Why fintech is still a decade behind adtech

Willie Pang.

Willie Pang, CEO of Limepay

The booming industry that it was, and continues to be, adtech has undoubtedly gone through its ups and downs over the years. Having worked in the industry for over two decades, I have seen first hand these changes come into the light and then back into the dark again.

But only since moving into the parallel industry of fintech have I noticed some similarities that arguably place adtechadtech a decade ahead. This raises the question: Is fintech’s future determined by adtech’s past?

There are three key areas worth unpacking. The first is related to data and value exchange (hint, in advertising and marketing we have failed on this front). The second is the existence of too many siled point solutions and a need for aggregation. And last but not least is the increasing convergence between the finance and marketing ecosystems.

One. Data and value exchange.
When we look at the trends side by side, the use of data appears as a symbiotic relationship that both industries have at their core. Yes, it’s true that every successful business has data at its core – regardless of industry – but the way it’s used is the key here.

The “cookie” system has long been used by adtech to build user profiles, leverage opt-in information and preferences to better understand customers – which in turn allows them to better sell free products and services. From a fintech perspective, payments data now has a similar treasure trove of rich data that can be leveraged to define users and their personas – it’s the way users consume that brands need and want to understand better, and payments data provides exactly this insight.

One could argue that as the cookie approaches extinction, payment data could deliver the next wave of insights brands require to maintain a level of personalization that meets the high expectations of today’s customers. But again, this data needs to be sourced responsibly, and this is where the opportunity for embedded finance melts into the marketing sphere.

With the rise of open banking services and data sharing within the banking and financial industry, the floodgates for data access are opening again. Where bankers need to learn from marketers the most is how to transparently share the benefits of this value exchange with their customers and give them choice. It may sound utopian, but I think it’s fair for consumers and businesses to give permission for data access in exchange for faster access and movement of money – think digital wallets, bill payments, automated loan applications… the list goes on.

Where advertising made a strategic mistake years ago was trying to hide this choice, to be used as a secret weapon to increase advertising yield and increase sales. We cannot let this mistake happen again. Data should not be feared, it should be embraced.

Two. Too many silos make it impossible for marketers to harness their power.

This brings me to my second point about why fintech will indeed follow in the footsteps of adtech. A decade ago, the adtech industry had a myriad of niche tech startups, all specializing in a small piece of the broader adtech puzzle. Slowly but surely this led to consolidation as the ‘big players’ in the industry outcompeted or absorbed such ‘small players’.

In fintech, we see a very similar pattern emerging. While banks still work with fintechs, we are seeing more and more fintechs bought out by dominant industry players – again following in the footsteps of ad-tech, which met its fate a decade ago with the acquisition of leading startups by industry giants.

Three. The convergence is coming.
It’s not all doom and gloom though. For now, the relationship between ad-techs and embedded finance provided by fintechs offers a unique opportunity to close the loop and allow payments to elevate the total experience a customer has with a brand, while in exchange for that experience, it gives brands additional insight into who, what, why and when customers convert. Brands that recognize the value exchange within the adtech and fintech relationship will win, and until we see the fintech industry converge, it is likely that these brands will continue to win.

Looking at it holistically, it is possible that both fintech and ad-tech can work together to deliver the holy grail of the customer journey and truly understand what the key to conversion actually is. Embedded financial platforms are often provided by fintechs, providing brands with “white-labeled” payment options for users to transact seamlessly. Not only do they support a seamless user journey, but the fact that the user is shopping in the same ecosystem means that brands can leverage their payment ecosystem to gain more insight into purchasing decisions and payments.

But it’s not just about using this data to sell. More and more, we’re seeing what we consider “responsible” use of payment data, where brands leverage insights about payments to better understand spending patterns and support financial health. Especially amid the rise of Buy Now, Pay Later platforms are being held accountable for supporting the customer’s financial health.

Knowing the power of payment data, we’re starting to see new e-commerce ecosystems, like Commbank’s Cheddar, emerge. By offering deals for consumers to buy brands and services, Cheddar has turned traditional banking on its head, turning the relationship between brands and banks as they also begin to tap into the revenue opportunities such holistic ecosystems offer.

As a fintech operator, I know that it is still early days before the industry reaches its full potential. But I hope that the fintech sector can use the lessons learned from the adtech journey to build a better path to a converged future.