Despite financial uncertainty, Fintech executives are ready to build
With interest rate hikes, a “cryptocurrency winter” and growing stagflation or recession concerns, there is at best a general sense of uncertainty – and at worst pessimism – about the current state of the financial markets.
It has “Big Tech” companies and investors in turn. But local fintech executives see unique reasons to be optimistic right now. That was the general consensus at two fintech-focused conferences this week, Fintech South in Atlanta and Fintech & Insurtech Generations in Charlotte. Both conferences highlighted how founders and investors are reimagining the role of technology in the post-pandemic areas of financial services, banking and payments. And as more complex challenges emerge, many local fintech leaders say the Southeast is ready to tackle fintech’s next major challenges.
Can Southeast Fintech face the moment?
“Meeting the moment” was a key theme of the week, which underpins how fintechs position themselves to help consumers and businesses cope with any upcoming financial storm.
“Those of us who have been in business for a few decades have seen the cycles, but they look different. There will always be nuances that we are not ready for. But the FinTech industry has such an incredible opportunity now because payments, for me, is the great equalization, said Lara HodgsonPresident and CEO of Now.
Hodgson spoke with Hypepotamus after her talk on financial inclusion at Fintech South. Financial inclusion is what Now tackles by offering faster invoicing solutions to small businesses. As Hodgson explained, this helps to “level the playing field for small and underrepresented businesses” as they can compete for larger projects with more competitive terms.
Financial equity and inclusion were a major issue that emerged from the pandemic. This helped trigger a new amount of banking alternatives and credit-focused startups in the Southeast. As the pandemic takes on a new form in 2022 and companies prepare for an uncertain future, areas in fintech such as BNPL, embedded finance, fractional investment, blockchain, crypto, and yes … even the role of the meta-verse in financial services is central.
Many fintech first-movers focused on solutions that competed directly with banks and other older financial institutions. Since the pandemic began, we have seen a new wave of startups building technology solutions aimed at credit unions and community banks, to help these organizations modernize operations. and better compete with fintechs and other larger established companies, »said Lucas Timberlakeco-founder at Fintech Ventures Fund.
BNPL (buy-now-pay-later) is a special area of interest for both large companies and startups. As Mastercards Les Matthews explained during its panel in Charlotte this week, the BNPL could be “another tool for managing finances” and could help “diversity and expand someone’s purchasing power.”
But the place is constantly changing as big players, such as Mastercard and Apple, come in and early players like Klarna have struggled with layoffs and losses lately. Despite the challenge in the BNPL area, Matthews said there is opportunity for those who can bring a better consumer experience to market and those who can figure out how to improve loyalty and access to credit along the way.
STATE OF FINTECH: SIGNS OF OPTIMISM?
How much fintech startups can isolate themselves from market turmoil in the coming months is an open question. But external capital has not stopped completely, as investors are looking for fintech startups that tackle large gaps in space.
“I’m still quite optimistic about early-stage fintech investments, and I do not yet see a significant decline in the pre-seed / seed stages in terms of invested dollar volume or valuations. At Series A level and beyond, we are seeing a noticeable decline in funding availability and value adjustments, which had to happen at a time, given where the market had moved to, Timberlake added.
Keep Financial (launched by Kabbage’s co-founders), FilmHedge, Groundfloor and Wayflyer all announced significant external investment rounds this year. (TAGs 2022 Fintech Ecosystem the report goes deeper into the trends and the latest major measures for those who want to explore more).
Pre-seed through Series A funding has also seen some significant headlines this year. Verdata, Charityvest, Uplinq, Hello Donor, Ledgible, Audit Sight, Layr, Gridline, Bear Tax and Alto Solutions raised venture capital funds in the first half of 2022. This is because funding for global fintech companies fell 18% quarter-on-quarter, according to CB Insights.
Financing is not the only reason for optimism. The local fintech scene has continued to attract new talent and expand its overall talent pool recently, with news that startups like Capital on Tap are expanding their footprint in the city.
Capital on Tap, which just crossed 200,000 customers in the SMB credit card area, said that moving into Atlanta was a strategic decision for the scaling company. It recently raised $ 200 million in funding for expansion efforts.
“In Atlanta, our customer service agents sit in the same office as corporate employees. We work together every day and share insights from both sides, all to better support and communicate with our customers.” Kiera Wiatrak from Capital on Tap, told Hypepotamus. “We can not control the economy, but we can offer the best possible product and experience to help small businesses cope in the tough times and thrive in the better ones. “
Another reason for optimism: Companies like Visa are expanding their footprint in Atlanta specifically to capture local fintech talent. The credit card giant is ATDC’s latest corporate sponsor, and if attendance at this week’s Entrepreneurs Night was any indication, the local fintech community is ready to start building.
