Finix Payments Product Team Sees Fintech Evolving Mainly from a Competitive and Regulatory Perspective, Further Consolidation Quite Possible

Finix Payments notes that 2021 was another “crazy” year in Fintech (and for the planet in general).

Finix wrote in a blog post that they wouldn’t be here “without the people behind the scenes working hard to bring better payments processing technology to software platforms, so [they] decided to ask some of these people why they think what [they’re] building … is important,” and where they anticipate or expect the financial technology industry growth this year.

The firm explains that the technology they are creating “enables companies of every size, from brand-new startups to publicly traded companies, to embed payments acceptance into their platforms so that they can improve the customer experience.”

Finix added that companies may leverage their expertise to create “an integrated experience that will delight their customers.” Starting with Finix’s Flex offering (Payments-as-a-Service) “allows companies to begin their journey to becoming a PayFac (or payment facilitator), learning along the way.”

The firm also mentioned that this effectively “lowers the barrier to entry as companies don’t need to hire Payment Operations and Compliance teams unless they want to become a PayFac today.”

According to the update, payments revenues can “eclipse SaaS revenues as companies scale, so embedding the experience in the platform and managing that customer experience are key from the very beginning.”

The Finix team also noted that payments are “complex, and that’s not changing any time soon.” They’ve seen “tremendous innovation in the last decade on the merchant side, making accepting and disbursing payments easier.” But if you want to make payments “a more central part of your product,” then your options are still quite limited, and you’re “back to unraveling the complexities.”

Finix further revealed that they’re “building infrastructure that simplifies the lift for software companies to embed payments.” This “enables a more efficient distribution of payments leading to more options and lower costs for merchant payments, and a better product offering and more robust business model for software companies – win, win.”

As noted by the firm’s management:

“What we are building ties directly into our mission of creating the most accessible financial services ecosystem in history. Financial services on a global level, for both consumers and merchants, have historically been limited in terms of accessibility due to technology limitations, awareness, regulatory inertia, and long-standing biases.”

They added:

“We are building the connective tissue underneath the Fintech industry to bring these disparate services together in a seamless experience. Our work is not just on the tech side: we need to build intuitive visual experiences through strategic design, adhere to and eventually influence compliance and legal guidelines, and weave together a network of partnerships to create a comprehensive suite of products and services.”

The company’s management acknowledged that there’s “a lot of work to do to get there and [they] are creating processes to make sure we are focusing on the right things in the short term while always progressing towards the end state.”

Christopher Bodmer, Director of Product, commented:

“In 2022, I see Fintech evolving primarily from a competitive and regulatory perspective. I wouldn’t be surprised to see further consolidation in the industry, as large Fintechs like Square and Stripe continue to expand their product offerings through acquisition. The cost of capital is cheap (for now) and with potential rate hikes on the horizon there could be a flurry of activity in the near term.”

He added:

“I also think lending services, in particular Buy Now Pay Later, will receive more regulatory scrutiny next year. BNPL volume greatly accelerated in 2021 and we will soon see how these installments will affect the end consumer over time. If consumers get over-extended, and it’s easy to spend money you don’t have, there could be a wave of defaults and repossessions that catch the eye of regulators. BNPL has been great for accessibility to higher-ticket items but a general lack of financial awareness in consumers coupled with easy debt is not a good combination.”

Sunil Joshi, Director of Product, predicts:

“In 2022, I see Fintech’s as doing more than just one thing (eg. payment processing, lending, etc.) and working to provide a more holistic and interconnected experience across all things money related to their customers.”

The firm believes that it will “continue to see platforms expand financial service offerings to their customers.” They added that “leveraging a platform to help run their business is just the first step for many small business owners.”

They are actually “looking to the experts who deliver the tech stack that helps them manage appointment scheduling or inventory to also help them accept payments.”

Finix also noted that these businesses are looking for contactless in-person payments and “new card not present experiences to support curbside pickup.” The pandemic is “not going away, and small businesses are fighting to stay in business,” the firm noted while adding that “anything platforms can do to enable consumer choice will help these small businesses maintain and grow their brand.”

You may check out the complete update from Finix here.

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