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 Andrew Dunlop, Lisa Edwards, Hristo Borisov, Gene Deyev and Katsuhiko Shirasaki on their 2021 thoughts, plus a look ahead to 2022. Will there be a Happy New Year? Read on…
Andrea Dunlop, managing director of Access PaySuite said:
“Now more than ever, efficiency is an important part of business success. This year, fintechs have played a key role in helping organisations of all sizes use data to make informed decisions, streamline operations and boost profits.
“While we have seen a number of innovative new developments form fintechs which are disrupting traditional payment methods, support for more established payments is still resolute. Direct debits, for example, continue to grow as a payment method and remain the mainstay of recurring payments for many businesses.
“At Access PaySuite, we’ve seen an increasing number of businesses looking to deploy integrated payments, hoping to remove the pain of multiple, clunky systems. This increase is focused on putting payments firmly at the heart of their operations. Data output from the linked software can be viewed much more easily on one dashboard, providing synergy between each service or department.
“There are many considerations for businesses looking to rebound from a challenging twelve months and I anticipate the digital revolution will continue at pace next year.
“As well as adapting to the world being much more digital, businesses need to invest in strengthening customer relationships and building trust. When it comes to payments, this is crucial and some customers remain sceptical about replacing in-branch, face-to-face interactions with digital alternatives.
“In 2022 I anticipate more and more organisations will look to develop a more integrated approach, as this will not only reduce unnecessary costs it will also showcase an understanding of new and changing expectations of the customer.
“With the digitisation of the sector continuing at pace, getting the ‘basics’ right is even more important. Payments must be simple, secure and streamlined to provide an excellent customer experience, as well as the operational efficiency which is critical to enable a business to grow.”
Lisa Edwards is President and COO of Diligent Corporation , and believes ESG has been a hallmark of this year and will feature prominently in the future.
“In 2021 we saw an increase in fintech institutions prioritising ESG as a focus, both in the development of sustainable products (“Green fintech”) and incorporating ESG practices into their own organisations. fintech companies are well-positioned to be a force for good in the fight against climate change through the creation of green financial ecosystems.
“The pressures from governments, regulators, investors, employees and other stakeholders will only intensify in the coming years. Organisations need to ensure they’re incorporating ESG throughout all levels of their business going forward, in order to succeed. Where ESG was once viewed as a cursory exercise, this year, businesses worldwide have realised that it has a more fundamental impact.
“Where we saw the prioritisation of ESG as a strategic imperative this year, in 2022 I expect to see fintech institutions make the most of intelligent technology to execute on these strategies. In particular, leveraging automation, AI and robotics to integrate governance with ESG, risk and compliance data to drive better decision-making.
“The task of accurately reporting on ESG metrics is a mammoth undertaking of data collection and processing. Technology will play a pivotal role in helping companies navigate the climate data challenge; enabling fintech businesses to monitor and act on current and future ESG risks, gaining clarity on evolving regulations and requirements, and fostering collaboration among ESG stakeholders throughout their organisation.
“Intelligent software allows organisations to paint a complete picture of their ESG data and map that data against always-updated standards. Most importantly, it allows leadership to benchmark progress across executive compensation and public perception monitoring. Demands from consumers, investors and other stakeholders are almost certain to grow for businesses to deliver change on environmental and sustainability practices. Technology plays a crucial role in determining how ESG commitments become realities embedded in the way companies operate and not just a passing catchphrase. “
Hristo Borisov, CEO and Co-Founder of Payhawk said:
Three major trends we saw include verticalisation, horizontalisation, and artificial intelligence (AI). Verticalisation is not new for fintech, but the trend is accelerating – adding services and benefits to your leading product to boost revenue. We’ve seen the trend take off significantly in payments and lending, due to digitisation, open APIs, and updated regulations that enable non-banks to enter more segments.
In horizontalisation, we’ve seen non-fintech players jump on the financial services wagon. Big techs like Amazon, Meta, and Alibaba are developing their own payment systems to try and gain more end-to-end efficiency. However this trend is not without risks, and consumer data privacy has been called into question.
“Finally, AI has been huge again. AI has helped fintech companies to predict outcomes better and create more personalised services for customers, detect risks and anticipate consumer behaviour.”
On the future, he said: “Cashless businesses will be even more common in 2022, and fintech will be busy supporting it. The rise of cashless economies – accelerated by COVID-19 – will add pressure to businesses and they will need to prepare. Contactless payments have become the norm, and businesses will need to invest in digital transformation to ensure B2B and B2C payments can be made with virtual and physical cards, as well as digital wallets.
“Blockchain technology will have a significant impact in 2022. Blockchain-powered startups are popping up in different business sectors, based on the speed and security blockchain technology offers. It does however have negative associations with huge energy consumption, which is particularly important for now and the future.
“Big data has been around for a while, and it’s set to get bigger in 2022. Segmentation, the anticipation of consumer needs, managing risk and fraud are several of the benefits of analysing big data in the fintech sector, and these will continue to grow. With more businesses going cashless, data will be easier to collect and work with, enabling fintechs to create personalised offers, products and services for their customers.”
Keith Grose, Head of International at Plaid thinks “2021 was the year alternative payments went mainstream.”
He continued: “Riding on the back of the massive changes Covid brought into all our lives, consumers turned to new digital payments like open banking and BNPL as commerce moved to mobile. It’s grown so fast that now 13% of e-commerce checkouts in Europe are account-to-account based, 40% of UK commerce happens online, and the majority of Western Europeans are shopping online regularly.
“As financial situations for businesses and consumers changed overnight, more people turned to fintech to help manage their lives. Now fintech is used more widely than streaming video services like Netflix and is second only to the internet in the speed of adoption. Plaid’s own Fintech Effect Report found that 88% of Brits have adopted fintech, with 77% feeling greater confidence with their finances thanks to fintech. Importantly, money taboos are also being crushed with 44% of consumers saying that financial tools and apps have now become top dinner table conversation over the last six months.
“Lastly, if you walked – or zoomed – into any of the major financial services conferences in 2021, you probably heard one phrase more than any other: “Open Banking”. This year saw the rapid emergence of account-to-account payments, the shift in perspective from incumbents, and the focus on how disruptive this will be with advances like VRP on the horizon.”
In terms of the future, he said: “2021 brought the realisation to the fore that banks, third party providers and the regulator need to work together to create a smooth and enjoyable customer experience with financial services and apps. The FCA’s latest developments in changing the 90-day reauthentication will remove so many barriers and turbocharge innovation in the sector to improve consumer outcomes. In 2022, we’ll see many capitalising on these changes, creating a ‘people first’ experience and we expect to see 10 million Brits will have made a payment using Open Banking by the end of the year.
“In a similar vein, embedded finance will hit the major leagues in 2022 in an effort to reduce friction in payments. Incumbent banks and financial institutions, and non-financial companies want to find new ways to attract and retain customers, boost engagement and simplify money movement and we believe that embedded finance will provide the answer to do so. We’ve already seen the likes of Peloton adopting an embedded point of sale lending with its partnership with Klarna, Uber’s in-app payment and digital wallets like Apple, Google and Samsung showing the opportunity it creates. In 2022, I predict we’ll see a Fortune 50 tech company launching a financial service product using embedded finance.”
Unlimint’s head of Japan, Katsuhiko Shirasaki, shares his insights and predictions on the Japanese market
“In Japan, cash remains as the dominant payment method, especially on small payments. However the use of credit cards, e-money, and debit cards is also increasing due to the influence of the government’s promotion of cashless payments. Currently, about 80% of people use a combination of cashless payments and cash together in their daily shopping. However, it is expected that the percentage of cash usage will decrease year by year.
“Additionally, the usage of alternative payment aggregators, including PayPay, Rakuten Pay, Line Pay, SUICA (transportation IC payment), etc. are increasing. It can be noted that the steady adoption of these methods is due to the benefits consumers are rewarded with, such as discounts and a ‘points’ reward system.
“COVID-19 had significant impact on merchants, as they rapidly were forced to alter their companies’ processes, sales channels and increase business efficiency. The key takeaways are (1) promotion of marketing through omni-channel utilising new communication channels such as SNS. (2) promotion of cross-border e-commerce initiatives.(3) digitisation of business processes.
“Notably, an increasing number of companies are considering entering the cross-border e-commerce market, in addition to the traditional domestic e-commerce sales. In practising cross-border e-commerce, the need for adoption of a diverse range or payment methods will be unavoidable, in order to create a seamless service in each region.
“Credit cards remain the number one payment method used in the traditional Japanese e-commerce market. Until now, convenience store payments have been inundated by credit card purchases, but recently a shift into the use of new cashless payments such as PayPay and Rakuten Pay has begun to increase. This trend will assuredly continue in the future.
“Last but not least, it is known that Japanese people have more experience in purchasing products and services using overseas e-commerce websites than people in other countries. Many overseas merchants who have sold products and services to Japanese people, living in Japan, make good use of internet advertising including SNS such as Instagram. Access to market is imperative to generating sales, and so merchants will rely on digital marketing to access new markets overseas. In addition, in order to successfully create a sale to Japan, the necessity of providing convenient and familiar payment methods, which are known to the community is imperative.”
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.