebacks due to supply chain issues and shipping difficulties, scarcity around the holiday season is also likely to increase shifted shopping habits, leaving e-commerce retailers exposed. We know only too well from recent events that external forces can create unprecedented peaks and troughs in demand. The online retailers that have managed to keep pace with this demand, amongst coping with product supply chains, will have invested appropriately some time before, in their technology and be working with technical partners capable of responding rapidly to changing retail dynamics and shopping habits.
“We will also see women play a greater role in finance and technology. This is something that I’ve been personally passionate about, and it is a key value that we embody at Chargebacks911. Our Lift programme is aimed at correcting the gender imbalance in fintech through mentorship, giving women at earlier points in their career one-to-one help with interviews, wage negotiations and other aspects of making your mark on this industry. “
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.