FintechFutures resident Gen Z’er, Ruby Hinchliffe, shares her three predictions for 2021.
Banking will continue tailing payments
I can’t speak for all Gen Z’ers, but I know if I have to enter my card details to buy something, then the probability of my buying said item will decline by around 75%. And if it’s an impulse buy – which, in lockdown, it likely is – thinking about it for too long makes me feel instantly guilty for entertaining the purchase in the first place. That’s why the majority of venture capital (VC) investments are going into payments-focused fintechs, rather than challenger banks. Optionality at the checkout, with various alternatives to plugging in your card details, will always triumph over banking app functionality.
There’s an ever-growing number of fintechs operating payments businesses with no intention of getting into banking. Fintech start-ups facilitating a burgeoning list of embedded payment options – such as Stripe, Checkout.com, Affirm, and GoCardless – have continued to drive the decentralisation of global finance from banks to end-user platforms. A wave which kicked off in the early days of e-commerce with the launch of PayPal’s digital wallet to support its owner at the time, eBay.
Richard Arundel, Currencycloud’s co-founder and “chief evangelist”, tells me the rise of embedded finance through 2021 will continue to “propagate the uncoupling of payments and finance from the traditional banking system”. He points out that banks – historically monolithic entities where all financial transactions and services took place – are seeing their roles in society change. And this, Arundel says, is what’s going to “underpin the second wave of fintech innovation”.