We all saw it Highlights: FinTech is struggling. Since last year, valuations are down 70%-80%, deal activity is down 67% and layoffs have plagued many former industry favorites.
But fintech is resilient. Innovation continues to see new developments in lending, payments, crypto and, in particular, infrastructure, showing that the industry still has a lot of room for growth. And while investment activity has slowed this year, it is still much higher than it was in 2019 and 2020.
Infrastructure providers have a unique opportunity to be the bright spot amidst all the calamity. Over the years, the infrastructure has enabled fintech companies and non-financial services companies to seamlessly integrate financial products into their platforms.
However, as the market became more crowded, infrastructure providers began to compete on who could develop the least expensive product and sign up the most fintech companies. The infrastructure market is missing out on a crucial opportunity to create additional production capabilities that address pain points arising from fintech’s struggles.
Infrastructure providers can help connect fintech companies with incumbent banks so that both can benefit from the interest rate environment.
Infrastructure providers need to find a way to re-prioritize and increase their capabilities for their existing customers rather than signing new ones. To do this, they need to closely examine the issues that customers deal with on a daily basis. What does a fintech company do when under a fraud attack? What does the new compliance order in the UK mean for their business? How will they retain customers who are spooked by news of skyrocketing interest rates and inflation?
These are questions fintech industry leaders face every day, and infrastructure providers need to understand how they can answer them.
Identifying and addressing pain points
The financial infrastructure sector is inundated with huge influxes of newbies. Addressing specific fintech pain points is not just about helping the fintech industry; This is a way for infrastructure providers to differentiate themselves and show that they offer real value.
The draw of additional customers and revenue streams has caused fintech companies to explore international waters. In an increasingly globalized world, international coverage is no longer optional.
Infrastructure providers need to satisfy their customers’ appetite for global growth by ensuring their platform is available in countries outside the US – they need to ensure their platform helps fintech companies adapt to rapidly changing global regulations – further down the line.