What is next for fintech you ask? It is a sector that is redefining itself. Not only did its ability to have a positive impact on society truly come to light during the pandemic, it is becoming intrinsically more connected to our economy than ever before.
Money20/20 has the privilege of numerous private conversations with leaders across all areas of the industry including banks & financial institutions, startups, big tech companies, VCs, media, consultants, analysts, regulators, academics and many more. What began as a few conversations nearly a decade ago focused in the US, has expanded to thousands of conversations around the world. The goal of this paper is to generate discussion and move the industry forward rather than present a dogmatic view.
Money20/20 was founded shortly after the global financial crisis of 2008, a time when leading financial institutions shut down or required government support. Market opportunities opened up for new entrants including startups, new consortiums, and large companies from other industries. Like upwardly mobile, hip neighborhoods such as SOHO or SOMA in large cities, the sector formerly known as financial technology became known by the moniker, Fintech. The term became widely adopted globally, and even legacy institutions adopted the term.
Having survived the past year, an increasing number of conversations we have are looking beyond the pandemic.
- Fintech has become a vital part of the economy during COVID-19 and will become even more critical.
- The industry will move beyond distribution and marketing to reimagine its core offerings.
- Just as the last downturn triggered the first era of fintech, the pandemic accelerated digital adoption and triggered a new era, which we are calling Fintech 2.0.
Let us take you on a journey through the different eras and stages of fintech, before we analyze those building blocks of Fintech 2.0.
The first era, beginning in the year 2000, represents the world of the dot com boom, a time before fintech became known as fintech. We’ve dubbed this era Fintech 0.0, and it was a time when internet connectivity and monetary transaction accounts were still limited to upper echelons of society. The next era, we’ve called Fintech 1.0, commenced after the global financial crisis when internet penetration blossomed from 30% at the beginning, to 60% by the end. The majority of this was driven by large developing countries such as China and India.
So where are we now? Where does Fintech 1.0 end, and Fintech 2.0 start?
Fintech 0.0: The average internet user was a younger, urban elite American with a bank account and multiple credit cards.
Fintech 1.0: The average internet user was middle or upper middle class American or European, also with a bank account but fewer cards.
Fintech 2.0: At the dawn of Fintech 2.0, the average internet user is a working class Asian where a mobile money account or digital wallet is their primary financial vehicle.
Today, the majority of people worldwide have internet access, and access to electronic money services either through financial institutions or mobile money. We will also certainly see how digital will progress into becoming the primary method of shopping.
See the full White Paper here