The number of investments may have decreased during these risky periods. However, fintech initiatives, which investors are still chasing and the developments will not affect much, are under close branding.
The Corona virus pandemic has profoundly affected all of our lives. Investments in many areas suddenly paused, and in sectors that were desperate against this unknown virus, investments almost stopped. The FinTech domain is, of course, affected by this virus, but on the other hand, it is an industry with great opportunities.
According to CB Insights data, investments in fintechs suddenly fell to the lowest level in the last 3 years. Actually, this did not happen with a low level of instant movement. Investments in FinTechs were already in a downward trend. More precisely, very serious investments in fintech ventures came last year, and fintech initiatives were the shining star. At the same time, many new fintechs were born at that time. However, we have experienced a recent boom in cryptocurrency ventures and investments. Therefore, my personal belief is that the fintech investments decrease in number is not pessimistic.
The most important issue for enterprises in this period is transparency. It is very important to establish a serious trust with investors or candidates and to be open about the effects of this period. The founders of the enterprises express exactly these.
Featured in the FinTech category are digital banks. It is very important for digital banks to maintain their transparency in this process. Because today’s traditional banks with branches pass an important test. In some countries, banks’ branches were completely closed. However, digital banks are hardly affected by this because they do not have any problems such as branches, branch employees and rent. Of course there are other troubles, but these are now more prominent in investor presentations.
Let’s take the example of Lunar, a digital banking initiative based in Denmark. The initiative just received a € 20 million resource a few days ago in addition to the Series B investment it received. While many banks have stopped such investments, Lunar aims to grow by getting additional investments in this difficult period. Open banking is a seriously followed process in the field of banking. In this field, open banking-based API platform Yapily has received $ 13 million investment just a few days ago. There are many big and small samples. However, the Japanese digital bank Kyash’s $ 45 million Serial C investment 5 days ago is also a good example for this paragraph.
Another issue in this process is regulation. The fact that some operations are not possible but there are serious needs is stretching the rules and perhaps the belts will be loosened at the points that the regulators will never allow before and new developments will take place in this area. For example, the prevalence of digital signature usage. The use of digital signatures, which have not been very common until today, will increase afterwards. For example, the shares of VeriSign, which provides digital signature services, are currently in flight.
Another development will be in digital customer acquisition. The obligation of the customer to go to the branches disappears since physical signature obligations are no longer possible during this pandemic period. Regulation also has to allow it and bring solutions. The process we live in necessarily draws official institutions towards allowing this. For example, customer authentication attempts will do a great job in this period. It is possible to say that the outputs will be felt in this area, just like the explosion experienced by video conferencing devices.
In short, it is very normal for FinTech initiatives to be affected this period. We are not sure if it will increase after the speed, but the steps that fintech enterprises in this field will take to do the right job at the right time will take them to the upcoming tour investments. At the same time, fintech initiatives that accurately reflect the process will gain investors’ trust better and will be more successful.