Fintech’s Next Phase

May 2023

“Fintech’s next phase” refers to the greater integration of fintech with commerce. Fintech companies are innovating to increase access to financial products and services, improve the security of payments, increase funding, and enhance the merchant and customer relationship. In this next phase of fintech adoption there has been consolidation within the industry, and a growing call for an established regulatory framework that can encourage competition and protect consumers.

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Key Findings

Consolidating competitive landscape

Fintech is impacting how transactions are funded, most notably through the expansion of buy-now-pay-later (BNPL) platforms. This low- or no-cost option is expanding the products and services available to a wide range of consumer income segments.

Digital banking gains popularity

Fintech can leverage the information created from a transaction to reduce fraud and enhance the customer/merchant relationship by offering targeted promotions and advertisements in real time.

Fintech adding value to payments

Digital banking can offer consumers better financial products and services at a lower cost in many markets, leading to mainstream financial institutions investing in fintech to offer similar products and services.

Funding overhauled by fintech

With a crowded competitive landscape, there have been more acquisitions among fintech companies, as well as by traditional payment players looking to adapt and remain competitive.

Fintech regulation in focus

Regulation helped drive the initial growth in innovative fintech, but has not caught up with recent products and services, leaving a void or self-regulation, which could have negative consequences going forward.

Scope
Key takeaways (1)
Exploring Fintech’s Next Phase
Drivers of fintech
Fintech uncovered
Increasing access to funding
Humm Australia’s take on BNPL
Klarna sets fintech example in Europe
BNPL reaches across geographies and merchant categories
Legacy players and new entrants alike leverage fintech to add value to payments
Fintech integration in fraud fighting tools mitigates burden on consumers and merchants
Mercado Pago: Increasing access and improving the shopping experience
Payment players should strive to add value via fintech, but tread lightly
Rise of digital banks drive digital transformation of the global banking industry
WeBank leveraging Tencent’s ecosystem for customer acquisition and usage
Monzo leads on user-centric innovation to drive customer engagement
Digital banks changing the way of banking
Large payment companies seek to catch up through acquisitions
Case study: Apple acquires fintech firm Credit Kudos to expand into lending
Consolidation likely to continue
Regulation needs to keep up with market development
Supportive regulations driving open banking progress globally
New licences and regulations of digital banks promote competition and inclusion
Emerging BNPL regulations
Refining regulations to address payment security of digital wallets
Consultants and RegTechs to assist compliance with fintech regulatory development
Key takeaways (2)
Fintech: How to win
Evolution of fintech
Questions we are asking

Payments and Lending

This is the aggregation of Financial Cards and Payments, Mobile Payments, Transactions, and Consumer Lending.

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