Why now is the time for a Fintech reset?

Karine Martinez, Head of Sales at PPS explains how a partnership approach to Fintech entrepreneurship​ can spark a much-needed industry reset, and why a culture of ‘do what you do best and outsource the rest’ could help businesses emerge stronger from a challenging investment environment.

Projections show the Fintech industry growing at a compound annual growth rate of more than 22% a year, surging from $11.8 billion in 2018 to around $306 billion in this year. But despite this growth, fintechs are swimming against a tide of sharp valuation declines in both public and private markets, a dramatic spike in interest rates, rising inflation and ongoing macroeconomic uncertainty. 

It’s safe to say the days of unrestrained capital spending are behind us, making now the perfect time to hit the reset button.

The challenges forcing FinTechs to re-think their strategies​

Securing investors and raising funds will be the main challenge for fintechs in the year ahead. Raising venture capital is one of the key elements that make a startup grow. However with fierce competition and investors who are attentive to financial benefits, getting them on board requires a detailed financial plan, a long-term strategy, and validation of the idea. 

As well as competition from financial powerhouses like PayPal and tech giants like Amazon, payments and fintech organizations are feeling the pressure from often-overwhelming government regulations. Companies must follow a number of standards including GDPR, GLBA, the Wiretap Act, the Money Laundering Control Act.

Considering the ongoing volatility and tough economic conditions, it’s therefore never been more important for them to present potential investors with compelling business strategies in order to receive funding support in 2023. Key to this is finding the right partners who can help them grow their product offerings without straying outside existing regulatory frameworks.

The long-term benefits of a partnership approach

While newly minted fintechs businesses often start out with big plans to single-handedly disrupt traditional payments networks, collaboration and forging relationships with those that can help them scale is a proven and effective strategy. It’s one that’s being recognised by traditional banks as well, with almost 90% of financial institutions considering fintech partnerships to be very important to their business, up from less than half (49%) in 2019.

We are also seeing partnerships develop between fintech companies forming new joint offerings and innovative solutions. At PPS we see this in action every day, as we work closely with both start-ups and established businesses looking for a reliable and flexible partner to manage their processing, issuing and account-based needs.

Our partnership with ekko is a prime example of how successful a partnership approach can be. ekko offers embedded sustainability for the digital economy with award-winning technology that combines real-time carbon tracking, carbon offsetting, reforestation and plastic waste removal with banking and payment services into one multichannel solution. With our help, ekko has been able to provides customers with a virtual and physical Mastercard debit card, and expand its service to employers, banks and payment providers around the world.

Partnerships like this between an innovative fintech and an established brand can dramatically reduce time to market and result in cost efficiencies across the value chain. At a time when inflation is higher than it’s been in decades, these efficiencies are an important consideration for businesses in 2023.

Finding your perfect partner

The Fintech industry is facing many challenges and a partnership approach is one of the best ways to overcome them, but organizations can thrive or fail depending on the partners they choose. It’s crucial to collaborate with a reputable vendor because delivery to market, customer service, and the quality of your offering depend so heavily upon them. 

My advice is to pair up with those who can provide the upgrades, improvements and access to emerging technologies that ensure you will always be one step ahead of the competition. If you focus on what you do best and outsource the rest, you can gain access to the payments expertise you need while focusing your attention on growing your fintech business.

About PPS
PPS is a payment solutions provider, helping fintechs, corporates and retailers to seamlessly embed reliable financial services. They provide a suite of functional APIs that enable clients to access an ecosystem of connections (payment schemes, licenses, banking solutions) to build a unique product experience, without the technical and regulatory complexities. As a trusted partner, they offer flexible solutions and guidance every step of the way.  Successful brands across the UK and continental Europe such as Tide, Monese, Sainsbury’s and TUI benefit from PPS’s technology, licensing and 15+ years of expertise, giving them the freedom to focus on providing the best experiences for their customers.