“It's pretty hard. In the end, if you really want to be successful, you might not be the platform, you might be collaborating with the right platforms. Not everyone can be the platform if everyone aims for that a lot of them will fail”.
The pandemic has brought mixed fortunes for fintechs, a survey conducted by Innovate Finance found that nearly 60 percent of small fintechs only have enough cash for the next six months or less. On the other hand, almost 80 percent of larger fintechs have cash for 12 month or more.
Saka Nuru, head of product marketing for fintech ecosystems and payments at Intuit said that some firms may go bankrupt but that others could be picked up by larger players hoping to add more peripheral features in order to improve the value add of their our service.
“No one needs a third or fourth bank account. The reason why you'd have another bank account or another banking facility, or even decide to use a FinTech service is because it gives you some sort of added value.”
Ginsei does also say that operating on a platform you don’t control leaves you in a slightly weaker position but it is about working your own advantages.
“You have to pick your battles. You can lose the game of trying to be the platform but you could win the game by being an ancillary service. Fintech’s just need to pick what they’re good at and try to gain a competitive advantage.”
The platform that will come out on top will be the one with more funding according to Swati Kalra, change and transformation lead for banking at Monese.
“The platform which will outlast the other one is the one which has the most funding. That's the hard truth of it. It's more about who has the most capital to keep buying more services or giving discounts or subsidies to the customer.”
With capital harder to come by, fintech will need to take on a more collaborative approach Karla added.
“A trend in the market overall is an increasing need for collaborations and partnerships. It’s easy to launch a product but to scale it is difficult. There is a lot of operational capacity you need which startups are not the best at when flying solo.”
“I think if anything, coronavirus has just increased that momentum of everyone evaluating what are the collaboration opportunities, which can make their business more resilient.”