Fintech Matures from Novel to Necessary

September 30, 2020

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The relationships across many aspects of our lives have profoundly changed in just over six months – work, socialising and many day-to-day activities we previously took for granted have all taken a different form. These shifts are all well storied. But a change in the way we relate to another important area has slipped below the radar: money.

E-commerce and digital payments ballooned around the world as countries went into nationwide lockdowns, and they continue to persist at well above pre-crisis levels. Fears of contagion through the handling of currency has meant cash has fallen even further out of favour. And chances are, if you’ve taken out a loan, mortgage or other financial service recently, you’ve done this online.

However, while we’re likely to have all benefitted from the world of digital financial services, the fintech sector has not remained unscathed by COVID-19, and today, we’re excited to launch a new report, ‘FinTech Driving Global Change: Building a Better Future’. This is a global research report conducted by FleishmanHillard TRUE Global Intelligence in conjunction with Money20/20 (client) that surveyed fintech leaders and experts around the world to hear their perspectives on the future of fintech.

Perhaps one of the key takeaways is that as investors grow cautious, 67% of our fintech experts think early-stage start-ups will struggle to secure funding. On the other side of the coin, 87% do not think that ‘unicorns’ and other late-stage fintechs will struggle. This suggests newer fintechs at the lower end of the market may be an early causality, potentially slowing innovation.

They also believe there will be a greater focus on profitability over hypergrowth, with concern that some businesses may collapse. Lack of funding and the struggle to achieve profitability also means that the majority in the industry (66%) believe there will be a spike in fintech acquisitions in 2021, as traditional financial institutions look for good deals and strategic investments that can help them expand their own digital offerings.

Although we are still in the midst of this crisis, our fintech experts already see opportunities emerging for the sector. The first wave of fintech innovation was born out of the 2008 financial crisis, with fintechs looking to do things better than the banks that failed. This crisis has hit the real economy, revealing groups that are not having their needs met. Sixty-two per cent of respondents believed that the pandemic has highlighted the need for innovation in lending for both small to medium enterprises (SMEs) and consumers; indeed, many cash strapped small businesses couldn’t get funds quick enough to mitigate their cashflow issues, while certain consumer groups remain invisible with no credit score making them ineligible for loans.

As we come to depend on fintechs more in our lives, the responsibility for these companies to not only safeguard our money but to meet our needs and earn our trust has never been higher. Indeed, 77% expect to see an increased focus on customer experience as fintechs and financial services organisations strive to build their reputations.

In this environment, the role of communications for fintech brands to clearly articulate their value is vital. The language of ‘disruption’ is likely to fall on deaf ears when all people want is stability. And with fintech users being notoriously fickle, ready to jump to another app after one bad experience or a shift in public opinion, there is everything to lose. Fintech brands must, therefore, focus on maintaining an authentic voice amongst the chaos to come out better on the other side of this crisis.

Read the FinTech Driving Global Change: Building a Better Future report here.