Prior to the onset of Covid-19, we were already seeing huge disruption in the payments space. The power dynamics were changing as businesses and consumers shifted from cash and cheques to digital payment methods.
Cards were still king for retail but mobile solutions and wallets like Apple Pay saw huge levels of adoption. Digital person to person (P2P) apps began to take a serious foothold as they continued to demonstrate improved user experience and seamless integration with existing infrastructures.
That change is now trickling into other sectors long dominated by cash and cheques, such as remittances and business payments. Big tech is taking a larger slice of this market.
It appears now that the adoption of better and more robust payments platforms will only rise, bringing with it new opportunities for businesses that can provide solutions for potential new types of fraud threatening data security and privacy.
This is both a challenge and an opportunity for the big banks. It also creates an opportunity for best in class new entrants in the payments space.
West Coast Big Tech is here, and it wants to eat your lunch
The rise of P2P payment platforms such as Venmo are only the beginning. We are seeing Silicon Valley and the wider San Francisco region increasingly encroach into the financial services space, with Stripe alone recently raising $600 million, valuing the company at $36 billion.
The company has seen a growth in demand during Covid. Existing clients of the platform include Instacart, Doordash, Postmates and Caviar. It recently added Zoom.
John Collison and his CEO brother Patrick have stated that in the period since March 1st, Stripe generated $1 billion in revenue.
The swift and tactical approach from Valley based tech firms has seen traditionally slow-to -respond banks lose ground in the race for your wallet.
It’s not just payments. Peer to peer lending, alternative investing, alternative risk assessment, among other areas traditionally provided by banks, are now growing rapidly in Silicon Valley, with significant players such as Affirm, Brex, Plaid and Dataminr emerging. The disruptors are here, and they are not going away.
Using Data to minimize risk and free up employees
The financial services industry is currently coping with the task of processing a mountain of applications for government led small business loan programs. Banks are also trying to ascertain who is entitled to temporary amnesty on mortgage payments as arrears grow, and are setting aside reserves to cover loan defaults coming around the corner.
Financial institutions of all sorts are looking at alternative solutions to manage functions such as loan processing, risk assessment and portfolio management.
Increasingly, they are looking at artificial intelligence (AI) and data intelligence to best ascertain what parts of their lending portfolio is most at risk in the virus driven recession. They are also looking at ways in which to better utilize their data to develop compliance solutions and best practices.
That means increasing opportunities for companies with AI driven solutions in the financial services sector.
The challenges of managing remote workers
For those industries where work from home is possible, managing a workforce remotely is a big challenge. So too is the managing the return to office process, which will be done on a staged and strategic basis.
Banks and other businesses will need to live with a remote workforce component for the foreseeable future. Better and more robust platforms for managing staffing and other remote considerations are increasingly required. With offices closed all around the world, companies are scrambling to manage such considerations as global payroll, global and local tax compliance.
For banks, the processing of loan applications has been particularly troublesome. Appetite from these banks for tech solutions is ever growing.
Opportunity is out there
Innovative Irish Fintech companies are strategically well positioned in the post Covid era. Ireland’s history of a large and dynamic financial services sector has helped build an expert workforce.
That fact, combined with the growth of big tech on Irish shores, has created something quite unique.
In US fintech we now see two thought leaders: the traditional banks on the East Coast and the big tech giants out of Silicon Valley. Great Irish companies combine both those mindsets, and have deep domain knowledge of each.
Phonovation, the market leaders in secure, Application to Person (A2P) messaging has developed anti SIM swap attack software which prevents hackers gaining access to bank accounts.
Aylien uses a unique combination of data and AI to help banks and others manage risk and optimize access to news monitoring. It leverages artificial intelligence to empower forward thinking enterprises to collect, analyze and understand vast amounts of human generated content. It is increasingly seeing banks using its product to as an alternative resource to assess portfolio risk.
Taxamo helps companies around the world to meet their global tax requirements. It recently signed a collaboration with Deloitte to provide a tax compliance service enabling online marketplaces be tax compliant.
Altada uses its AI solution to help businesses grow and reduce employee time spent working on data. It has seen great success in its target sectors of Government, Financial Services, Professional Services and Human Capital. In financial services, its application is being used to reduce the legal and operational costs in processing the purchase of loan books.
Payslip’s digital technology solution transforms global payroll operations creating a streamlined, low risk, cost effective process for the business. It has demonstrated its effectiveness in the crisis recently, helping a San Francisco based technology company onboard two new payroll countries in just five weeks using Payslip.
Accelerated Payments offers a unique invoice finance solution to SMEs. Using its platform, businesses can access cash tied up in their invoices in just 24 hours. During Covid, many new customers turned to it to ease cashflow concerns at a difficult time.
TerminusDB has given back the power of data to the businesses that gathers it, but doesn’t readily know how to use it effectively. The result is unified, well-structured and refined data – the jet fuel of future business. TerminusDB greatly reduces the time and effort required to build any application that shares, manipulates or edits data. Banks and financial institutions are increasingly turning to TerminusDB to better execute their business.
As we move into the post Covid era, fintech innovation will be more valuable than ever.