Fintech will lead the charge in the post-COVID-19 recovery
Fintech companies will remain profitable and offer SME’s better opportunities to grow following the economic downturn, says new report.
While the pandemic has hit every industry, affecting growth and profitability, one sector, fintech, has remained solvent and profitable. As consumers and B2B companies shift their focus to a cloud-based approach to managing business, fintech is experiencing an unexpected demand for services. Corporations have been forced to move away from more traditional business models to accommodate the demand for services available online.
But the unprecedented growth will change direction from its early 2020 boom, which saw the emergence of a new set of unicorns valued at £1bn or more. Today, funding for such new start-ups has slowed considerably, and there has been a shift from launching new enterprises to managing profitability in current businesses.
Justin Knowles, Director of Digital and Payments at CitiBank, said, “I believe this pandemic has created an urgency for all financial services. I see two large factors that will play a part in success or failures of anyone in this market. 1) Current employees’ ability to be agile - to work quickly and to adjust and modify the existing strategic plan. 2) Partnerships with fintech partners out there will also be key.”
A shift towards far more M&A and consortiums are also predicted to spike in 2021, though Knowles added picking collaborations should be done with care. “We must be cautious when creating those partnerships in these unstable times.”
A new business structure
But strong leadership will be required to lead companies away from their traditional business models towards a restructured format that is conducive to the post-pandemic business environment. Competition is predicted to be fierce, with the longest-established fintech businesses thriving, while new entrants to the market will be challenged.
“The board and exec teams have to lead from the front by being great models and communicators, developing a convincing post-COVID-19 business and financial strategy,” said Susanne Chisti, CEO at Fintech Circle. “
She commented; “Investing in a diverse talent pool and the right innovation and fintech infrastructure, [is essential] to turn the existing global recession into an opportunity for sustainable growth.
However, the report also suggests industry innovators will find themselves in an advantageous position as the fintech industry grows and explores newer and better solutions to digital business practices. Currently, payments have been identified as a key market, ripe for investment.
“Payments is an overly saturated space,” said Nasir Zubairi, CEO at The LHoFT Foundation. “Europe has to move forward to building its own card scheme and payment infrastructure to mitigate dependence on Visa and Mastercard. It’s likely to cause a frenzy of M&A activity in the sector.”
With the marketplace becoming ever more crowded, competition will be fierce, making marketing and branding, as well as customer experience and service, a priority. In a survey carried out by Fleishman Hillard, 77% of respondents said they expected there to be an increase in focus on the customer experience, and “maintaining an authentic voice amongst the chaos to ride out this crisis.”
One thing is clear; fintech continues to be a cutting-edge industry and will be contributing greatly to the re-shaping of business commerce over the next decade.
Amber Group Valued at US$1bn in $100m Funding Round
Amber Group, a cryptocurrency financial services firm, has raised US$100m in a Series B funding round at a pre-money valuation of $1bn.
The funding round was led by Chinese investment firm China Renaissance, and other participants in the Series B include Tiger Brokers, Tiger Global Management, Arena Holdings, Tru Arrow Partners, Sky9 Capital, DCM Ventures and Gobi Partners. Existing investors Pantera Capital, Coinbase Ventures and Blockchain.com also joined in.
Michael Wu, co-founder and CEO of Amber Group said in a statement that the funding would be used to “expand global operations to meet client demand and develop market solutions for the world’s leading crypto investors and companies.”
“We’ve had record months over the past quarter across both client flow and on-exchange market-making volumes,” Wu said in a press release. “Our cumulative trading volumes have doubled from $250 billion since the beginning of the year to over $500 billion.”
Cryptocurrencies are becoming increasingly popular, with many people investing, although not everyone seems to know what they are investing in. Using survey data collected from 750 investors earlier this year, Cardify found that only 16.9% of investors who have bought crypto “fully understand” the value and potential of cryptocurrency, while 33.5% of buyers have either zero knowledge about the space or would call their level of understanding “emerging.”
Who is Amber Group?
Amber Group is a global crypto finance service provider with a presence in Hong Kong, Taipei, Seoul, and Vancouver. Founded in 2017, Amber Group services over 500 institutional clients and has cumulatively traded over $330 billion across 100+ electronic exchanges, with over $1 billion in assets under management. The company said that its assets under management, or AUM, reached $530 million in 2020, representing a 275% increase from the previous year.
Instead of being a cryptocurrency exchange that allows users to trade individual digital coins, Amber Group CEO Michael Wu said the company is bringing a “private banking experience to the everyday customer.”
Their goal is to optimise investment flexibility, maximise investment returns and deliver long-lasting value for their clients. In 2019, Amber Group raised $28 million in Series A funding led by global crypto heavyweights Paradigm and Pantera Capital, with participation from Polychain Capital, Dragonfly Capital, Blockchain.com, Fenbushi Capital, and Coinbase Ventures.