Fintechs: A New Paradigm of Growth (Speaker: Sean Spence)
Over the past decade, technological progress and innovation have catapulted the fintech sector from the fringes to the forefront of financial services. And the growth has been fast and furious, buoyed by the robust growth of the banking sector, rapid digitization, changing customer preferences, and increasing support of investors and regulators. During this decade, fintechs have profoundly reshaped certain areas of financial services with their innovative, differentiated, and customer-centric value propositions, collaborative business models, and cross-skilled and agile teams.
As of July 2023, publicly traded fintechs represented a market capitalization of $550 billion, a two-times increase versus 2019. In addition, as of the same period, there were more than 272 fintech unicorns, with a combined valuation of $936 billion, a sevenfold increase from 39 firms valued at $1 billion or more five years ago.
In 2022, a market correction triggered a slowdown in this explosive growth momentum. The impact continues to be felt today. Funding and deal activity have declined across the board, and there are fewer IPOs and SPAC (special purpose acquisition company) listings, as well as a decline in new unicorn creation. The macro environment also remains challenging and uncertain. In such a scenario, fintechs are entering a new era of value creation. The last era was all about firms being experimental—taking risks and pursuing growth at all costs. In the new era, a challenged funding environment means fintechs can no longer afford to sprint. To remain competitive, they must run at a
slower and steadier pace.
In this report, we examine how fintechs can continue to grow in strength and relevance for customers, the overall financial ecosystem, and the world economy, even in disruptive times. Based on research and interviews with more than 100 founders, fintech and banking executives, investors, and senior ecosystem stakeholders, we have identified key themes shaping the future of fintechs. To help fintechs capitalize on these themes, we also provide a framework for sustainable growth, based on an analysis of the strategies used by long-established public companies that have weathered previous economic cycles.
A/V requirements: