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The Rise and Fall of Digital Disruption

The Rise and Fall of Digital Disruption

🥁 Introducing the latest addition to our series of Deep-Dive reports: The Rise and Fall of Digital Disruption

 

Although the last two years will forever be remembered as a global health crisis, whose devastating effects were felt by all corners of the world, during this time the digital space relished an unprecedented amount of popularity, and FinTechs providing digital solutions to newfound pain-points had customers, and funding, coming out of their ears. 

 

This latest report breaks down the forces and effects of the market changes responsible for the Rise and Fall of Digital Disruption. We observe how all financial institutions, both digital and non-digital, will have to consolidate their target demographics and business models, as well as their use of technology in line with evolving regulation, in order to remain in business. 

 

☝️ The Covid-19 pandemic accelerated existing market trends, whereby digital adoption was pushed into overdrive. 

 

As the global economy faced turmoil and insecurity, FinTechs saw an opportunity to offer services to customers who were previously unbanked or underserved. 

 

Those providing Banking services eliminated overdraft penalties on current accounts and offered “freemium” models to millennials who came to maturity during lockdowns, as well as to communities frustrated with their own Legacy Banks. 

FinTechs in Payments added a market cap value of $422 billion between 2020 and 2021, and are now targeting all other key verticals in the financial services industry. This further increases pressure on incumbents who expect to risk losing as much as $280 billion in Payments revenue by 2025.

In Lending, European Buy Now, Pay Later firms were predicted just 6 months ago to reach a Gross Merchandise Value of $860 billion by 2028.


👇 In 2022, however, decreased revenue from fees and commission, trading losses, and rising interest rates due to market volatility have compounded the pandemic’s consequences for both Traditional Banks and FinTechs alike. 

 

Europe’s biggest Buy Now, Pay Later firm Klarna recently underwent a painful 86% drop in valuation, whilst Nubank’s stock has plummeted 61% since its IPO. Traditional Banks have been feeling these effects for some time - in 2020, the 10 biggest banks in Europe had an average Cost to Income ratio of 68.7%.

 

🤝 Given the increasing pressures and competition, Traditional Banks and FinTechs are mutually benefitting through Mergers and Acquisitions. 

 

As of May, 2022, 8 banks were already in the process of acquiring FinTechs, and we expect this number to reach record levels by the end of the year. Co-branding is also occurring between Traditional Banks and BigTech, such as Goldman Sachs with Apple. 

 

As David Vélez, CEO and Founder of Nubank says, “There’s going to be a rationalisation of some of the FinTechs that are in the market… This will enable the survival of the fittest.” 

 

C-Innovation Research

 

This report is aimed at FinTech businesses, enthusiasts and corporate banks looking for actionable takeaways which address current issues in the digital space. It provides insights on the ways in which to adapt so as to continue to survive and evolve. 

We include case studies of Santander Bank, JPMorgan Chase, N26 and Amazon to shed more light on their unique growth strategies as a response to market changes.

 

To learn more about the changing digital landscape, download the full report or subscribe to get access to the C-Innovation suite of FinTech deep-dives. 

 

Report Contents

 

  • Changing Landscape of Banking

  • Analysis of surveys and emerging trends

  • Banking in the New Decade

  • Global Banking market size and revenue, Banks’ changing strategies

  • Consolidation is Next

  • FinTechs’ struggles, European Banks, M&A deal trends of 2022, and more

  • Key Areas of Disruption

  • Digital Banking

  • Green Banks, Australian Banks, Open-banking, AI, and more

  • Payments

  • E-commerce, regulation, Big Tech, and more

  • Lending

  • Mortgage origination, BNPL business models, and more

  • What is to Come in 2022?

 

 If you want to learn more about the Rise and Fall of Digital Disruption, why should it come from us?

 

  • ☺️ All of our sources are displayed and are up to date - leaving nothing to second-guess!

  • 🔨 We have done all the hard work (sifting through financial statements and long press releases) and synthesised this information so that it is as easy to read, digest and apply as possible!

  • 🏝️ Themes and key points are stand alone, so if you need information quickly it can be easily identified and understood independently from previous slides.

  • 🏠 Our experienced analysts are in-house, and so if you have any additional questions we are just an e-mail away.

  • 👃 Our opinions are objective and unbiased - we are not affiliated with any companies featured in this report and simply enjoy sticking our noses into their business model…!

 

 


 

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