Three Trends Coming Out Of Money20/20

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We are well ahead of 2020, but the prestigious convention of fintech, M20/20 Still humming with possibility and future.

Coming out of the event, after 100+ conversations, three topics emerged.

1. Search for Unreserved Categories

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As Adam Nash told me: “In fintech, we have handled everything from spending to saving to lending. Still, there are many other needs that the same disruptive forces can unlock”.

In many ways, the first wave of fintech digitized individual product lines and opened the bank. another, rebuilt it, Nevertheless, many pieces of the ecosystem are still largely offline.

Adam’s New Company (short for Donor-Advised Fund for You) focuses on building a habit, helping members set aside money for charity, one such seamless category.

Even within sub-sectors where a lot of venture capital has flown in, there is white space. Alex Tong, an investor at Information Venture Partners, shared that in the crowded insurtech space, “there are only a few vendors dealing with life and health.”

Of course, it is not only certain verticals that are underserved, but also certain customer segments. For example, “99% of international students in the US are excluded from traditional lending options due to the lack of a US citizen co-signer. By tapping into new sources of data, and through digital platforms (eg physical branches) By reducing the cost to service, fintechs are able to address an already underserved or under-served customer segment”, says Manu Smadja, CEO mpower financingA LendTech for high-promise international students in North America.

Some new categories are also emerging. Climate change is causing pain across the spectrum – insurers trying to better understand their risks, and lend their risk by example. Similarly cyber risk is replacing risk exposure for insurance companies. New categories are emerging to serve this space.

2. Localizing a Global Story

Fintech has become a global startup category with unicorns across the globe. In some markets, fintech is the dominant startup category. For example, I wrote earlier that the majority of unicorns in sub-Saharan Africa were in fintech.

Yet, despite the industry’s global importance, the winners remain largely local.

As CEO and Co-Founder of Brazilian Fintech Unicorn Joo Del Valle EBANX commented, “It is an ongoing climb to maintain multi-regional payment platforms. To support multiple card schemes and alternative payment methods in Chile, to tax management in Argentina, Colombia, Brazil, Mexico and Considering similar regulation changes. , all together. To provide consistent services you need to consider a number of local specialties. Some pillars are essential: in-depth knowledge, strong local team and genuine with local partners Relationship. It’s our model, that’s what we live by.”

If anything, fintech complexity can add up. For example in payments, we are expanding rapidly from the world of MasterCard and Visa. Brazil has launched the real-time payment network PIX. Others are following, for example with Minka in Colombia. India pioneered the Universal ID scheme Aadhaar with a set of APIs, including fintech, built above.

This globalization adds to the complexity.

“Local expertise is incredibly important in fintech platforms, especially when it comes to accurate identity verification. There are huge differences within identity verification data as it can be accessed locally within different phones, credit headers and public records data sources by country. is created and stored from,” said Johnny Ayers, Founder and CEO. Sauerkraut, “Data usage, storage, retention, and regulatory and privacy requirements vary by country, which adds to the complexity. Region by region and country by country, local expertise is needed to ensure that organizations are not only legal, Meeting regulatory and privacy requirements, but also maximizing customer conversion and fraud detection performance within the framework of that specific country or region.

3. Putting Fintech in Embedded

Everyone in fintech is speaking about embedded-this and embedded-that. It appears that your future bank account may be with your gardener or your dentist.

This is definitely exaggerated. Greg Cohen, CEO fortis, says the growth in embedded payments comes not only from an emphasis on customer experience, but also from the digital transformation movement. Previously, only software companies were able to take advantage of embedded payments, but as more companies go digital first, more will be able to take advantage of that. Embedded payments will help drive this movement, helping companies rethink their business. ,

Where embedded fintech will succeed, it will be part of the existing customer experience, and adds value to it. as the CEO of Chris Dean treasury primean embedded fintech provider explained it to me, “Imagine construction vertical software. Suddenly a contractor can have their supply chain needs and a bank account integrated with a subcontracting portal. All lanes powered by a single fintech engine- Lending, lending and insurance. The same approach works across multiple verticals.”

While not all financial services will be embedded, it will play an important role when it comes to being additive to the ecosystem and convenient to use.

Bonus Topic: Returning to camelnomics

In recent years, the fintech focus was on hyper-growth. But sustainability matters more than ever.

We have seen it in the headlines. Even the biggest fintech players have been laid off. Stripe laid off 14% of its workforce and Chime (a company I invested in a previous firm) laid off 12%.

While the underlying models are strong, the world has changed. Greg Cohen of Fortis explained it: “We are moving from an era of growth to development and are in an environment that must be highly focused on meeting customer needs. In other words, it is more important than ever. That companies are solving real-world problems.”

One observable shift is a conversation that has shifted completely to the camel camp: a focus on sustainable unit economics, managed burn and a long-term outlook. Joo del Valle told me: “Unit economics has always been important, but companies were overtaking reality by raising more capital to maintain revenue growth and deferring this important discussion of business stability. Now, growth Capital is scarce and investor talks will focus on the exact topic that was previously undermined: entity economics.”

In this year’s M20/20, the story was not about growth at all costs. It was about cost management and planning for a long-term bright, sustainable and resilient future.

Ahead of

Ultimately, the existence of persistent unwanted segments and categories, increased complexity in multiple local markets, and the rise of embedded will create opportunities for this segment. Camelnomics would mean innovations would be permanent.

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