Transformative Trends in Fintech Amidst the Pandemic
At CES 2021, Andrew B. Morris from The Fintech Agenda, LLC, noted that while the Covid-19 pandemic posed significant challenges, it simultaneously brought about transformative opportunities for the fintech sector. Key players like unicorns Stripe and Plaid facilitated the world’s transition to a contactless economy, enabling businesses to adapt to consumers’ newly established routines. Insights from industry leaders Ginger Baker and Erika Wool outline the evolving landscape of payment giants.
In the wake of the recent cancellation of Visa and Plaid’s proposed $5.3 billion merger, which faced a Justice Department challenge, Ginger Baker, Plaid’s head of financial access, discussed how the company’s goal of “unlocking financial freedom” gained traction during the pandemic. Plaid provides essential API infrastructure for popular consumer applications, including Venmo, Betterment, Acorns, and Robinhood.
Baker remarked, “It feels as though we’ve pressed the fast-forward button on a future we envisioned would take years to realize. The pace of acceleration has been remarkable.” She reported that 60% of U.S. consumers are now utilizing more fintech products than before the pandemic, with 80% expressing confidence in managing their finances independently of traditional banks. Between March and May 2020, Plaid experienced a notable 44% increase in new user registrations compared to the same period in 2019.
She also noted a paradigm shift in focus from merely “delighting customers” to “protecting customers.” Digital payment solutions are now being designed with an emphasis on convenience and health considerations.
Following the recent decision to halt processing donations for the Trump campaign due to Capitol violence, Erika Wool, Stripe’s head of payments partnerships, shifted the dialogue from e-banking to the realm of e-commerce. Wool highlighted that while internet businesses are expanding at a quicker pace than the global economy, only 3% of total commerce currently occurs online. Stripe aims to dismantle barriers to e-commerce, accelerate growth for established companies, and build a robust economic infrastructure for the digital world. The pandemic has further expedited the adoption of digital payments among small businesses.
Wool noted that by August 2020, just six months after the pandemic began in the U.S., Stripe had processed over $10 billion for new businesses joining the platform during that time, with many venturing online for the first time. Additionally, 90% of U.S. adults had made a purchase via Stripe in the previous year.
Both Baker and Wool acknowledged that the recent shifts in the digital payments sector are likely to endure, as consumer behavior has fundamentally changed. This transformation, often referred to as the "new normal" or, as Wool describes it, the "next normal," has emerged out of necessity and is poised to shape the future of financial interactions.