2020 Fintech and Insurtech predictions

Since the advent of the word “fintech”, anyone tried to play the little game of tarot to predict the next-gen finance trends. Everyone has heard of banks going out of business, GAFAM taking over consumer finance, financial institutions teaming up with fintech, the fintech ‘bubble’ and so on…

To be fair, last year we also embarked on the hard task to publish our first article guessing the fintech and insurtech trends that would shape the European landscape in 2019.

The clock is ticking and the 365-day period has now passed: I find myself doing the math to see what we got right and wrong. Well… I would say we got roughly half of our guesses right. That’s the hard truth of not owning a crystal ball, but also the fun part of working in VCs. Surprises and wrong predictions are our cup of tea.

Let’s run a short recap:

a) European Neobanks conquering the world — 25% right

b) PSD2 finally getting tangible — 25% right

PSD2 is live but only the UK has embraced a true open banking model. Continental Europe appears to be lagging behind. If we were right about the consolidation of API providers and spread in the number of services leveraging on PSD2 standards, we again overestimated the time needed to see the full-blown effect throughout the Continent (or better, regulator granted FIs a 4-months+ reprieve to get compliant with PSD2)

c) Identity management & fraud detection hotter than ever — 100% right

d) Towards a home buying, selling & financing (r)evolution — 60% right

e) Other interesting trends — 50% right

i. Increasing spread of credit products with subscription-like models
We have missed out on the “market serendipity”

iii. Growth of index-based insurance products/services
Apart from Descartes Underwriting, we have slightly missed the shot here. However, in our defence, the US market has definitely been way more active in the space 😁

What about Europe in particular? In 2019, we have tracked roughly 500 deals and a total raised amount of €7bn. Find below some high-level stats.

We share this “finance on autopilot” vision. However we all are aware that this looks like the end of the journey, hence a mid to long-term vision. As the development of fintech seems to mirror the evolution of computers and the internet, at BlackFin, we are all steamed up to take a role in this (r)evolution!

We have tried, for the 2nd time, to undust our crystal ball and hint at some trends that will characterize the first year of the new decade. There you go!

In the past 5 years we have seen attempts to “disrupt” the lending business, both at product level (e.g. payday loans) and at distribution level (e.g. digital mortgages, point-of-sale lending).

We believe that, during 2020, we will witness an increased offering of lending products. In particular, those that bear a lower credit risk and that ties directly to customer habits.

Also, a number of alternative lenders will be stepping to the scene to fill the gap left by new economies / business models (i.e. gig, on-demand, e-commerce, SaaS).

Lastly, we will very soon see booming platforms allowing employees and freelancers respectively to access instantly their earned wages before the pay day, and achieve better financial stability. This kind of facility is already provided by several banks in different geographies. However, the interesting part is that fintechs are now tackling this opportunity as well, bringing the “tech” piece into it. This means better connectivity with payroll and HR systems, higher flexibility (both for employees and employers) and re-designed UX and service model...

It is not new that at SME level, far too many finance tasks are still manual, from reconciling accounts to building forecasts to chase unpaid credits. The same goes with larger enterprises but with a different flavour: software exists but the overall workflow is clunky.

This is the main reason that why 2020 (and so the years after) it’s gonna be all about the CFO role, with the aim of automating low-value tasks and enriching core information with additional data.

Less tied to the CFO roles, other adjacent areas like advanced payroll management and procurement are under discussion.2020 could showcase some interesting change also in those segments.

There are no doubts incumbents won’t be leaving their roles of protagonists any time soon. On the contrary, they seem to be more and more willing to team up with B2B fintech and insurtech to streamline their internal workflows, add new features to their products, better leverage on their data sets, level up their tech stacks.

We believe 2020 will see a growth in B2B propositions and therefore a bunch of new opportunities for incumbents to innovate. We think two topics are probably going to be hot in the next 12 months: privacy and documents retrieval/extraction.

We thought of sharing here some other thoughts on what to expect this year.

We will probably see:

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