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A woman looks at an AI-powered screen. Fintech businesses are evolving to meet consumer needs

The Future of FinTech

Strength in numbers

Our research, conducted through Money20/20’s 2021 global conferences and online polling, explores how FinTech businesses are evolving to meet ever-changing customer needs, from effective partnerships and collaborations to seamless payments, regulation and security.

About the research

Money20/20 is the world’s leading, premium content, sales and networking platform for the global money ecosystem. For a third year, Barclays has partnered with Money20/20 to produce an in-depth report on the future of FinTech.

Usually, Money20/20 holds global conferences three times a year in Asia, Europe, and the US, with live polling of delegates, but in 2020 Money20/20 took its leading content programme online as MoneyFest. However, a partial return to physical events was possible in 2021; the results shared in this report were collected through in-person surveys in Europe and the US and online polling.

With a total of 994 respondents, we have been able to produce detailed research on how the industry has progressed over the last three years and what we could expect to see going forward.

Take a look at our latest report, ‘Strength in numbers’, to explore how FinTechs are adapting to keep up with ever-changing customer demand:

You can find our previous 2019 and 2020 reports here.

Read the highlights

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  • Growth through adaption

    We know that the FinTech sector is growing. Following the significant investment we have seen in recent years, further considerable growth is projected –at a compound annual growth rate (CAGR) of 23.58% from 2021 to 2025.1

    Understandably, FinTech players are hugely focused on their individual growth – in last year’s Money20/20 report, 57% of respondents cited growth as their core focus. This year, that focus is continuing but is manifesting itself in many more strategic activities.

    When asked to set out their main focus for the short-to-medium term, this year’s respondents’ most popular response across all three regions was again growth – EMEA (23% of respondents), APAC (22%), and the Americas (26%).

    While this figure was down considerably from last year’s survey, rather than seeing a sharp decline in attitudes to growth, it’s more likely that last year was somewhat of an anomaly, as firms sought to drive growth solely by capitalising on trends accelerated during the pandemic, such as remote working and digital payments.

    As Jenni Himberg-Wild, Head of Fintech & Non Bank PSP, UK, Corporate Banking, Barclays, explains “Last year we saw that FinTechs had to adapt to Covid-19 realities, and they were successful in doing so as their digital-native approach and speed to react was well suited to the trends accelerated during the pandemic.

    “Now, alongside this continued focus on growth, FinTech firms are broadening their activities – thinking about multiple challenges and opportunities and looking to address many of those activities that will also be real drivers for growth.”

    We are seeing a specific mix of activity across the larger FinTechs. In some instances, companies are aiming to strengthen their core, shedding non-core businesses to invest in better technology and client experience. The majority, however, are growing through acquisition.

    David Williams

    Head of Fintech & Non Bank PSP, Americas, Corporate Banking, Barclays

  • The war for talent takes hold

    Talent acquisition has risen up the order of priority for respondents this year – and is now cited as the second-most pressing area across all three regions.

    Himberg-Wild says this presents a real challenge, which is being exacerbated by multiple players seeking to attract the talent that does exist.

    “Competition for talent in the payments industry is hot right now and it includes the traditional financial institutions, because they also need access to those good people,” she explains.

    “It’s essential to understand that the battle is no longer just for coders and technical payments people. As the market continues to mature, there is increasing demand for people with a real breadth of experience. We are seeing firms looking at IPOs, for example, and they are looking to add people with broad business experience, bolstering their boards and adding credibility.”

    The competition is now fierce. As these businesses mature and evolve, it is not enough to just bring in new tech. Talent is essential to the continued growth of these businesses.

    Jenni Himberg-Wild

    Head of Fintech & Non Bank PSP, UK, Corporate Banking, Barclays

    In response to this challenge, FinTechs are increasingly steering their focus towards partnerships and collaboration as a means of accessing the talent they need to drive growth – collaboration is now the second-most popular route to idea generation and change across the sector.

  • Strength in numbers

    Partnerships mature to meet evolving challenges
    FinTechs’ focus on partnering and collaboration to achieve the growth they are seeking through multiple routes is clear. This survey once again revealed an expectation across the industry that start-ups will drive the ideas that lead the behaviour and disruption of the payments industry.

    In the Americas, 61% of respondents said they expect start-ups to be the main source of disruption and change in the industry going forward – while in APAC and EMEA that was the view of 59% of respondents. These figures were up even on 2020’s research, when just over half (53%) of respondents collectively cited start-ups as taking the lead.

    FinTechs see partnering with these and other financial organisations as crucial to their growth and success.

    Collaboration is king
    When asked about traditional banks’ roles in payment innovation going forward, the most common responses were collaborating and partnering with FinTechs for mutual benefit, and investing in early-stage FinTechs with equity and/or accelerator programmes.

    These partnerships are no longer just about one buying services from the other, but a coming together to create a meaningful relationship whereby each party is bringing something to the table that the other needs – and with both parties fully focused on the same positive outcome.

    Jenni Himberg-Wild

    Head of Fintech & Non Bank PSP, UK, Corporate Banking, Barclays.

    The role of traditional banks
    One of the biggest shifts in this year’s report versus that of last year related to the proportion of FinTech businesses that are seeking to become financial institutions. Last year, the primary region where firms were looking to gain a banking licence was APAC – where 28% of respondents felt FinTech businesses would seek to become financial institutions, with EMEA (17%) and the Americas (28%) lagging behind.

    This year, there was a far greater expectation in EMEA and the Americas, (27% and 28% respectively), while the number in APAC fell to 18%.

  • Innovation

    Payment advances become pan-regional
    As payments continue to evolve to meet end users’ needs, views on where future innovation will come from are changing.

    As was the case in 2020, when asked where the biggest rise in payment innovation will be in the next five years, there was again some tendency among respondents to rate their own region highly; however, this was not as prevalent as before, and there was a notable shift in respondents’ views on APAC and the US.

    One explanation for the shift in views on where innovation will come from in the near term may be that, as some core markets mature and evolve, many of the “quick wins” and initial innovations aimed at meeting customer demands have now been made, meaning further immediate innovation will be less likely.

    Despite that, Himberg-Wild suggests the differences between regions suggest local knowledge remains key to success: “We have seen it time and again,” she says.

    Being truly ‘global’ is difficult to achieve in payments, and even those who appear more global are mostly part of a network of companies, with a web of banks and other FinTechs around them.

    Jenni Himberg-Wild

    Head of Fintech & Non Bank PSP, UK, Corporate Banking, Barclays.

    Invisible, frictionless and seamless
    This year’s report revealed unanimity among respondents, across regions, that frictionless payments are now the most important driver for keeping customers loyal.

    Across regions, more than 24% of respondents to this year’s survey cited frictionless payments as the key driver for customer loyalty – split broadly evenly across EMEA (23%), APAC (24%) and the Americas (26%). This compared with just 21% citing ‘delivering a personalised offering’ as the key driver – a step change from our last report when delivering a personalised offering sat at 29% across regions, while frictionless payments stood at just 20%.

    B2B shifts its focus
    In the B2B space, there was agreement across regions when it came to the topic of the most important payments innovation for B2B-focused FinTechs: ‘digital payments – virtual cards and new payments rails’. This was cited by 27% of respondents overall, but was a particularly strong response in APAC (35%).

    Connectivity was rated as the second most common response in each region this year (24% across regions). All three regions also cited data-driven optimisation of payments and funding as the third most popular response (16% overall).

    This is the arena where we expect some of the fiercest competition going forward, as entrants converge from different evolving business models to drive some of the most exciting innovation.

    Tim Glennon

    Head of NBFI, Europe, Corporate Banking, Barclays

  • Future-proofing

    Firms must not lose sight of ISO 20022
    Perhaps a surprising finding was the relatively low number of respondents that cited ISO 20022 as likely to be the next innovation or industry standard that will disrupt the payments market.
    This was the second most popular response in terms of trends affecting the sector last year, with 11% of overall respondents citing it, and 17% in APAC. This year, ISO 20022 was cited by less than 5% of respondents overall – falling behind CBDCs, AI-powered payments, and clusters of collaborating FinTechs.

    This may be the result of firms now feeling that ISO 20022 is well and truly on their radar and an issue they are currently handling, leading to them no longer treating it as ‘new’.

    However, the adoption of the messaging standard is at the core of a major transformation across the payments industry, involving market infrastructures, financial institutions and non-bank PSPs – and while many may feel they have a grip on the issue, it is important they do not become complacent and stay focused on implementation.

    Find out more about the standard’s importance to the sector.

    Embracing regulators
    In line with the findings from last year’s report, firms in the sector continue to view the regulatory landscape in a positive light – maintaining an optimistic outlook across the market.

    This was borne out by the findings of this year’s survey, which revealed the most common view of the impact of further regulation on businesses was that it will create new opportunities. This was the case across all regions – EMEA (45%), Americas (44%) and APAC (35%).

    Encouragingly, most respondents revealed they are ‘working with regulators’ or ‘working with industry experts’ to stay on top of regulatory matters – in line with our findings that the sector is increasingly focused on strong collaboration and partnership. That was further supported by large numbers of respondents saying they are partnering with payment experts and ‘learning from others’.

    Cyberattack prevention is better than cure
    A more complex digital payments sector, built around enhanced data processing and handling, means a potential increase in entry points for cyber attackers.

    Despite that, there was a common theme across all regions that firms do not feel they need to spend more on cyber security moving forward. In fact, in EMEA and the Americas, at least half of businesses (55% and 50% respectively) said they are confident they have a robust approach to cyber security and only 20% and 21% respectively said they feel they need to invest further in cybersecurity.

    It’s vital to talk about cybersecurity regularly and I would encourage far more firms to increase investment in this area to prevent attacks. I would recommend a ‘healthy paranoia’ when thinking about cyber security, and that means remaining focused and being prepared to invest.

    Steve Lappin, Managing Director, Cards and Payments, Barclays

    Discover more about how to prevent fraud.

Download our previous reports

Download our 2020 report

Download our 2019 report

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