With the ever-growing interest in the Fintech and Digital Banking industry, it is worth being on track with its trends and opportunities. At Velmie, a digital banking software provider, we handle yearly market surveys to understand how the market is going to evolve.
Comments and some additional insights from our experts will give you a more detailed picture of the current landscape and help with the next year's predictions.
To discover the findings of Velmie Fintech 2022 Research choose the option that suits you best:
Watch the recording of the webinar where Velmie experts discuss the data.
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Fintech sectors to grow in 2022;
Adoption of emerging technology;
Building a successful Fintech product;
Addressing major threats of Fintech companies.
Webinar on Fintech Market 2022
Watch Velmie expert panel discussion to explore what are the main Fintech predictions for 2022. Find out our perspective on the fastest growing technologies, markets, and sectors.
Fintech 2022 Discussion Transcript
Carl: Hi everybody and welcome to this webinar. My name is Carl-Johan Larsson and I'm a client representative at Velmie. Today we are going to talk about how the market could possibly look like in 2022 and further. With me online today I have my colleagues Kate who will handle the tech, Paul Shumsky who is our CMO, and Julia Prus who is our Sales Manager. The structure of today's call is pretty straightforward, we will go through the results of the “Fintech Market Forecast 2022” survey and see what kind of conclusions we can draw from that. First, a little bit of background. Velmie is a banking technology provider, we have been building banking and other financial systems for many years now, this gives us great insight into how the market works and how the market shifts. When it comes to fintech, the market shifts very quickly. I have been doing IT for 25 years and there have been many substantial shifts, think when backup became cloud-based, when CRM became a thing, but never have I seen the market shift so rapidly as when it comes to Fintech. So, we don't just go by gut feel. So, before I tell you what I'm about to tell you, I want to give you some insights into how we collect data. The base of our knowledge comes by asking questions, we send out questionnaires constantly to keep us informed, we also do one big survey every year, I guess some of you here probably answer our latest one, the “Fintech Market Forecast 2022”. But before we ask questions, we need to know what questions to ask, we solve that by calling people, so, we get contacted by fintech companies every day, most of the requests are like can you build this, or does your platform support use case Y, but we also get more complex questions. Questions that are out of the ordinary, so what we do is we call these people, talk to them and get an idea about what they are thinking and how they see the future of Fintech. Armed with that knowledge, we are in a good position to formulate the questions that we feel that would give us the answers we are looking for. So, now that you know that the knowledge we have is not just pulled out of a hat, what do we see for 2022? Well, we see that the pandemic didn't really have an impact on the fintech industry, it moved along pretty much as we thought it would. In fact, investments in fintech increased a bit more in q3 and q4 than we thought. All things were not positive, we could see that some platforms out there had more downtime than usual and some had issues with a bigger failure rate than usual when it comes to transfers, We do believe that this is simply growing pains. That problem shouldn't be there, but I'm actually not surprised it's there. Besides the technical challenges, one huge challenge is also the staff, its almost impossible to find the right staff at a reasonable price, and we don't really see an end to this. I would like to finish this quick intro with 3 numbers, just something that you can bring with you and compare with your own business. Did you know that the average customer acquisition cost is around $6, the revenue for one client is around $21 a month, an average banking system can collect an average of 11,000 data points for each client?
Which of the technologies in the financial sector will bring the most impact in 2022?
Paul: We're all witnessing that emerging and advanced technology keeps shaping the finance industry. Some technologies such as ML, Big Data, or AR are already with us for years, while such a thing as NFT is new to many of us but we see a lot of buzz around it. So, I'd say, that tomorrow's industry success stories are being built today around modular core systems that rely heavily on the data ML algorithms. That is what we observe on the market looking at Fintech companies that were able to become unicorns.
However, even more, are betting on crypto and want to take the red pill and go down the rabbit hole. Let's see what comes next.
What’s your take on crypto? Do you see the potential in it?
Paul: Yes, definitely. Crypto is a completely new world, and it significantly impacts the global financial services industry. Still, many professionals are arguing about the value of cryptocurrencies, and we can spend many hours on such discussion. However, narratives are now shifting from calling crypto currencies a bubble to comparing it to gold, which is a good sign actually. Both crypto and gold are good options to store the value for those who don't believe in paper currencies. As for the lasting value crypto, community is taking huge steps to add more utility functions. In the past year, we observed whole new ecosystems, tools and offerings that were built on top of the existing crypto currencies. So, I'm quite optimistic on how it goes so far.
Where does Velmie stand for crypto?
Paul: Well, we have a long story with crypto and blockchain started back in 2015 when we worked on crypto exchange projects and tokenized payments solutions. Since then, the market and technology greatly evolved, so did Velmie. And now we're looking forward to expanding our offerings and provide more tools to our clients who're interested in this technology.
What's the biggest challenge companies face when building crypto solutions?
Paul: We see crypto adoption across many verticals. Many top banks are now investing in digital assets and providing such tools to their clients. It is also a best practice for Fintechs to allow opening crypto wallets within their apps. International remittances are getting disrupted by cryptocurrencies and so on. But as long as this is still emerging technology, it is often hard to onboard the right talent. Thus, building products in-house becomes risky and time-consuming. Small companies that are building products in this space have to compete for talents with Citi, Goldman Sachs, Coinbase, and other major players and pay a premium. This is currently the biggest problem according to many of the surveyed. This situation is one of the main drivers for crypto infrastructure companies that provide various tools and APIs that simplify the adoption of crypto. This is something we are considering to launch next year as well. So, stay tuned for the updates.
The vast majority of respondents (80%) would prioritize time-to-market and start with MVP. What are your thoughts on that?
Paul: Creating a Minimum Viable Product (MVP) has been a crucial step of product development for years. The concept around MVP also evolved over time and there are new terms such as MMP (Minimum Marketable Product) or Minimum Shippable Product. Often the most tricky part is to actually define the MVP product scope by not making it too big or too small.
Customer expectations are constantly growing as the technology evolves and the minimum product nowadays can be much more complex than it was 5 years back. Clients now expect a certain level of personalization, intelligence, and automation from MVP right from Day 1.
What about security issues? Is it worth being prioritized for an MVP?
Paul: Yes, for sure. I think with financial services things are getting even more complicated due to the specific requirements around security and data compliance which you simply can't skip or postpone. As a result, when building a new product you have to spend time mostly on the back office and architecture solutions rather than staying focused on delightful product experiences for your customers. These problems are not unique to startups, enterprise companies are facing very similar issues with the new product initiatives.
Is there an ideal approach to launch a new product?
Paul: With all we've just mentioned, I would say that building in-house systems for the MVP solutions is simply a no-go because it is not feasible in terms of time-to-market strategy. In our survey, you can see that hiring and retaining talent is #1 problem for Fintech, early-stage startups have a lot less opportunities to hire world-class teams for their products. If we imagine that they decide to build the whole product from scratch, it would normally take at least one year to hire a team and then a few years to go to the market. All this time founders will be burning cash and observing the market landscape changing and new competitors taking target segments. So, I honestly don't think that the buy vs build dilemma still exists for startups. Looking at the most successful products the right approach should sound like Buy & Build. Most often companies prefer acquiring existing technology for their back-end while staying focused on features and experiences that they are aiming to deliver to their clients. That's how it works nowadays.
90% of the respondents say they either secured the funds for new initiatives in 2022 or are considering launching new products. Only 10% feel negative about the next year in terms of the fintech investments. What do you say about this?
Julia: Indeed, we saw such positive stats in the survey, but also noticed very similar predictions at other sources. For example, KPMG and Accenture recently shared their predictions for 2022 and the figures were positive. And it is happening right now. We noticed a significant increase in the capital investments in fintech products in Q3 and Q4 this year. According to the data, it is going to continue in 2022 as well.
Working closely with the founders and executives. What is your impression about the new products launching next year?