Dr Anino Emuwa is Founder and Managing Director of Avandis Consulting


The tighter regulatory environment following the 2008-2009 financial crisis constrained banks ability to innovate and helped to fuel the fintech revolution. Another crisis, the pandemic this time, is again bringing about major changes in the fintech industry and impacting the banking  sector.

The acceleration of digital transformation- a five-year shift taking place in a few months, according to experts- following the global lockdown led to a surge in e-commerce and digital payments, driving down bank’s share of the total market value of global banking and payments industry to 72% at the end of 2020 from 81% at the beginning of the year.  Paypal, for example saw its share price almost double during the same period. Currently, the top 5 global financial organisations by market capitalisation include 3 payments and fintech firms – Visa, Mastercard and Paypal

This booming lucrative payment sector hasn’t escaped the attention of GAFA- the big four technology companies- Google, Apple Facebook and Amazon who have already started making incursion into this space and their expansion into this space could lead to a large-scale disruption of the sector.

Anino Emuwa

It wasn’t positive for all fintechs during the pandemic. Lending platforms have come under pressure as the worsening economic climate is reflected in reduced borrowing, and signs of increasing defaults in both personal lending and small business loans as experienced by Lending Club and On Deck in the US, causing online lenders to tighten their underwriting standards.  Howeverr, in the longer term significant growth from this subsector is expected aided by digitization of lending

The instalment payment business has boomed creating billionaires in the process:  case in point, Nick Molnar and Anthony Eisen, Australian co-founders of Afterpay, a market leader. New entrants are also faring well:   Max Levin –co-founder of Paypal—whose recent venture Affrim almost doubled users between November 2019 and July 2020  to 5.6 million. It has raised $500 million valuing it at more than $5 billion a 40% increase in from last year (Source Forbes).

Investment in the fintech sector dropped 30% during the first year of the pandemic according to McKinsey, forcing fintech companies to review their business models to focus on profit-making rather than cash-consuming customer acquisition strategies.  Investor’s focus shifted to fintech ventures which are showing revenues and evidence of scaling, with newer ventures finding it more difficult to access funding as VCs focused on businesses already in their portfolio. This led to concerns that pre seed and Series A ventures could lose out in the short term.

Happily, the first quarter 2021 global fintech investment has rebounded reaching a high of over $13.4 billion across North America, Europe and Asia with a record for mega rounds, 33, in a quarter, according to CBI insights – State of Fintech Q1 21 preview. Frontier markets also experienced this boom, Africa has seen an uptick in tech investments at over $2bn in 2019, five  times the level in five years with fintech accounting for the major part of this recent growth. In 2021, notable transactions included Stripe’s $200 million acquisition of Nigeria’s Paystack signalling its entrance into the African payments market via the continents largest economy  whilst Flutterwave closed a $170mm funding round valuing it at over $1 billion.

In emerging markets, technological leap frogging may well be a feature of fintech innovation finding solutions for solving some of the infrastructural gaps.   The UK, which known as the fintech capital of the Europe attracted almost $5 billion in fintech investment in 2019. In Q1, according to Pitchbook, UK fintech raised $2.9 bn across 117 deals.  It is still to be seen how the UK can continue to retain that status with Brexit now in force.

Other big drivers of trends in fintech will be in infrastructure in the near term, as well as advances in emerging technologies notably block chain, crypto assets and AI.  Digital currencies are currently booming- Bitcoin is currently valued at close to $60,000 compared with around $6,000 at ahead of the pandemic with a market capitalisation of over  $1 trillion, bigger than any bank, whilst Ethereum hit a new record at over $3,400 (as of  3rd May) , making 27 year old co-founder Vitalik Buterin, the world’s youngest  Cryptobillionaire. NFTs are becoming popular as an important cryptoasset used by creatives to sell their work of art and other intellectual property.  Central Banks can no longer ignore crypto currencies market and are responding to this perceived decentralised challenge to their sovereignty  with plans for CBDCs which are controlled by the government

In April 2020, China piloted a digital currency and notably, at the end of March, the President of the European Central Bank, Christine Lagarde, has spoken about the possibility of Euro Digital currency in the next four years, with a decision to be made by EU countries mid-year.

In terms of Artificial Intelligence, the estimated value of AI in fintech  is expected to grow to over $22.6 billion in 5 years from $6.7 billion in 2019 according to Finextra, who predicts that AI and machine learning  will drive innovation particularly in areas such as robo-advisors, credit scoring, and process optimisation

On the regularity side , PSD2 coming on stream in Europe driving  open banking creating a boom the sector particularly for challenger banking. The post COVID-19 era is likely to see established fintech companies expanding their portfolio of services and also geographically.  For example, Revolut, one of UK’s  success stories, which started out as a payment platform has now extended into banking and is now seeking a US banking licence. At the same time, as governments globally come up with policies in response to concerns about customers data security as well as security of assets, more stringent controls and policies may reign in innovation.

Apart from advancements in technology, social trends are also impacting innovation: the pandemic has drawn attention to the need for values- based financial services to address equity, social justice and environmental concerns. With impact investing becoming more significant, we can expect investment flowing to supporting fintech solutions addressing global issues such as financial inclusion and sustainable finance. And as the digital native, Generation Z comes of age demanding more gamification, digitalised financial services, we will see fintech increasingly catering to this demographic.

In all, the fintech is sector is expected to continue to surge providing a challenge to traditional banking in many areas, one of the exciting areas is in Defi- as blockchain powered solutions replace the middleman in traditional financial services with a smart contract.   For now, the dampening in investments during the height of COVID seems to have been overcome. As banks continue to make equity investments in fintechs, it will be interesting to see possible mergers or large-scale acquisitions by banks of fintechs. Or even vice versa.


About the author

Dr Anino Emuwa is Founder and Managing Director of Avandis Consulting, a strategy and financial advisory firm in France.  A former corporate banker with Citibank, she is a also a non-executive director, sitting on several boards including the Board of Governors of Nottingham Trent University. Anino is a and Diversity and Inclusion advocate; she is a member of the Institute of Directors’ Expert Advisory Group on Diversity and Inclusion and a member of the global advisory Board of UK’s 20-first, a gender balance consultancy firm.


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