Karine Martinez, Head of Sales at Edenred Payment Solutions, on why a partnership approach is the best way for fintech businesses to emerge stronger from a tough investment environment and the ongoing economic crisis.
It’s safe to say the days of uninhibited capital spending are behind us, and the fintech industry can no longer rely on investors who have, until recently, been enthusiastic about this booming industry.
The problem isn’t that fintech success shows signs of slowing; quite the contrary. 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 this year. Nevertheless, fintechs face a number of challenges if they are to make these projections a reality.
From sharp valuation declines in both public and private markets to dramatic interest rate spikes and rising inflation, this time of unprecedented macroeconomic uncertainty is not the time to go it alone.
Why do fintechs need an expert partner?
Fintechs are often regarded as the mavericks of the finance sector, out to disrupt traditional payments networks. But the those that will succeed in the long term will collaborate with partners that can help them scale. Even traditional banks are taking this approach, 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 Edenred Payment Solutions 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 Sprive is a prime example of how successful a partnership approach can be. Sprive is a first-of-its-kind mortgage overpayment app designed to help homeowners save interest and become mortgage-free faster. Since October 2021, we have provided Sprive with our payments technology platform, payments licensing and processing services, including e-Wallet provision, access to the Instant Faster Payments Service, regulatory adherence, and anti-fraud services.
Partnerships like this between an innovative fintech and an established brand are an effective way to fast-track speed to market and reduce costs 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.
What to look for in a payments 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 choices they make. 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 can get, and retain, that all-important competitive edge. 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.
Why now?
As well as competition from financial giants 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, and the Money Laundering Control Act.
Not to mention that securing investors and raising funds will continue to be a huge challenge for fintechs in the year ahead. Raising venture capital is one of the key elements that make a startup grow, but competition is fierce, and getting investors on board requires a detailed financial plan, long-term strategy, and validation of the idea.
Considering the ongoing volatility and tough economic conditions, it’s 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.
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.