2020: fintech sector's highs and lows

January 20, 2021


2020: fintech sector's highs and lows

January 20, 2021

Fintech sector was shaken in 2020 several times. The year started from breaking news about acquiring Plaid by VISA for whopping $5.3 billion, then coronavirus started to spread across the globe, but in the end 2020 was not that bad for Fintech sphere in general. In this blog post we will make a quick overview about Fintech sector’s highs and lows in 2020.

Fintech sector’s highs and lows in 2020

  1. ”Banking as a service” may be the next unicorns

    “Banking as a service”, or “fintech enablers” are the financial platforms, which rent out their API’s to the third parties to develop new products, apps and services. The experts say that this kind of players of the Fintech market may become a billion-dollar companies within 5 years. A rise of the number of so called fintech enablers should be considered as one of the Fintech sector’s highs in 2020.

  2. Acquiring 

    New players on the Fintech market like payment platforms, open banking apps and peer-to-peer apps are building a new network. It is not surprisingly that such giants of the banking sphere like Visa and MasterCard also want a piece of that cake. In January 2020 Visa has announced that it is buying Plaid for 5,3 billion dollars. But finally regulatory action prompted Visa to call off a this acquisition. Besides that in 2020 Visa was able to finalize the acquisition of Earthport, a cross-border payment services company, which earlier MasterCard was interested in. Meanwhile, in August 2020 the European Commission approved proposed acquiring of Nets' account-to-account payment business by Mastercard. The upcoming year will show if these were Fintech sector’s highs or lows, but it may be also a trend for 2021.

  3. Wire Card collapse

    In the end of June 2020 German company Wirecard collapsed after its auditor EY refused to sign off on the 2019 accounts. This situation has paralyzed many activities, since Wirecard is one of the main operators in the Fintech sector. Many companies, which were using the Wirecard solutions, were freezing customers’ accounts.

  4. Fin-fluencers

    If we’re speaking about the highs of the Fintech sector in 2020, we should definitely mention the new wave of influencers – “fin-influencers” or “fin-fluencers”. This is a promotion for financial products through popular influencers on social media like Instagram or Tik Tok, which became extremely popular in 2020. Famous bloggers started to promote Starling, Revolut and N26. Gen-Z banking app Zelf, Germany’s Vivid money, SME bank Penta, and Klarna - have also experimented with influencer marketing last year. Fintech startups started to use a strategy, which traditional banks are not implementing so widely.

  5. Closing of digital bank Bó

    In May 2020 the Royal Bank of Scotland (RBS) has announced that it is closing the digital banking brand Bo. The project started in 2018 and was launched in November 2019. Bo supposed to compete with similar digital banks like Monzo or Starling, but just within 6 months and with 11 000 customers the bank decided to shut down the project because of the coronavirus.

    Notwithstanding that fact, experts still give positive forecasts for the digital banks. Fundraising-data shows that dozens of banking apps are gearing up to launch, this doesn’t include already existing 250+ neo-banks on the market. But the new generation of digital banks employs different strategy than their forerunners. They are focused on specific segments of society. And this strategy actually is the right one for a highly competitive market, which sphere of digital banks will become in the nearest future.

    Although the Fintech sector has experienced a lot of highs and lows in 2020, there were also promising opportunities for new players on the market. We hope that for your company 2020 was the year of opportunities too and you were able to grow. And if you’re looking for new payment solutions, Universepay can find the best one suitable for you.

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