Strong Opinions, Loosely Held

Fintech Predictions For 2020

Alan Tsen

At the end of 2019 I tweeted my fintech predictions for 2020. I mean are you even in tech if you don't get your crystal ball out at the end of the year?

In previous years, I've just let my predictions live on Twitter with occasional commentary about what I've been wrong about and what has in fact come to pass.

This year I'm going to experiment with tracking my predictions on an ongoing basis throughout the year. I'll be adding my commentary every now and then for each prediction - should be fun to see what I was massively wrong about and what I got right. So here goes.

Prediction 1:

As at 11/19 there are 58 fintech unicorns worldwide - 33 in North America and 25 across the rest of the world. This year the 'rest of the world' surpass North America in terms of number of unicorns.

Commentary:

20/2/2020: According to CB Insight's Q4 2019 State of Fintech report, another 8 unicorns were born in Q4 of 2019. This brings the global number of unicorns to 67. The majority still residing in North America (38) with the rest of the world still lagging behind (29).

Prediction 2:

China, India, Chile, Brazil (I'm a South America fintech bull) and UK lead the charge in creating more unicorns. Closer to home, I think Australia sees at least another 2 unicorns created this year.

Commentary:

6/3/2020: No huge change on this front. According, CB Insight's Q4 2019 State of Fintech report another 8 fintech unicorns were added in the last quarter of 2019.

Prediction 3:

Corollary to 1, get ready for more fintech foie gras rounds. VCs are going to stuff fintechs with serious cash...and with good reason. Worth remembering how big the size of the prize is. Eg.40th largest bank in the world has a market cap of ~$US47bn (Postal Savings Bank of CN)

Commentary:

6/3/2020: We've already seen some big rounds raised in the first few months of 2020. Some notable foie gras rounds:

  • Revolut's $500m round.
  • Chime's $500m round.
  • Nubank's $400m round.

Prediction 4:

'Every startup becomes a fintech'. Lots to unpack with this one - but simplest example is, most at scale startups will begin doing their own payment processing inhouse and kiss goodbye to Stripe/Braintree/Adyen et al. See for example, what Finix are doing in this space.

Commentary:

6/3/2020: This prediction is running super hot in 2020 πŸ”₯ Here are a few interesting developments on this front:

Prediction 5:

Related to prediction 4, fintech infrastructure will see the biggest rise in number of unicorns this year. Personally, I'm bullish on middleware that is β€˜stitching the financial world together’, but there is a bunch of surface area in the guts finance.

Commentary:

6/3/2020: This prediction probably best reflects the fintech zeitgeist at the moment. Angela Strange, Partner at 16Z, had a great presentation on this topic that can be found HERE. Also, capital continue to flood into this vertical - see for example, the $35m round raised by Finix. Β 

Prediction 6:

This will be the year rebundling in fintech hits hyper speed. Can't wait to see which challenger bank acquires a scooter company first πŸ˜‚

Commentary:

6/3/2020: Still waiting on a scooter company to be bought by a fintech. In all seriousness, there is continued signs of fintech startups rebundling services and continuing to go further up (or down, depending where you are) the food chain. For example, take Square with Square Cash and it's move into the fractional trading space.

Prediction 7:

Speaking of acquisitions: more consolidation in payments (for sure) and brokerage (customer accounts are the game). We'll also see someone go big and do a $5bn+ acquisition of a fintech.

Commentary:

6/3/2020: Fintech is running uber hot in 2020. Acquisitions so far this year:

  • E*trade bought for $13bn. Ps. I can think at least another 2 brokerage plays that should get acquired.
  • Plaid sold for $5bn by Visa.
  • Credit Karma bought for $7bn by Intuit.
  • Lending Club buys Radius bank for $185m.
  • Ally buys Cardworks for $2.6bn.

And that was by February 2020!

Prediction 8:

This year blockchain/digital currencies... do little. Maybe 2021 gets interesting - but probs not. Probably most interesting thing will be whether John Mcafee loses THIS BET.

Commentary:

6/3/2020: Yes, the price has oscillated for crypto and a few random projects have been birthed, but we're still in the trough of disillusionment for the technology.

Prediction 9:

Most techfins continue playing at the edges. A majority are too busy cancelling themselves to really make a massive play in 2020. Also, US elections make it harder for the US based ones to do anything radical.

Commentary:

6/3/2020: Beyond Apple, there really hasn't been many moves in this space made by large tech incumbents and as predicted many are busy with their own regulatory issues.

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