As Bob Dylan once sang, “The Times They Are A-Changing”, and this is especially true of today’s fintech industry, which urgently needs a step change – one that makes use of rapid and strategic adaptation measures that could define the long-term survival of many companies, writes Pat Patel in an article for finews.asia.
The origins of fintech go back to the global financial crisis of 2007-2008, when financial institutions suffered huge losses and needed government assistance to survive. In the same period, mobile technology grew exponentially, which further gave rise to a new type of financial institution. Web 2.0 created opportunities for fintech companies by leveraging mobile, social and cloud.
Since then, fintech has grown at an unprecedented rate. In 2021, global venture funding reached a record high of $620.8 billion invested in FinTech. This saw a double increase from the previous high of $294 billion in 2020, and shows a 111 percent increase from $294 billion in 2020 to $621 billion in 2021.
Valuations cut
But as market liquidity increased and fundraising reached record levels, things turned around in early 2022. Both public and private markets have since taken a beating and are experiencing an average decline in growth rates. Valuations have been cut and IPOs have flattered to deceive – and these have affected several sectors of technology. The end state is no longer clear and the term “unicorn” should be seriously questioned as any kind of meaningful metric or term.
The art of valuation has always been subjective, and when you’re in markets that radiate optimism, the seriousness of the future supersedes the present. Clearly, for many fintech companies, especially startups, it is time to be realistic about valuations and rethink their business strategy.
Urgent step change
As Bob Dylan once sang “The Times They Are A-Changing”, and that is especially true for today’s fintech industry, which is in urgent need of a step change – one that makes use of rapid and strategic adaptation measures that could define the long-term survival of many companies.
The discussions around topics like these will take place at the upcoming Singapore Fintech Festival (SFF) from 2 to 4 November 2022. SFF is the world’s largest and most impactful FinTech festival, and serves as a knowledge platform for the global FinTech community. It is the brainchild of the Monetary Authority of Singapore (MAS) and our staff at Elevandi – a non-profit entity set up by MAS to connect people and businesses, ideas and insights in the fintech sector in Singapore and globally.
At Elevandi, our core commitment is to continue to create an open dialogue and a safe and inclusive environment for fintech companies to not only survive, but thrive.
Challenges in the financial sector
Since its inception in 2016, SFF’s annual theme has been carefully selected to reflect the prevailing opportunities and challenges in the financial sector – and this year’s edition, with the apt theme “Building Resilient Business Models amid Volatility and Change”, will provide a unique opportunity for thought leaders. to exchange valuable insights, and build relationships that go beyond business transactions.
Government leaders, regulators, financial services leaders, entrepreneurs, investors and technology experts from around the world will have the opportunity to meet face-to-face, participate in knowledge-sharing sessions that will benefit their organizations across the region and beyond with a focus on being viable, responsible and inclusive FinTech companies today and tomorrow.
The rise of open banking
After the last few years of uncertainty, fintech firms need to find ways to ensure they have the right business models and infrastructure in place to set themselves up for the future. But beyond profits and economic growth, businesses must serve a greater purpose, which is to improve people’s lives.
For example, the rise of open banking services in the region has shown how cooperation between the public and private sectors can benefit previously marginalized communities. At the same time, necessary precautions must be taken by stepping up cyber security measures.
Still borderless financial world
In this increasingly borderless financial world, Elevandi has been set up with the intention of promoting a more open dialogue between the public and private sectors. Charting new paths in this digital economy can be challenging, but with the right collaborations we can build an ecosystem that works in the long run.
Pat Patel currently working to build collaborative fintech ecosystems across South Asia, Africa and Europe at the national and industry level. After a period leading the International Fintech Office at the Monetary Authority of Singapore (MAS), he led the launch of Elevandi, a company created by MAS to promote an active dialogue between the public and private sectors to drive fintech in the digital the economy. Prior to MAS, he led Money20/20’s growth into Europe, Singapore and China, following stints in the payments and insurance sectors.
