Adapt to survive in 2023: A step change for business models in FinTech

By Pat Patel, Executive Director, Elevandi

The origins of FinTech date back to the Global Financial Crisis of 2007 to 2008, when financial institutions suffered large losses and needed government assistance to survive. In the same period, mobile technology exponentially grew, which further yielded a new breed of financial institutions. Web 2.0 created opportunities for FinTech companies through leveraging mobile, social and cloud.

Since then, FinTech has been growing at an unprecedented speed. In 2021, global venture financing reached an all-time high at $620.8 billion invested in FinTech. This saw a doubled increase from previous high of $294 billion in 2020, displaying a 111% increase year-over-year from $294 billion in 2020 to $621 billion in 2021.

But as the market liquidity increased and fundraises reached record levels, things took a turn at the beginning of 2022. Both public and private markets have since taken a beating and are experiencing a mean reversion in growth rates. Valuations have been slashed and IPOs have flattered to deceive—and these have impacted multiple sectors in tech. The end state is on longer clear and the term ‘unicorn’ should be seriously questioned as any type of meaningful metric or term.

The art of valuation has always been subjective, and when you are in markets beaming with optimism, the gravity of the future supersedes the now. Evidently, for many FinTech companies, especially start-ups, it is time to be realistic about valuations and reassess one’s business strategy.

As Bob Dylan once sang, The Times They Are A-Changing, and that’s particularly true of today’s FinTech industry, which needs an urgent step change – one that makes use of quick and strategic adaptability measures that could define the long-term survival of many companies.

It’s discussions around topics like these that will take place at the upcoming Singapore FinTech Festival (SFF) from 2 to 4 November 2022. The SFF frontruns as the world’s largest and most impactful FinTech festival, serving as a knowledge platform for the global FinTech community. It is the brainchild of the Monetary Authority of Singapore (MAS) and our people at Elevandi — a nonprofit entity set up by the MAS to connect people and businesses, ideas and insights in the fintech sector in Singapore and globally. At Elevandi, our core commitment is to continue creating an open dialogue and a safe and inclusive environment for FinTech businesses to not just survive, but thrive.

Since its inception in 2016, SFF’s annual theme has been carefully selected to reflect the prevailing opportunities and challenges in the financial sector—and this year’s edition, aptly themed ‘Building Resilient Business Models amid Volatility and Change’, will set a unique opportunity for thought leaders to exchange valuable insights, and build relationships that go beyond business transactions. Government leaders, regulators, financial services leaders, entrepreneurs, investors, and technology experts from around the world will get the opportunity to meet face-to-face, participating in knowledge-sharing sessions that will benefit their organisations across the region and beyond focused on being viable, responsible, and inclusive FinTech businesses of today and tomorrow.

After the past few years of uncertainties, FinTech firms need to find ways to ensure they have the right business models and infrastructure in place to set themselves up for the future. But beyond gains and economic growth, businesses need to serve a larger purpose, which is to improve people’s lives. For example: the rise of open banking in the region has shown how collaborations between the public and private sectors can benefit previously marginalised communities. At the same time, necessary precautions need to be put in place by stepping up cybersecurity measures.

In this increasingly borderless world of finance, Elevandi is set up with the intention to foster a more open dialogue between the public and private sectors. Charting new paths in this digital economy can be challenging, but with the right collaborations, we can build an ecosystem that works for the long run.