FinTech Investor Rati Tchelidze Summarize 2020

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2020 is a year we will never forget. The coronavirus pandemic which began in Wuhan China by 2019 took the world by surprise and affected every industry, company and person. As both developed and developing nations have been brought to their knees by the pandemic, it was, and still is, a trying time for everybody. 

However, in some areas the pandemic became the driving force behind new technologies as we quickly had to find solutions to the new reality of social distance and remote work. One of those industries is the FinTech industry, one that has helped companies transition from traditional banking into the financial digital market. 

The FinTech industry has been considered a bit of a “roller-coaster” when it comes to short-term investment, but FinTech stocks have long-term potential. Anyone who wants to start investing in FinTech must stay up to date with developments in the industry and few know the market better than Rati Tchelize, the FinTech investor, behind Axios Holding. We asked him to summarize what he considers to be the three most important events within the FinTech industry of 2020 and what we can expect in the year to come.  

 

  • Digital Transformation & Cashless Economy

 

Sometimes good things come out of the bad and in some ways this can be said to summarize what happened to e-commerce and digital transactions during 2020 as the pandemic heralded a digital transformation. The digital age was already upon us before the pandemic but the pandemic sped it up as people had to resort to digital means for communicating and transacting business. 

According to Rati Tchelidze, we have never been closer to a cashless economy as we are now and Sweden is predicted to make the transition already in 2021. The pandemic brought to the fore, the possibility of a cashless economy especially in the developing nations where the use of cash was prevalent. Working from home which many were compelled to do during the lockdown meant the circulation of fiat money was difficult. The efficacy of digital financial solutions came to the fore and this trend is poised to continue through 2021. 

Nowadays, the tide has turned; there is nowhere to hide for businesses hesitating to implement a cashless policy. The second and third wave of the pandemic is in full swing and who knows if there will be another wave! Businesses that do not latch up to digital payment will be in for a torrid time.  

 

  • Open Banking 

 

Some reforms are engaged willfully based on intuitive thinking and recommendations from an individual and some reforms are birthed by necessity. As the pandemic hit Europe and especially England, it opened up the opportunity for open banking to thrive. Bank customers had access to their records even without visiting the banking halls even as measures were taken to limit physical congregation. Open banking compelled some of the UK’s biggest banks such as Barclays, HSBC, Santander, Allied Irish Bank, Lloyds, etc to securely share data with authorized organizations online. There is no cause for worry as the transfer of data between the bank and the third-party organization must first be authorized by the client before it can scale through. Open banking wasn’t necessarily a new idea but it came back to prominence last year and it may likely become a feature of modern banking for the years to come. 

 

  • Embedded Finance

 

The year 2020 brought about the synchronization of financial technology into non FinTech platforms such as Amazon, Uber, and Google. The pandemic opened the door for embedded finance to thrive and it was a thoroughly successful venture as it generated billions of dollars in its first year and is even projected to grow even further this year 2021. 

According to a report by  Lightyear Capital, estimates that embedded finance will grow from $22.5 billion in 2020 to $230 billion in 2025, during which period the sector will create more than $1 trillion in value before rising further to $3.6 trillion by 2030. These huge returns will boost the global economy that has been severely hit by the reduction in economic activities due to the pandemic. Embedded finance will facilitate transactions and also facilitate income-earning opportunities which could help compensate for the loss of income suffered by many families around the world during the pandemic. In another way, products utilizing embedded finance are growing in scope and usability even as their users begin to explore ways of interacting with the product outside of the core functions it was developed for. Embedded finance is set to become a major revenue earner for organizations that make use of it. 

As opined earlier, 2020 came and is gone but it has left us with a couple of lessons and this lesson can help pave the way for a better 2021. Although 2020 came with a lot of pain and anguish for families and for business owners it also brought about some innovations which will remain with us for the foreseeable future. 

The year served as a lesson for entrepreneurs to sit up and evolve; i.e. come up with new ways of resolving problems and meeting needs. The business terrain has gotten more hostile and only the strong will survive the turbulence.

 

Disclaimer: This content does not necessarily represent the views of IWB.

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