10 things I crystal ball about fintech
10 things I crystal ball about fintech
I’m a sucker for a good listicle this time of year. Let’s get excited about the sea change we are all going to be a part of in 2022. We’re not just changing financial services, but we’re influencing culture.
Here are the 10 things I 🔮 about fintech in reverse order.
I hope you enjoy ⚡ 💛
#10: Consumer tech keeps on keeping on
Fintech has reached mass adoption. Thanks to fintech throwing all its energy into B2B infrastructure over the last decade, consumer fintech is ripe for even more growth in areas like:
→ Serving the creator economy with best practices for income generation & wealth management
→ Robo-advising (which in its current form is comme ci comme ça). Fintech needs to help build that hybrid product, where users take real control of their money while having some amount of automation involved.
→ Investing apps remain influential, but the one that can capture a loyal user base that’s willing to use their platform for all their finserv needs will win.
#9: International e-commerce
I believe in businesses that use fintech to uplift others and influence culture. Sometimes that means preserving it.
That’s why I’m keeping my eyes on fintechs like Treinta, a startup providing e-commerce for SMEs via a mobile app that lets them set up their own online shop.
→ Digitization is low in LatAm despite SMEs making up such a huge part of the economy. In fact, of LatAm’s more than 50 million micro and small businesses, 90% have not digitized basic business accounting and management processes.
→ E-commerce tech has not reached LatAm in the same way as the U.S. (Amazon isn’t a thing) There is so much room to grow. LatAm fintech funding hit $9.8B this year, up 211% from full-year 2020.
#8: Alternatives forever
For decades, investors have put their financial future in the hands of ol’ reliable: the 60/40 rule. Fintechs today are saying RIP to traditional allocations and embracing diversification.
→ The aggregate value of alts, $4.1 trillion in 2010, is projected to increase over 300% to $17.2 trillion, by 2025.
→ Turns out, the demand for owning physical art by artists like Jean-Michel Basquiat, Francis Bacon, Mark Rothko, and Andy Warhol is soaring. Investors can get their hands on these via platforms like Yieldstreet.
→ Fine wine, too, is an asset class that’s traditionally only been available to less than 1% of all investors (and one that’s appreciated 127% over the last 10 years). It’s become more accessible thanks to apps like Vinovest.
Every investment-based fintech is going to have to offer alts to keep up with the competition.
#7: Embedded finance
How will fintechs leverage embedded finance to make waves in 2022?
→ Via embedded procurement, which means businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant.
→ This is the next wave of embedded finance: The opportunity for fintechs to expand their software offerings catering to a specific industry by managing inventory, aggregating demand, and then leveraging scale to negotiate more favorable pricing.
→ This opens the door for fintechs to become one stop B2B shops.
#6: Wealth tech ecosystems
Access and customization are going to continue to be table stakes.
How does this happen?
→ Account aggregation, the process in which data from many — or all — of an individual’s or household’s financial accounts are collected in one place.
→ The opportunity is in the data and the technology’s ability to take notes from each other so that data can convert insights and appropriate actions over the course of the accumulation and drawdown of assets.
→ Ultimately, wealth managers will be held to a higher standard, and they need to automate the coordination of client accounts to give suitable advice.
#5: Robots or raises
The Great Resignation is very real as we’ve all come to terms with work from home, burnout, and leaving jobs for new ones that align with our values.
In fintech, it’ll be interesting to see how the industry adapts to robots for automating tedious tasks and increasing raises for humans to do more critical tasks.
→ I predict the change in employment leaves room for more diverse and innovative leaders from outside financial services to enter fintech and make real waves.
→ Companies will be able to fill automated tasks with robots, but the human connection is always going to be necessary when running any business.
→ Fintech in particular needs humans. It’s already a tech-heavy game, which actually means that humans become even more critical to connecting with the end user.
#4: Women in VC change the game
When it comes to fintech, we have to remember that the systems have been built by and for the demographic majority, so it’s not entirely shocking they can’t get things right.
→ In 2022, I see more emphasis on building new companies inside of fintech that focus on the vast talent of women, BIPOC, and those with cognitive differences that are constantly innovating within the industry, but aren’t receiving the VC $$.
→ We keep demystifying a “pipeline problem” that is straight BS. Fintech investor Anthemis Group, for one, has deployed 40% of its capital into companies that are backed by women or people of color in fintech.
→ Content leaders (calling on folks like myself) intentionally include and uplift the stories of diverse leaders in fintech to truly shape the industry with innovation and inclusion.
Anthemis is changing the game, but we need more fintech leaders and investors to be diligent about intentional inclusion.
#3: ESG & SRI investing
Growing inequities, moments of social reckoning and a broad recognition that the decarbonization of the economy must begin have spurred more investors than ever to use their wealth to push for change.
→ Environmental, social and governance investing is a $17 trillion market and will only grow as more investors aim to align their investments with their values.
→ Sarah Kirshbaum Levy, CEO of Betterment does a great job breaking down the future of SRI investing and how it’ll impact our world moving forward in this episode of WTFintech?
#2: Women, youth, BIPOC as an economic and financial power
Diversity is where innovation lives, and I believe the influx of more women, young people, and BIPOC interested in financial services will only continue to grow in 2022 and beyond.
→ Fintech gains so much from the diversity of perspective, but you need to be very intentional about it because just having a diverse roster is not sufficient.
→ Everyone must have a seat at the table and a voice in the discussion. That’s what inclusion is. (Diversity includes gender, race and ethnicity, but also where people have lived and worked.)
→ Diverse groups have always had to be prudent with managing resources; they have had to think, look ahead, and plan for risks. These skills are invaluable for the next wave of fintech.
#1: Crypto, blockchain, DeFi, web3
Duh. I could end this No. 1 mention right here.
But ICYMI, 2021 was dominated by all things crypto, blockchain, and web3 ~ and thank goodness! It’s time for change, like real change, to shake finserv up.
What better way to do it than being a part of a completely new system that throws out old business models and scares the sh*t out of traditionalist?
I’m game, and so are venture capitalists: They invested a record $30 billion in crypto in 2021.
→ Blockchain as a service will rise as the industry works to communicate the benefits of “Bitcoin” with a capital “B” instead of focusing on “Little b” bitcoin.
→ Gifting NFTs & hanging out with friends in the metaverse become more mainstream and will be to 2022 what TikTok was to 2020.
→ The folks at the heart of the crypto industry do a better job at communicating the benefits of crypto to everyday people.
The freshest episode of the WTFintech? podcast is ready for listening! Featuring Miguel Fernandez, co-founder, and CEO of Capchase, this episode is a must-listen for anyone starting a business in fintech.
→ In this episode, we dive deeper into Miguel’s values and how Capchase is breaking the creative bankruptcy that has existed in the world of B2B.
I also launched the podcast series with two different powerhouses in fintech: Lule Demmissie, CEO of eToro U.S., and Sarah Levy, CEO of Betterment.
If you’d like inspirational and educational content to fill your ears while you relax during your break:
Listen to Lule’s episode here.
Listen to Sarah’s episode here.
Listen to Miguel’s episode here.
Watch episodes on YouTube here.