What’s Up In Fintech
By Nicole Casperson
On Thursdays, I share news stories and trending pieces I’m keeping tabs on. Consider it your shortcut to shifting through the noise in the fintech news world.
#1 FaaS Market Projected To Hit $995 Billion By 2032
Welcome to the world of Fintech as a Service (FaaS), where businesses of all shapes and sizes can dive into the pool of flexible and budget-friendly fintech solutions. According to the folks over at Global Market Insights, the FaaS market is set to skyrocket to a whopping $995.9 billion by 2032.
But what’s all the buzz about? Well, it boils down to something pretty simple: an unstoppable craving for financial solutions that are smooth, scalable, and don’t break the bank. FaaS providers are the backstage heroes, dishing out a smorgasbord of services – think payment processing, lending platforms, risk management, and compliance tools. When businesses hop on the FaaS train, they can focus on what they do best while riding the fintech innovation wave.
However, FaaS isn’t just about convenience and saving a few bucks. Here’s why it’s got a lot more street cred than you might think:
Financial Democracy: FaaS spreads the wealth, allowing even the little guys to get their hands on top-notch financial tech. It’s like a level playing field where startups and small businesses can throw their hats into the ring, sparking innovation and competition.
Rolling with the Punches: In a world where change is the only constant, agility is a superpower. FaaS gives businesses the power to pivot swiftly when industry dynamics or customer preferences move along with cultural shifts. This ensures they stay relevant.
AI and ML: Inside FaaS, there’s a whole world of AI and ML wizardry happening. This tech helps providers offer nifty solutions like automated underwriting and fraud detection. Imagine AI sorting through mountains of data for real-time insights or ML fine-tuning financial processes like a pro.
Mobile Banking: Mobile banking is the new black, and FaaS is the fashion designer behind it. This growth trend makes life easier for users and saves mobile banking providers from having to break the bank on development costs.
Financial Inclusion: In regions like the Asia Pacific, FaaS is the superhero behind financial inclusion. With plenty of unbanked folks and supportive governments, FaaS providers are the Avengers of financial services, promoting financial literacy and economic growth.
Industry Evolution: Big players like Envestnet, Adyen, Block, and Mastercard aren’t sitting on their hands. They’re making moves in the FaaS realm, shaking up the industry with mergers, acquisitions, and partnerships. It’s all about personalizing banking products and pushing fintech’s boundaries.
Fintech is dead? As if. Get ready to ride the fintech wave because it’s only just starting to swell.
#2 Bloom Money: Bridging Financial Gaps with Trust and Tech
Picture a world where trust isn’t just a word but the cornerstone of your financial security. Enter Bloom Money, a UK-based fintech on a mission to digitize the practice known as “rotating savings and credit association” (ROSCA), deeply embedded in ethnic communities worldwide.
ROSCA is the kind of system that unites communities. It’s about people coming together to create a financial support network, saving and lending among themselves. It’s a beautiful concept, except for one glaring issue: conventional banking systems often discriminate against minority communities. Nina Mohanty, Bloom Money’s CEO, knows this all too well.
“Some of it is just blatant racism,” she says in TechCrunch. “We don’t have clear red-lining like in the U.S., but there are definitely postcode look-ups.”
Mohanty, a daughter of immigrants herself, moved to the UK and experienced firsthand the financial challenges faced by immigrants. Her passion for economic justice and opportunity ignited Bloom Money.
Why It Matters. Bloom Money isn’t your typical fintech; it’s a catalyst for financial inclusion and empowerment. Their digital platform, offering “Bloom circles” for sharing and saving money, goes beyond finance; it paves the way for a communal way to build generational wealth for communities who need it most. In a world where trust and security are paramount, Bloom Money safeguards funds through an electronic money institution, ensuring peace of mind for users.
Despite facing initial misunderstandings and even prejudice from investors, Bloom Money’s unwavering dedication to diversity shines through. Their cap table boasts nearly 70% women, almost 50% from minority backgrounds, and about half as first or second-generation immigrants. In essence, Bloom Money isn’t just a fintech; it’s a force for a fairer financial future, combining trust and technology to drive financial inclusion and empowerment for all.
#3 FedNow, Now What?
After years of anticipation, the Federal Reserve announced in July the launch of its long-awaited faster payment system, known as FedNow. This move has been met with both excitement and confusion. So let’s break it down.
What is FedNow? It’s an updated payment infrastructure that allows for real-time money transfers between banks, similar to how apps like Venmo and Cash App work for individuals. This means you can pay bills and make transactions instantly, even on due dates, eliminating late fees. It’s launching with 41 banks, including JPMorgan Chase, BNY Mellon, and U.S. Bancorp, and 15 service providers approved to use its services.
Pros and Cons of FedNow. On the positive side, FedNow promises to benefit lower and middle-income individuals by providing faster access to funds, potentially reducing the need for predatory payday loans. It will also operate 24/7, 365 days a year, and transaction costs are expected to be lower than existing solutions, which could benefit consumers.
However, there are challenges. Financial institutions must choose to opt-in to FedNow, and concerns about fraud and risk controls remain as most of that responsibility remains with the financial institutions. Pricing also remains uncertain, with potential costs to consumers. Additionally, interoperability with existing payment methods must be addressed.
Why It Matters. Only 1.2% of all payments in the U.S. are currently sent via faster payments.
FedNow’s launch represents a significant step toward modernizing the U.S. payment system, bringing it in line with international counterparts like the UK, Brazil and India. This move is expected to stimulate competition, resulting in more efficient and affordable payment options for consumers.
However, widespread adoption and addressing operational challenges remain crucial for FedNow to achieve its potential in transforming the U.S. payment landscape. We’ll be closely watching how FedNow evolves in the coming years and its impact on everyday financial transactions.
MARK YOUR CALENDARS
A Week In The Life
Tune in every Thursday to keep in the loop on the best fintech events happening each week! Whether it’s an online meetup or a fintech conference, these gatherings provide amazing opportunities to network, learn and connect with our incredible fintech community.
So, let’s fill up those calendars with all the awesome events out there – I’d love to see you at one, or even better, if you have one you’d like to share, please let me know!
- [ANYWHERE] It’s Labor Day, and I hope you don’t spend it working or consuming any work-related content. I recommend going to a museum, park, or beach and spending time outside, getting inspired while being surrounded by people who bring you energy and light. I’m spending my Labor Day exploring my favorite city while having a band night with my closest friends. Cheers!
- [Virtual/IRL] A Global Perspective on Embedded Finance, with Ahon Sarkar: What does the future of embedded finance look like in countries experiencing a financial revolution, with cultural norms so different from our own? Join me and my friend Ahon Sarkar, as we chat about the homogeneity of cultural spending across the world, including the rising appetite for greater access to wealth management in India, South Korea, and India. Plus, Ahon and I discuss the challenges niche embedded finance companies face in creating a sustainable business model and generate a few potential solutions to solve the drop-off problem.
- [VIRTUAL] Lending Smarter With Cash Flow Data: Join me and some of the best minds from Plaid, SoFi, and Oportun as I moderate a Tech Talk to discuss the latest innovations in the credit space! We will explore how lenders are incorporating cash flow data into their existing credit models and the impact it has on both consumers and lenders. Don’t miss this invaluable opportunity to get a first-hand look at some of the key changes going on in the industry. Save your spot here!
- [NYC] The Artificial Intelligence and Finance Summit: A full day of educational insight via panels, lectures, and networking. Taking part in the event will be some of the brightest minds in the field, offering their valuable insights into how AI is changing the finance world as we know it.
- [HUNTINGTON BEACH] Real Talk Summer Stroll: I’ll be in California, baby! So while I’m here for a short time, I wanted to be sure and create an opportunity for my California fintech baddies to come through and hangout. I’ll be posted up at a coffee shop along the PCH. Details & RSVP here. Come through! I’d love to meet you while enjoying the beach vibes.
- [HUNTINGTON BEACH] Future Proof Festival: Are you ready for Future Proof Festival round two? If so, make sure you don’t miss my session on the future of Wealth Management and AI. Together with AI expert Ravi Koka, we’ll be giving you the insider scoop on what to expect as AI takes the wheel when it comes to financial advice, planning, and management. We’ve got all the juicy details – from the latest trends to the most innovative solutions – to keep you informed and ready for the future of financial services. So, don’t miss out – join us!
HUMANS OF FINTECH
Amy Schultz, Bolder Money
At Bolder Money, Amy Schultz is the Co-Founder and Head Money Coach passionate about helping people understand their relationship with money. She began her career in finance, but realized that a practical and human approach was needed to help people manage their wealth. As a Certified Money Coach, she combines her financial expertise with powerful coaching principles to help people overcome unconscious behaviors, patterns, and beliefs around money that prevent them from building the life they desire. To make her services more accessible, Bolder Money has just launched a membership for anyone looking to bring holistic financial guidance to their community or team. Check out the details, here.