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 Kurt Weiss, Rod Lockhart, Sahar Salama, James Allum and Erik Vasaasen on their 2021 thoughts, plus a look ahead to 2022. Will there be a Happy New Year? Read on…
Kurt Weiss, Head of Financial Services, Ekata has found buy now pay later options and cryptocurrencies becoming increasingly popular in 2021 as “consumers want greater flexibility in how they pay.”
He said: “While the COVID-19 pandemic drove more consumers to shop online and try out new payment methods, it has also been driven by younger, digitally savvy demographics who are interested in digital-first payment options.
“However, with rising popularity comes rising fraud risk. BNPL companies face different risks than traditional lenders, with shorter approval times and also taking on the chargeback liability from the merchant to help drive adoption. Cryptocurrencies, as fully digital currencies, require a high level of user verification to stop the creation of fake accounts.
“Luckily, both BNPL solutions and cryptocurrency solutions can be secured through smart verification practices. For BNPL, real-time identity verification strategies that enable quick and confident sorting of applicants into low- and high-risk buckets reduces risk without adding friction to the user experience. Crypto exchanges can leverage verification tools at the time of account opening to verify identities, increase conversion, and reduce risk at onboarding. This is especially important for validating “thin-file” consumers, such as Gen Z and younger Millennials, who may have little or no credit history.”
Rod Lockhart, Chief Executive Officer, LendInvest, has 17 years experience in property and property finance.
“As the importance of ESG dialogue across all industries intensified over the last year, so did the commitments and initiatives offered within the Fintech sector,” he said.
“Fintechs are taking up the challenge by automating processes and proposing more sustainable ways of doing business. As we move into 2022, it’s brilliant to see that over half of our mortgage applications are now for our EPiC green mortgage range.
“2021 was the year in which many Fintechs, including ourselves, chose to go public. We chose a normal listing process, but we saw others such as eToro do it via SPAC and Wise going via a direct listing. Over the Autumn, we saw a tail off in Fintech listings but with signs that SPACs are starting to get active again, 2022 could be another year for Fintechs going public.
“It goes without saying that Crypto continues to be a hot topic amongst Fintechs. We are seeing more businesses incorporate blockchain or digital currency into their offering, from accepting cryptocurrencies for payment, and even offering to pay their employees in digital currency.
“Finally, the Kalifa Review delivered an ambitious roadmap for UK Fintech in 2021, however, unfortunately, not many recommendations have been actioned by the government yet. Those at the coalface of building the UK Fintech industry will hope that the government will finally turn the talk into real action for our sector.
“In 2022, we can definitely expect to see further personalisation in the financial services space across all verticals. Customer’s expectations are growing every year, and the industry must use the tools at its disposal to keep up. At LendInvest, we are constantly iterating our platform, integrating new partnerships and requesting feedback from our customers to make the experience of applying for property finance simple.”
Sahar Salama is CEO and Founder, TPAY MOBILE, believes that, as we look ahead to 2022, we’ll see an increased demand for frictionless customer experiences.
“E-commerce has grown immensely in recent years and it’s gone from a nice to have to a must-have. The pace of growth is only going to increase; Nasdaq anticipates that 95% of purchases will be completed online by 2040. The coronavirus pandemic affected almost all aspects of daily life but it stimulated the development of e-commerce in particular. Amid COVID-19, the fear of contracting the virus through physical money, and sometimes even the refusal of businesses to accept cash, made consumers more likely to use electronic payment methods to pay for goods and services. People wanted to go online in every way possible and we didn’t just see this trend in developed countries, but in emerging economies too.
“The last year has seen big shifts in customer behaviour and expectations around digital experience in many sectors, including payments, and this will continue. As we look ahead to 2022, we will see a surge in demand for seamless and frictionless customer experiences. With the growth of online payments and mobile money, consumers expect fast and secure transactions so that payments can be made as easy as possible. Customer experience is one of the ways financial service providers can differentiate themselves and by revolutionising the way that money can reach individuals, businesses can set themselves apart in the marketplace.
“In addition, next year, we will continue to see fintech help solve the financial inclusion crisis. Fintech has moved and will continue to move, in the direction of more accessible, lower friction and lower-cost payment options that empower a multitude of business models. Fintech’s role in payments has enabled billions of people globally to transact online, lowering the barrier to digital payments. Because of this, digital payments are displacing both cash and credit cards. In markets where mobile wallets have become popular, that trend is expected to continue if not accelerate. Other markets, in which mobile wallets have yet to catch on, are likely to adopt mobile payments in 2022.”
James Allum, VP and Head of Europe at global digital commerce giant Payoneer, said:
“Throughout the past year, we’ve seen a steady stream of employees moving from established companies to fast-growing early-stage businesses. This shows an increasing willingness to take a risk in return for the opportunity to be part of a company that could potentially enjoy rapid success.
“More companies, including Payoneer and Wise, have decided to go public. Meanwhile, private companies have grown more sensationalist when speculating on what they will do next and how big they will grow.
“In banking, the likes of J.P. Morgan have tried to accelerate their open banking initiatives to support new go-to-market strategies. Meanwhile, large financial services firms like Visa have increasingly invested in alternative finance models like Crypto and Blockchain, as well as disruptive fintechs like CurrencyCloud. Despite not being entirely willing to commit to these new technologies, companies are clearly anxious to hedge their bets and avoid being left behind.”
On the next 12 months, James said “The battle lines are being drawn between open banking and cryptocurrencies – the debate is set to heat up further in 2022.
“More companies will turn to new compliance and regulation technologies to keep customers safe and improve their customer experience.
“As they become more mature, fast-growing fintechs will shift from focusing on customer acquisition to improving their margins throughout their operations. The larger fintechs listed on public exchanges, e.g., Wise, Payoneer and PaySafe, will become more confident operating as a public company and more vocal about their ambitions.”
Erik Vasaasen is CTO of Okay, a fully PSD2 compliant Strong Customer Authentication platform.
He said: “2021 has been a special year, and it is not easy to try to condense everything that has happened into a few sentences, but there are a few trends that stand out: A major trend is that security has become even more of a focus. Part of this is because of the requirements from the PSD2, but with payments becoming ever more digital fintechs are realis
ing the danger of fraud. The good news is that according to the EBA, the percentage of fraudulent transactions has roughly halved since June 2020, and is now down to
“On the technical and infrastructure side, an important trend is a growth in Banking-as-a-Service (BaaS) and embedded finance, with many new providers launching. The rise of BaaS and embedded finance is of course also linked to Open Banking, which has gotten more traction over the last year.
“It is not easy to predict the future in the fast-moving world of fintech, but if I have to look into the crystal
ball and speculate there are a few predictions that seem more likely than others: The first is that banks
will be under even more pressure to provide value, both to shareholders and to their customers. The
traditional revenue streams of fees and interest are less important in a world of Open Banking. Related
to this is the trend that payments will continue to move from tap-to-pay to app-to-pay, where the value
provided to the end-user is coming from the extra features added to the payment and fully new features,
not just traditional banking services.
“The end-user might not even be aware of how the payment happens, or by which rail it takes place.
Payment apps will have to handle online e-commerce, point-of-sale, and strong customer authentication
using an omnichannel model where the same singular app does everything. While this might be a
challenge for traditional players I believe the reality is that the fintech market is set for rapid growth, you
just have to be flexible enough to capture it.”
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.