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 Helen Child, Johan Strand, James Lynn, Todd Clyde and Justin Passalaqua on their 2021 thoughts, plus a look ahead to 2022. Will there be a Happy New Year? Read on…
Helen Child is the founder of Open Banking Excellence (OBE) and believes 2021 saw an increase of collaboration between the fintech and finance industry.
She said: “In the past year, we’ve seen more and more collaboration between fintechs and banks, which will result in better financial services and bring genuine change to the sector. Banks took part in a record 142 fintech deals across Europe last year, according to figures gathered by Pitchbook and Sifted. That means banks have tripled their investment in fintechs since 2016. When the dust settles on 2021, we are likely to see that this growth has continued and I’m expecting to see record-breaking levels of investment in the space.
“The pandemic has fuelled a huge growth in digitisation, which comes as a vibrant API economy makes customer journeys faster and more personalised, driving a win/win which results in higher conversion rates for banks and fintechs as well as cost efficiencies for customers.
“In July, we saw the number of successful payment initiations made using Open Banking APIs soar above two million for the first time. That’s 69,000 initiations a day and an increase of 664% in just one year. The number of initiations has only grown since then and hit 2.59 million in September. That is astonishing growth and demonstrates just how exciting the Open Banking space is right now. Could the latest Amazon announcement deciding only to accept debit cards be another milestone in the Open banking revolution?
“At OBE we believe that it’s time to fundamentally change the way we make payments online – from cards to instant bank payments, powered by Open Banking. The role of OBE is to bring pioneers banks, fintechs, regulators, and other industry stakeholders together to share ideas and collaborate. We sit at the heart of a global conversation and have observed several trends which will become even more important over the next year.”
Johan Strand is CEO at Zimpler, an account-to-account payments solution. He said: “Embedded solutions are growing fast and there is a clear move towards integrating financial services into customer flows.”
He continued: “More and more companies are starting to look at the entire customer flow and understand how they can leverage fintech in those flows. Everything from using open banking data to make better business decisions in a credit scoring or insurance claims, to integrated branded payment flows. All services should be at the top of your finger. That is what today’s customers expect.
In terms of the future, he added: “I think we will see more cross-vertical partnerships within the fintech space. Different parts of the value chain will integrate or merch. ERP system leveraging new payment rails. Data and payments moving together.
“From an end-user perspective, speed will be the name of the game. Gen Z and millennials wait for no one. Waiting 2-3 banking days to get paid after a gig or moving money from one platform to another is no longer acceptable. Fintech needs to move at the speed of culture to stay relevant. We will also see more cooperation between the big platform companies and fintechs.”
James Lynn, Co-Founder of Currensea highlighted the return of travel in 2022, where people will be looking to budget and cut costs.
“The pandemic has accelerated the move towards an increasingly cashless economy – the last 12 months have seen continuous innovation around payments technology ensuring faster, cheaper and easier digital transactions.
“In the travel industry, people have long been hit by extortionate foreign exchange (FX) fees when using bank cards abroad – but fintechs are rapidly modernising the industry, for example, Currensea leverages open banking to unlock the lowest FX fees on the market offering travellers more flexibility and convenience when spending around.
“The travel industry will be desperate to recover during 2022. However, when international travel hopefully returns to pre-pandemic normality next year, although some travellers may have substantial amounts saved after two years with minimal international travel, it’s likely that most will also be more money-conscious as household finances have suffered over the last two years.
“People will be eager to enjoy overseas holidays again, but will we see unbridled spending or an increase of trips on slightly tighter budgets? People want to maximise their holiday experience which means making their money stretch further. During the pandemic, we’ve seen an increase in financial education – through necessity as much as anything else – with people more focussed on their financial wellbeing and in greater control of their spending.
“As a result, people will increasingly look to reduce costs and make their savings stretch further. Whether shopping around for the best deals on insurance or eliminating extortionate foreign exchange fees when using bank cards overseas, we’ll see a rise in the number of innovative solutions from fintechs as the travel sector recovers next year.”
Todd Clyde, CEO of Token, an open banking payments platform driving the shift from card to bank payments.
He said: “The past year has seen Open Banking Payments (OBP) continue their steady march into the mainstream. The numbers around Open Banking offer compelling evidence of the incredible progress that the space has made in 2021. The UK has seen a 297% growth in OBP from September 2020 to Sept 2021. Today, up to 8.5% of digitally enabled consumers and small businesses in the UK now use open banking powered apps and services. That’s a lot of progress in a short space of time, which is very exciting to see.
“OPBs are fuelling the rise of account-to-account (A2A) payments that remove the need for intermediaries, reduce friction, boost efficiency and ultimately deliver payments at a lower cost. A2A offers significant cost savings and higher success rates. Early adopters include merchants and other users with high average transaction values such as card repayments or industries like the automotive, construction or home supply sectors that sell high ticket items. It has been a year of growth for A2A, which will not be considered an ‘alternative’ for much longer. In the UK, one in four credit cards can now be paid off using an A2A payment. This growth will continue in 2022.
“Next year we will see account-to-account (A2A) payments become a more widespread payment option in physical brick and mortar stores across the UK and Europe. The expansion of this new financial layer will be fuelled by Open Banking and Embedded Finance, giving banks and incumbents the opportunity to compete with challengers in this emerging space.
“Open Banking Payments (OBP) are also becoming the primary way of loading up e-wallets and will be responsible for half of all payments to e-wallets within the next 12 months. Another trend will be the “Great Rebundling” which will see the disaggregation of services from card payments. Instead, there will be a rebundling of services such as purchase protection, loyalty programmes and Buy Now, Pay Later around A2A – which is good news for banks. Open Banking is an opportunity for banks to go beyond data access and reclaim their position as the centre of the payments universe.”
Justin Passalaqua, CMO of North America for Worldline thinks the last year has seen a huge shift in the payments industry, accelerating the move from cash to cards.
“Globally we have seen cash payments drop by 12% due to COVID-19, with businesses quickly adopting contactless and e-commerce payment options to keep up with consumer buying habits,” he said. “The shift to e-commerce and online payment options is no longer a trend but a sustainable practice to ensure the future of many businesses.
“However, I think the biggest trend that has not had enough attention is the Payments-as-a-Service (PaaS) model of putting the customer first, using a simplified fee structure and focusing on the quality of service to retain customers. The shift to online payments is new for many businesses, and in uncertain times finding a trusted payment partner to help them navigate the new world of commerce will play a pivotal role in growing businesses into 2022 and beyond.”
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.
