With over 70% of US transactions handled by payments processing firms in Georgia, it’s no secret that the southeast is quickly becoming the epicenter of fintech in the US.
In September, a few of our team members had the opportunity to attend Fintech South, the largest event in the southeast focused on financial innovation, where there was no shortage of knowledge shared.
Here’s a couple of takeaways from the many informative sessions our team had the pleasure of attending:
Open Banking is Here to Stay, but the CFPB Has Something to Say About It
We like Mastercard’s definition of open banking the best: “Simply put, open banking gives you the ability to share your financial accounts’ data to access innovative financial service experiences.” In many of the sessions we attended, we heard about how open banking offers opportunities to improve financial wellness, streamline account verification for both financial institutions and customers, as well as create a more personalized wealth management experience.
The Consumer Financial Protection Bureau recently issued its much-anticipated Personal Financial Data Rights proposal that is intended to accelerate the shift to open banking and jumpstart competition. It will be a second until we see this proposal begin to face legislative scrutiny, but it will certainly play a large role in the evolution of banking.
Fintech is in a Funding Winter, but Spring May Be in Sight in 2024
During the first half of 2023, fintech funding witnessed a staggering 49% year-over-year decline. However, industry experts note that this funding winter has not affected all fintech startups equally. Early-stage startups continue to attract investments, albeit with a 12-14% decline compared to 2022. But, the sharpest decline is taking place in stage B funding rounds and beyond, where investments have decreased by up to 66%.
But, spring is in sight. The fundamentals of the fintech industry remain strong, and the consensus among industry experts is that 2024 will be markedly different from 2023. Increasing demand for innovative financial solutions and fintech’s potential for disruption mark an industry that is ripe for growth. It’s not a matter of if, but when the pendulum will swing back in favor of fintech.
FedNow and The Consumer Demand for Instant Payments
Digital payments are continuing to grow in popularity. In fact, global cash usage declined by about 4% in 2022, continuing a pandemic-era trend as instant payments gained ground in regions around the world.
The recent launch of FedNow in the US is a trend that was spoken of frequently during Fintech South. Following this launch was an increase in consumer demand for instant payments via digital solutions. Hot topics included earned wage access and the transition from peer-to-peer payments to business-to-business payments.
The demand for faster payments is consistent among age groups and has only grown since the COVID-19 pandemic, according to a survey by the Federal Reserve. Luckily for us, nine out of 10 businesses expect to be able to make and receive faster payments in the next three years.
Need more? Our crew of financial services nerds tracks trends, explores emerging spaces, and thinks about what’s possible. Hear their perspectives.