The Future of Fintech: You Can't Put Lipstick on a Pig
For many fintechs there is only one imperative "find money fast."
KPMG takes a look at fintech’s future and delivers a way forward for fintechs who have the luxury of time!
I quite like KPMG’s 5 “Signals of Change“ and 5 “Strategic Imperatives.” The problem is that many fintechs don’t have time.
According to SVB bank, “53% of fintechs will be cash out by Q3 2024 if they don’t raise or exit.”
So, for fintechs with time and enough money on their hands to hire KPMG, I say go for it! Who says you can’t put lipstick on a pig?
For everyone else, find money and find it fast!
👉TAKEAWAYS:
Key Forces:
Customer
Rising demand for wider, more personalized choices and a connected experience
Competition
Fintechs may need to embrace "co-opetition" -style strategic partnerships
Product
Fintechs innovate to stay connected to changing customer demands and disruptive new technologies
Technology
The rise of decentralized financial ecosystems
Regulatory
Growing regulatory scrutiny necessitates investment in regulatory and compliance resources
Strategic Imperatives:
Focus on core business identity
Enhance core competencies to stay ahead of the pack in a competitive fintech arena
Carve a path to profitability
Nail fundamental unit economics while amplifying profitability
Maintain technology relevance and avoid technical debt
Keep pace with emerging technologies to avoid technical debt
Create strategic partnerships
Accelerate expansion of customer reach through large-scale delivery of new products and services
Harness the power of data to drive strategy
Optimize data insights to develop trusted products and exceed customer expectations
👊STRAIGHT TALK👊
If only it were so easy! I do like KPMG’s suggestions in principle, but we all know that there’s only one thing that matters right now: profitability!
To KPMG’s credit, they address profitability as a strategic imperative, and that is a great addition.
The reality, however is that according to a recent report from the “new” Silicon Valley Bank: “53% of fintechs will be cash out by Q3 2024 if they don’t raise or exit.” See the stunning graph below.
SVB Future of Fintech report: here
The reality is that for many fintechs if they can’t convince investors that they still have their “mojo” it’s not going to go well for many. No doubt many will sell at a deep discount, but “beggars can’t be choosers.”
This isn’t just for the little guys. Major neobanks like N26 are running out of runway and investor patience. Downrounds are the norm and when Stripe halved its valuation at the beginning of 2023 you knew investors mean business. FT Partners monthly deal activity shows how the numbers are still down. (see below).
FT Partners Fintech Deal Activity is an industry standard. Deal activity is still low for the November edition. In March Stripe raised but at a down round that took off half of their value!
So, I liked KPMG’s report and hope it drums up some consulting revenue for them. What it can’t do is “put lipstick on a pig,” and I fear that many fintechs are just that.
For many, the only question is now that the fintech party is over what shade or red to choose for the lipstick?
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