18.02.2021

Fintech trends 2020

We have carefully studied several recent studies about Fintech companies and have highlighted some interesting findings that we want to share with you.

CB Insights in their research The State Of Fintech: Investment & Sector Trends To Watch notes a significant increase in banks’ interest in a young audience (including children and adolescents) and technological solutions aimed at it (such as Step, Gimi, Mozper), as well as in products that solve financial problems of small and medium-sized businesses (for example, Lili, Rho, Wise).

In the context of the 2020 crisis, the authors of the study note an increased interest in services in the Buy Now, Pay Later direction (for example, Chase, Lunar, ICICI Bank). At the same time, the total revenue of the direction increased almost 7 times compared to 2016. By the way, there is a parallel decrease in the number of received credit cards. So, we can safely talk about the trend of replacing traditional credit cards with credit and loan services. The crisis also affected the growth in the volume of venture capital deals with investment services and analytical platforms (such as DataRobot, Aumni, MioTech).

Fintech also maintains a global trend towards investor interest in technological solutions that take into account their impact on the environment and society and are aimed at sustainable development. More often than not, such startups (for example, Clim8, Cooler Future, Clarity AI) find themselves in the spotlight of millennial investors.

Anyone interested in Fintech is also advised to read the study The European FinTech Ecosystem Navigating Covid-19 prepared by Dealroom.co jointly with Expand Research and the Boston Consulting Group (BCG). It is curious that in 2020, against the background of a general outflow of investments in almost all areas of Fintech, there has been an impressive growth in the volume of venture capital investments in high-tech startups and support for financial institutions. Also, in the short term, the 2020 crisis had a positive impact on the insurance industry, as expected.

An interesting observation from this study: a whole generation of Fintech companies from Europe, founded during the last financial crisis (2008-2011), today are world leaders in their niches. The authors of the study predict the likelihood of a repetition of similar dynamics with companies that emerged during the current crisis.

In another interesting study The Future of Fintech in Southeast Asia by Dealroom.co (together with Finch Capital and MDI Ventures) there are many interesting trends in Fintech direction in Southeast Asia. First of all, it should be noted that venture capital investments from Asia in European startups remained at the level of 2019 (the record indicators of the second half of 2019 were preserved). Researchers note a real boom in the Internet economy in the region, provoked by an increase in the volume and involvement of a young audience. And here we can draw a parallel with the observations of CB Insights about the growing demand of investors for services for young people.

In 2020, the countries with the largest investments in Fintech in the region are Singapore and Indonesia. In addition to these two countries, Vietnam was included in the list of the most attractive investment opportunities.

The authors of the study predict that new financing models will soon enter the market, different from traditional financial services, and also conclude that more than 100 Fintech companies will disappear between 2020 and 2023, mainly due to consolidation.

Finally, some interesting observations from the study European Venture Report by PitchBook:

  • with an increase in the volume of venture investments in 2020 compared to 2019, the number of transactions decreased (which means that the average transaction amount increased);
  • the volume of exits of Fintech startups has significantly increased;
  • the volume of deals in venture fundraising has grown significantly.

We would like to summarize our review on a positive note: the period of the crisis means, first of all, opportunities for growth. Therefore, we are looking forward to new innovative breakthrough Fintech solutions that will become important financial instruments in the new reality.

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