5 Fall 2022 Fintech observations

Orchestrators

Standards unlock network effects!

There is strong evidence of this in hardware, software, and business processes.

Passporting in the EU is one such example in financial services. The European Commission continues to work towards its vision for a Single Market for financial services. I was pleased to hear at the Milan Fintech Summit that they aim to create Standards that not only principles for standards in other jurisdictions but also avoid introducing new walls / silos with the rest of the world. Of course, not an easy goal but the intention is there, and it matters.

I was super delighted to hear that they are working on Digitizing the licensing process in the EU which currently easily takes 2 years. This digitized harmonization for 27 EU regulators would be a valuable step for all innovators, be they startups or incumbents, and would unlock much faster the network effects of the existing passporting.

The European Commission`s Digital Finance Platform is live now and is a portal to enable more efficient sharing, co-piloting, and engaging in the policy-making processes. For the first time, there will be data and knowledge sharing from all national supervisory bodies which is very valuable for all innovators. The platform also facilitates cross-border testing of applications.

Innovators

Capital allocators play a major role in what products, services, and business models succeed. Right now, it seems that they favor Fintech ventures that have scalability potential through collaborations. Capital allocators are not chasing anymore the Disruptor — I win, they lose — elevator pitch. Convince them that you can build win/win partnerships of any sort, and they will buy your story.

Capital allocators favor Fintech ventures that have scalability potential through collaborations; not the disruptor types.

During the 3-day Milan Fintech Summit, I had the opportunity to hear from Fintech founders, VCs, and innovations from incumbents.

B2B and B2B2C digital offerings are dominant.

Impacting lives is the main narrative of service providers.

Attempts to build in social features in Fintech app designs continue but nothing to write home about yet.

WealthTech for retail

AcomeA, is an Italian independent asset manager, who launched a B2C investment app Gimme5 for retail to save and invest as little as €5. They have now pivoted to a B2B2C offering and aim to reach 1 million end customers via partnerships. They are already in partnership with Credit Agricole Italy. Their app is designed with a social focus.

SME Lending

Lending, lending, lending is starting to make more sense now for banks and incumbents are launching digital lending products. Banco Sella, one of Italy`s incumbent mid-size banks, has launched loans for small companies. They are targeting new clients that need to borrow up to a maximum €30,000 for up to 2 years. Opyn, the SME lending Fintech has already lent €1 Billion to SMEs over the past 10 years. Younited which has a banking license has a BNPL offering focused on large items (up to €50,000) and installments spread out over a maximum of 84 months (7yrs).

Financial Wellness Banking

Early Wage Access (EWA) is becoming more important than ever as the financially fragile population is sadly growing. Salarify is a Fintech out of Hungary and serving for now Eastern Europe but expanding. Their EWA is not a credit product but rather a subscription service for employers to offer their employees free access to their earned wages.

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