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 Marina Goche, Yann Murciano, Jed Rice, Michael Ourabah and Brendan Jones on their 2021 thoughts, plus a look ahead to 2022. Will there be a Happy New Year? Read on…
Marina Goche is the CEO of Sentifi, and believes there were several fintech trends that accelerated in 2021.
She said: “From a digital banking perspective, established/mature retail and institutional banks continued to create or grow existing digital channels in recognition of their customer preferences to avoid branches. To support these digital retail channels, banking-as-a-service providers continued to develop their offerings with greater investment flowing to back-end providers in 2021.
“From a payments perspective, the focus on facilitating real-time, cross-border payments continued, along with the growth and use of digital wallets.
“Finally, from a lending perspective, the appetite for buy-now-and-pay-later models amongst retail customers and retailers increased with new buy-now-and-pay-later challengers entering the space as well as the growth of lending marketplaces.
“The re-opening of international borders as covid vaccination rates accelerate globally will continue to drive the trends outlined above.
“From an investment perspective, ESG investing and leveraging insights from machine learning models that process large volumes of data to gain a current view of a company’s ESG performance will dominate the investment landscape. Disruptive entrants offering retail investors the ability to make and execute portfolio construction decisions efficiently whilst also managing portfolio risk and avoiding institutional management fees will gain traction in 2022 (millennials prefer to self-manage over extensive reliance on institutional advisors).”
Yann Murciano, CEO at Blend Network, a fintech company operating an online real estate development finance lending platform
“Partly as a result of the pandemic, we’ve seen consumers’ willingness to try new digital financial services grow rampantly, therefore leading to the increasing speed of innovation within the fintech industry. Since the start of the pandemic, banking has become more business-oriented, payment cards have given way to mobile apps, transactions have become more “invisible” – and that’s just a small part of how the FinTech industry is evolving. But I’d say the biggest trend we’ve seen in the FinTech sector in recent months is the acceleration of strategic partnerships and what at Blend Network we’ve called the “rebundling” of banking and fintech. What I mean by “rebundling” is that we’ve started to see a subtle change in the trend whereby newcomer FinTechs were competing with financial institutions, and there’s now a sense of collaboration in the water.
“The impact of this new “rebundling” is likely to be incredibly beneficial to the whole industry, fostering collaboration between FinTechs and traditional financial organisations. I personally believe that collaboration and partnerships is the name of the game in this business, the more collaboration we see, the better it is for everybody. These are exciting times for our sector.”
Jed Rice is the CEO of Aliaswire, a provider of digital payment and credit solutions for businesses and financial institutions.
He said: “With all the hype around blockchain, crypto, and Buy Now Pay Later in 2021, it was easy to miss what a huge year it was for ACH payments. According to Nacha, nearly 27 billion payment transactions worth more than $61 trillion ran on ACH rails in 2020. Transactions are expected to increase by another 10% in 2021 and reach $70 trillion in value. While some of this can be attributed to the pandemic and an overall increase in electronic payments, some can also be attributed to the increased adoption of same-day ACH.
“Faster payments make a big difference – especially for businesses. ACH payments have always been cheaper than credit cards, but the account validation process has also made them significantly slower. As a result, many billers have reflexively pushed their customers to credit cards with the added cost negated by the certainty of funds.
“Nacha has been working closely with the payments ecosystem to streamline the account validation process and expand the use of same-day ACH. They want to mirror the speed of a credit card transaction, while still offering the substantial cost benefits of ACH. The momentum gained in 2021 is likely to continue in 2022 and well beyond.”
CEO and Founder of BSO, Michael Ourabah, believes crypto will “continue to have its moment.”
“2022 will be a year in which we will continue to see a great shift from centralised finance, tech innovation and power within fintech, to the decentralised,” he said. “The prevailing pyramid that currently has big institutions sitting at the top will become inverted, seeing fintech start-ups and end-users rise to the summit as a result of Open source technology like the Blockchain.
“AI and machine learning will also come to the fore and rise in significance, driving the application of fintech within various industries.
“The financial services space will be a key example of this evolution, as more non-financial brands start to offer financial products through embedded finance.
“Crypto will continue having its moment. The digital asset market in Europe alone is already predicted to top EUR1.5 trillion by 2024 and 2022 will be a pivotal year for its growth. The adoption of cryptocurrencies will increase, as the economic effects of Covid-19 will result in crypto being used as a hedge against inflation.”
Finally, Brendan Jones, CCO, Konsentus thinks the pandemic has shaped the evolution of fintech this year.
“Contactless payments, online banking, and even cryptocurrencies have skyrocketed leading to increased consumer demand for digital services. From a regulatory standpoint, however, the focus has been on financial stability over innovation and enforcing compliance.
“At Konsentus, we believe that open banking API volumes across Europe are gaining momentum, adoption is accelerating, and more innovative services are being offered to consumers. The groundwork for payment initiation, buy-now-pay-later, cross-border eCommerce and instant payments has been set, and we will continue to see developments in these areas.
“There has also been a shift in mindset as banks stop viewing open banking merely as a compliance headache and recognise it as a business model shift and revenue-driving opportunity. This has resulted in more partnerships and greater collaboration among ecosystem members.”
In terms of the future, Brendan said: “At Konsentus, we believe other sectors will begin to adopt an open framework and we’ll see investments in open health and open energy with organisations such as Icebreaker One making inroads in the space. Within open banking, there will be a progression from regulation alone towards a prescriptive scheme-based approach. This is already occurring outside the EEA. For example, Open Banking Limited in the UK provides a standardised rule book and user journey. To facilitate the transition from open banking to open finance, and remove friction in the customer journey, common European standards will need to be implemented.”