Fintech’s Growth Potential In A Bear Market

 

In the early 2010s, pundits wondered whether Europe would spawn billion-dollar tech companies. As 2023 begins, the European tech ecosystem has spawned around 150 unicorns. Fintech success stories like Revolut, Checkout.com and Adyen are leading the way with incredible success rates. Fintech has been the crown jewel of the European tech industry for over a decade.

But after a decade of tremendous growth, fintech is weathering its first big storm. Already feeling the effects of the tech slump, layoffs, cost of living crisis and looming recession, the Wall Street Journal news that fintechs will outperform both financial and tech stocks in 2022 comes as a surprise. It’s depressing, if not what it should be.

Vulnerability to rising interest rates, the disappearance of the pandemic’s catalyst, and increased focus on profitable companies and those with a clear path to profitability have all been cited as reasons for the poor performance of fintech stocks. I’m here. These are all valid arguments that hit the industry particularly hard, not just fintech.

14.5 Million Tickets a Day

But don’t believe everything you read. With the phrase “the higher you climb, the harder it is to fall” come to mind, there seems to be a long line of industry experts desperate to declare the end of the Fintech innovation era. In a country where 14.5 million tickets are still created daily, it’s strange that journalists are so quick to dismiss fintech innovations.

The truth is that fintech is already transforming the business and personal finances of millions of people around the world. Think of the millions of people who carry Revolut and Monzo cards in their wallets, as well as the innovations that improved legacy banking systems and his B2B technology that increased consumer security, privacy and risk. . Or it could be businesses that survived thanks to SME financial platforms, or merchants using digital payment devices. It’s only in Europe. Fintech is making an even bigger impact in emerging markets through online money transfers, microcredit and mobile payments.

To say that fintech is on the brink of collapse is to ignore the scale of the digital transformation already happening in the global financial industry.

Indeed, despite economic turmoil, despite short-term setbacks, despite market corrections, fintech will continue to attract significant venture capital in 2023. There is plenty of dry powder available for investors, and fintech innovation remains a strong option.

Cheques vs. Checks

Many financial services are still outdated — take another look at our checks. Should we say friends writing checks across the Atlantic? Now more than ever, every euro counts. Today, fintech companies can create tremendous value by improving their corporate finance back office functions and running healthier businesses.

The current economic climate makes it difficult for fintech entrepreneurs to raise capital unless they show traction. At the same time, crises present opportunities. Over the past year, Antler has received a record number of applications from aspiring founders, especially supporting fintech startups addressing the challenges posed by the cost of living crisis and strong signs of an impending recession I’ve been Entrepreneurs are using technology to help consumers pay off debt more efficiently, get mortgage approvals faster, and access BNPL services to manage their personal and/or business finances. increase.

Originally published at https://businessdor.com on January 27, 2023.