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Trends Shaping the Fintech Space - FinovateEurope 2023

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Euromonitor International attended the Europe edition of the Finovate conference series, held in London in March 2023. The conference attracted over 1,000 attendees from financial institutions, tech firms, platform providers, regulators and investors – all to understand the underlying forces of the financial technology (fintech) industry and connect with key stakeholders.

Turbulent year for the global economy and the fall of SVB – what does 2023 hold?

The global economic environment, with rising interest rates increasingly restricting economic activity, has inevitably impacted the financial sector over the past year. A recent critical development of the banking industry was the collapse of US-based Silicon Valley Bank (SVB) on 10 March 2023. The fall of the bank, which had a large innovator start-up customer base, raises many questions regarding the outlook for the industry and whether we are entering a new banking crisis.

On the first day of the conference, the session by Chris Skinner, CEO of The Finanser, addressed the question of “what caused the death of SVB?” According to his expert opinion, the collapse of the bank was due to the lack of accounting for an increase in interest rates, and not implementing the Basel III risk management framework. He also highlighted that in Europe, Credit Suisse’s annual report had unveiled some serious financial problems. Since then, the Swiss bank was saved and acquired by UBS for CHF3 billion just over a week after SVB’s fall.

As for the outlook, the industry consensus is that while the fintech industry benefited from the pandemic’s disruption in the past few years, 2023 and 2024 are likely to be more challenging as the global economy faces multiple headwinds.

Embedded payments and non-financial institutions to revolutionise the way we pay

The future development of the payment industry was one of the key focus areas of FinovateEurope. Discussed trends included embedded payments, and in particular digital wallets.

63% of connected consumers used digital wallets to buy online or in-store in 2022

Source: Euromonitor International’s Voice of the Consumer: Digital Survey 2022

A panel discussion on digital wallets shed light on the differences in the state of play in developing and developed markets. The former holds massive growth opportunities for the payment type as e-wallets close gaps in financial inclusion. While in developed markets, the growth potential of e-wallets is more limited, yet still exists. Targeting niche customer groups, such as children, might offer providers an opportunity for expansion.

Another takeaway is that non-financial institutions, including telecommunications giants, have an increasing role in the payments segment, and are expected to gain further market share in the future.

Finovate Europe 2023 Chart 1.svg

The Buy Now Pay Later (BNPL) market, which according to Euromonitor International’s data, was worth USD156 billion in the total of 47 researched markets globally in 2022, remained in the spotlight at Finovate. Industry experts shared their views on what is next for the payment alternative.

The Buy Now Pay Later (BNPL) market was worth USD156 billion in 47 researched markets globally in 2022

Source: Euromonitor International 

Despite imminent regulation in Europe, the future outlook for BNPL is still considered positive. Furthermore, BNPL expending into the B2B sector is expected to be the next major trend in the Fintech industry.

Further emphasis on customer verification to prevent fraud

Consumers are moving many aspects of their lives online as the pandemic accelerated the emphasis on online security and fraud prevention. Improving digital security in banking and financial services is still gaining momentum. For instance, Trulioo demonstrated its customer verification solutions on the first conference day, while on the second day, presentations discussed the importance of boosting security via verification methods, including KYC (Know Your Customer).

The unique solution of digital keys was discussed by Adam Lower of Arculus by CompoSecure, who used global marketplace eBay as an example. eBay is reportedly looking to replace passwords with digital keys to enhance platform security. Leading card network Mastercard was also present at FinovateEurope as an exhibitor of its NuData security product, which is technology using behavioural biometrics to prevent mobile and online fraud.

Finovate Europe 2023 Chart 2.svg

Partnerships between stakeholders remain vital

Talks and panel discussions embraced the importance of collaboration in financial services. In a discussion about strategic partnerships in the fintech industry, panellists representing ING, Raisin, everyoneINVESTED (KBC Group) and CoinBase shared the view that legacy banks working in partnership with fintechs, and vice versa, can pose challenges due to different work cultures. Based on the panellists’ experience, vision and purpose of the two parties are essential to smoothly and efficiently work together. Partnerships are considered extremely important from the aspect of the digital expansion and transformation of the industry.

Fintech companies and customers to benefit from the metaverse

Several presentations were centred around exploring what financial services in the metaverse would look like. Author Steven Van Belleghem’s keynote on customer experience highlighted that extending services through the metaverse will not only offer new forms of personalised experiences, but also new revenue streams for companies and financial institutions.

FinovateEurope’s demonstrations, insightful presentations and panel discussions around the current state and future of the industry highlighted that technological advancements, including AI, blockchain or 5G, continue to shape the landscape of payments, lending and banking services despite the unfavourable economic forecast.

For more discussion on BNPL, read our report, Trends and Outlook for BNPL.


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