I just returned from FinovateSpring, where I spent three days watching live product demos, listening to panels and keynote discussions, and shaking hands with new and old connections alike. As with all events, this one showcased new ideas. Unlike other events, however, this year’s FinovateSpring event signified a shift in the fintech landscape.
I’ve summarized this shift, withal with other key themes presented, in seven key takeaways below.
Regulations are here
Pending regulations was a prominent topic at the event, extending vastitude the crypto sector to include traditional finance. Despite many instances of regulatory oversight in the crypto sector over the years, last years’ FTX scandal was big unbearable to raise the red flag for regulators. Since then, traditional banks including Silicon Valley Bank and Cross River Bank have raised concerns well-nigh lack of oversight, and banking-as-a-service, respectively. Regulators are stuff held accountable, and their response to oversight issues is rhadamanthine increasingly important.
Fintechs and banks have shifted to consider regulation increasingly heavily when and how they build products. Not only this, banks have moreover learned that they need to step up their due diligence surpassing partnering with third party players.
AI is rhadamanthine table stakes
The integration of AI has moved vastitude mere discussion and has wilt crucial for fintech firms. They now recognize the need to leverage AI wideness various aspects– including consumer service, personalization, merchantry intelligence, underwriting, and more– to stay competitive and meet consumer expectations.
However, the good news is that it’s easier now than overly for firms to get involved with AI. We saw a few live demos at FinovateSpring that showcased accessible, no-code methods for firms to engage with AI. No developers? No problem.
The froth of 2019 is not coming back
The fintech industry has entered a new phase, and the environment of low interest rates and excessive fundraising we experienced from 2012 to 2019 is not sustainable. Firms must transmute to this new normal by focusing on unit economics and operational efficiency to ensure their survival, as lanugo rounds and exits wilt increasingly prevalent.
Things can only improve. Or will the slide continue?
On our Investor All Stars panel, the venture capitalists on stage expressed differing views on the market trajectory. Three out of four said that in their view, we are bouncing virtually the bottom of the downturn, and that things can only go up from here.
However, many folks I spoke with on the networking floor disagreed with the positive sentiment, and said they thought that the economy would see a downturn surpassing things improve. Consumers are feeling the pain in their wallets, and the looming debt ceiling–as well as a spike in consumer debt– arent helping.
Beyond consumer acquisition
Merely acquiring a large user wiring or having a unique product is no longer sufficient for fintech success. VCs and banks now require a well-spoken monetization strategy and a focus on unit economics. Fintechs must demonstrate how their consumer wiring supports their marrow line in order to vamp investment and partnership opportunities.
Consolidation will continue
In both the financial and fintech sectors, weve seen an uptick in M&A activity. Some of these deals have been unexpected, like the specimen of Silicon Valley Bank’s collapse, for example. At the conference, there was much discussion well-nigh a potential shakeout in the fintech sector. Startups who are running out of funds and cant renew a new round will either have to fold or be acquired. The neobank sector will moreover see a reckoning. Niche neobanks that have launched in the past four years will either have to find a way to mine value from an expanded user group or merge with like-minded fintechs.
Regulatory challenges with DeFi and crypto
Notably woolgathering from the event’s discussions were decentralized finance (DeFi) and cryptocurrencies. In unrelatedness to two years ago, when every session included a discussion well-nigh crypto, only a few presenters brought up the topic at last week’s event. The reason? Regulatory challenges.
Regulatory concerns have spiked due to the fallout from last year’s FTX scandal and other crypto collapses. Regulators fear loss of tenancy with decentralized finance and lack understanding of the underlying mechanics overdue crypto.
Photo by Pixabay
