FinTech Innovators Take the Lead Across Financial Services

I was on a call today preparing for the technology innovation panel for the Midwest Acquirers Association conference. As our conversation unfolded, we kept coming back to the need for traditional payments and financial organizations to innovate, to do something different, to work out strategies that will radically change the way they operate in the next three to five years. Or they will be gone.

FinTech innovators of many stripes, shapes, and pals are working to raise vast sums of money this year – payments is the hottest sector of what GonzoBanker referred to this week as FinTech on Fire – and they are working on ways to remove any organization that sits between them and the consumer.

That doesn’t mean they are not partnering with traditional organizations, by the way, but it does mean that existing organizations need new strategies. Our Innovation panel will discuss that, too, but you’ll have to be there.

Yeah, that’s a plug. The conference will take place – in person – July 21-22 in Chicago. Details here.

As if on cue, I received Prof. Scott Galloway’s weekly email during the call. This week it’s called “Bank.” It focuses on boring old FinTech and banking and how they are the best investment bets to make now. “It’s hard to imagine an industry more ripe for disruption than the business of money,” he writes.

A look at today’s headlines shows that Circle, which issues a USD-backed stablecoin, is going public. Visa’s crypto-linked card reached $1 billion in payments. And Bank of America is the l latest bank to form a crypto research team.

The digital disruptors are looking pretty good in traditional payments, too. The most recent FIS Global Payments Report notes that digital and mobile wallet payments were used as much as credit card payments for ecommerce purchases at 30% each, followed by debit cards at 21%. Digital and mobile wallet payments make up 10% of POS payments, just behind cash at 12%, with credit and debit combined at 67% of the total.

These may be small amounts in the grand scheme of payments revenues, but they are telling all the same. There is a shift toward digital alternatives across all financial services.

One point of Galloway’s argument that moved me focuses on the number of underserved and underbaked low-income consumers and small businesses. “Inequity is a breeding ground for disruption,” he writes, noting that FinTech lenders tapped into that need and wrote more PPP loans to that market than the banks.

Yet FinTech investments and innovations are coming from companies of all sizes and vintages. What’s interesting about the deals in Sam Kilmer’s GonzoBanker FinTech list – and in today’s financial innovation in general – is the wide variety of firms making investments. Enterprises are buying tech and some really may be doing it to develop solutions and not kill potential competitions.

“As fintech startups, challengers, and even mature fintech providers laser in on evermore specific pain points, investors pour funds into the payments, lending, data, and other approaches to pain relief,” Kilmer writes. “With demand hot and new supplier deals growing by the day, the FinTech market is a steady burn ahead as far as I can see.”

– Collin Canright