Around 91 per cent of fintech leaders are confident that investment into the sector will grow next year, Silverflow, a global card processing cloud platform, has revealed.
According to a Silverflow survey completed at Money 20/20 Europe in Amsterdam in June 2024, with respondents including the likes of Visa, Mastercard, American Express, Adyen, Worldpay, Barclays and Lloyds Bank Group, as well as numerous smaller, start-up and scale-up companies, significant optimism about the future of the fintech industry remains, despite a recent difficult period for investment.
Fintech investment experienced a 42 per cent decline in 2023, with investment falling to $113billion. Unsurprisingly, this was a tough pill to swallow for the industry as a whole, considering it reached as high as $225billion in 2021.
Many attribute the reason for the decline to rising interest rates making borrowing more costly, signalling the end of the ‘cheap money’ era. The decline was mirrored in a lacklustre year for startup funding in general, with smaller companies across all sectors receiving less funding than they had in the past five years.
Despite this, the industry appears to be growing increasingly confident that the future looks good for fintech. Robert Kraal, co-founder and CBDO at Silverflow, commented: “This seems to be because investors are adjusting their strategy from investing in large numbers of companies in the hope or expectation, that some will become ‘unicorns’ to finding a smaller number of companies who are likely to turn a sustainable profit rather than chase infinite growth.
“This was our experience at Silverflow when we secured €15million investment in 2023 at the height of the fintech downturn. This came on the strength of our solution, overall proposititon and the experience of our management team. Our investors saw the value we provide to our customers and how we continue to operate as a profitable business.”
Combatting company challenges
Silverflow also explored the challenges that companies face, with high fees and associated costs (39 per cent) emerging as the most common problem that companies face in the payments space.
Lack of data and poor customer experience was the next major challenge for firms, with 26 per cent citing each, while other factors including difficulty to use and a lack of functionality came in far behind.
“The survey results show an industry that has taken some blows but is far from out. Companies that solve real problems and do so in a way that is profitable are going to come to the fore, and it looks like the industry is recognising that. The near future should be full of some very exciting companies, some of whom we have met, and we would like to count ourselves among their number,” Kraal added.
A recent report by Goldman Sachs cast doubt on whether artificial intelligence (AI) technology had the transformative potential that its evangelists suggest.
“In the fintech space not only has AI and machine learning been used for decades, it has important applications in optimisation and anti-fraud operations,” explained Anne Willem de Vries, co-founder and CEO of Silverflow. “This is particularly true in the payments space, in which machine learning is used to identify fraudulent behaviour. For instant payments, this becomes even more important as there is no possibility to correct the transaction after the fact.”
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