The Path Towards A Sustainable Global Fintech Ecosystem
By Ingrid Vasiliu-Feltes, USA
MD MBA, Healthcare Executive, Futurist & Globalist
The Global Fintech Ecosystem has been expanding at a fast pace over the past few years with an estimated $53B capital influx into startups only in CY 2019. Despite the economic downturn and a drop in funding recorded in Q1, the Fintech Ecosystem has been able to weather the pandemic better than many other industries. The latest forecasts expect the Fintech market to grow at a CAGR of 17.1% by 2025 according to a report published July 16th 2020. The trends we are expecting to observe in this Fintech Ecosystem are: hyper-personalization, as well as increased AI and blockchain integration. Within the AI fintech category, robotic process automation and conversational interfaces seem to be front-runners. For the blockchain fintech market, we expect to see an increased adoption in digital currencies and a strong competitive drive from neobanks.The key stakeholders in our current ecosystem are incumbents investing in innovation, as well as established fintech rivals. There have also been major changes in the regulatory and taxation law landscapes that are expected to significantly change the dynamics within the Fintech Ecosystem. Additionally, the current pandemic has also enhanced funding challenges and highlighted the imperative need for access to alternate funding sources.
The current global economic crisis has caused a decrease in overall funding available, decreased access to various funding sources, high market volatility and an increase in digitalization. Experts can foresee a few challenges in the post-pandemic environment: need for rapid digitization, need to increase collaboration among various stakeholders, and facilitate access to innovative alternative funding mechanisms.
There are also tremendous opportunities for the next few years, such as the opportunity to strive towards creating purposeful entrepreneurship, deploying proactive digital ethics programs, optimize cybersecurity mechanisms and ensure long term sustainability. In addition to these improvements, it is incumbent upon us as a society to ensure that the fintech industry is a key contributor to the greater good.
Fintech for Good
The Global Fintech Ecosystem of the future will hopefully be characterized by an increased financial diversity, financial inclusion, optimized digital fluency, enhanced socially responsible capital deployment, robust digital ethics programs and a human centric design. While financial inclusion is on the agenda for many organizations, there is still a large gap due to the complexities required to solve this issue that transcend many facets of our society and require intense cooperation among multiple stakeholders. According to a recent financial inclusion and diversity report published by the World Bank the global aim is to enable 1B people to gain access to a transaction account. It is recognized that financial access is a key element contributing to the financial inclusion index for any country and a building block for poverty reduction as well as economic growth. Another important driver of success is digital fluency, which is defined as a combination of digital proficiency, digital literacy and digital competence. These skills are essential as they translate into the ability to leverage technology to create new knowledge, new challenges, and new problems and to complement these with critical thinking, complex problem solving, and social intelligence which are critical for adaption to a fintech ecosystem designed for the digital era. In order to ensure long term sustainability, the fintech ecosystem of the future has to also be socially responsible and based on robust global digital ethics frameworks. Above all, it is our responsibility to design a fintech ecosystem that is human-centered and able to dynamically adapt to a never ending flux of technological advances. Only by having an interactive systems approach focused on all users within the ecosystem can we achieve optimal effectiveness and efficiency, while maintaining human wellbeing. With the disruptive impact of 5G, IoT, AI, or quantum computing we are facing it is also imperative to develop global education and training programs that will facilitate their adoption without further increasing the digital divide. Last but not least, responsible Fintech leaders will also need to consider the impact on our environment, with climate, air pollution and natural resources being top concerns.
Only by investing in disruptive innovation and digital transformation, can the Global Fintech Ecosystem remain a key driver of the global economy. It is essential to collaborate with all other key players to further harmonize laws, regulatory guidelines or policies in order to facilitate a large scale adoption of state of the art financial technologies and financial instruments.