Global report points to bright future for fintech sector

John Mathers

WE'RE feeling optimistic about the return of face to face events, and it was great to see an event like the Northern Ireland Fintech Symposium take place a few weeks ago, where the focus was on the growing - and impressive - contribution fintech makes to the local economy.

On a larger scale, one of the annual highlights for the financial sector is the global Money 20/20 series, which brings together the most innovative people and players in payments, fintech and the broader financial services industry around the world. With a buzzing fintech sector here in Northern Ireland, we're always keen to tap into it.

Barclays is the Global Insights Partner for Money 20/20, meaning our research gives us an insiders' viewpoint on how the fintech industry is shaping up around the world. We've published the latest report following a survey of nearly 1,000 financial services leaders from EMEA, the Americas and Asia-Pacific.

Three key topics feature: growth, talent and the role of start-ups in disruption. There's also some interesting insights from China and India. The biggest finding of note is evidence of maturing in this sector, as it stabilises and grows more confident, even in the face of the challenges and changes of the last two years.

Firstly, on the topic of growth, there's no doubt this is the number one priority for many fintech companies (around a quarter), but our insights are showing strong signs of greater stability. In 2020, growth was the top focus for more than half (57 per cent) of organisations surveyed at that time. Now as they mature, fintechs are prioritising activities which will strengthen them in the short to medium term: increased profitability (8 per cent), acquisitions (7 per cent), enhanced cross-border operations (7 per cent) and redefining target markets (4 per cent) are all areas of focus.

With Northern Ireland identified as one of the ten leading emerging clusters for fintech in the UK, local recruiters and employers will know all too well the challenges of securing skilled staff in the tech sector. They may take some solace in knowing they are not alone; the Money 20-20 insights show that talent acquisition has increased in priority and is now the second-most pressing area across EMEA, the Americas and Asia-Pacific. In fact, more than one in ten (11 per cent) said securing the talent they need is their top priority. However, the report reveals that with maturity in the sector comes a new-found need for breadth and depth of talent and not just the tech skills.

Jenni Himberg-Wild, UK head of fintech at Barclays Corporate Banking, said: “The competition is now fierce. The battle is no longer just for coders and technical payments people. As the market continues to mature, there is increasing demand for people with a real breadth of experience. We are seeing firms looking at IPOs, for example, and they are looking to add people with broad business experience, bolstering their boards and adding credibility. Talent is essential to their continued growth.”

Looking at our own fintech sector in Northern Ireland, with both established players and a healthy start-up ecosystem, readers will be keen to learn that the Barclays research revealed that 60 per cent of those surveyed world-wide identified start-ups as the key drivers of disruption and change in the payments industry. This was up even further from 2020 (53 per cent). Fintech businesses are increasingly looking to the innovators driving behaviour change as a critical ingredient in their future success.

Interestingly, survey respondents in the Asia-Pacific region cited large established businesses as being the second most important driver for change (at 18 per cent), against only 5 per cent of respondents in EMEA and Americas. The report suggests that this could be down to the fact the A-P market is dominated by a few large players with a higher profile.

Results from Asia-Pacific throw up some other interesting points of note, perhaps due to their sector being slightly further along the development curve. When asked where the biggest rise in fintech innovation will be in the next five years, in previous years, most opted for their own region. In 2020, home bias was particularly strongly in favour of China, India, Japan and Southeast Asia (over 83 per cent). However, in 2021, these countries only accounted for 36 per cent of Asia-Pacific votes, with respondents in this region opting for other regions instead. This will be an interesting one to watch as we might ask, which region will emerge as the next fintech innovation hotspot?

UK respondents are still looking East for innovation, with three times as many respondents pinpointing Asia-Pacific as the next source of innovation (12 per cent) versus Western Europe (4 per cent).

This report will be of great interest to anyone interested in fintech. There are clear signs of confidence and positivity in the sector. The last two years have cemented this through consolidated growth and increased stability.

As the market matures, the outlook on growth is now moving beyond short-termism, and we're really encouraged to see an evolving focus on long term strategic drivers of growth and sustainability. Tenacity is being rewarded and bright times lie ahead in the fintech sector.

The 'Strength in Numbers' state of the industry report can be found in full at:

:: John Mathers is corporate development director at Barclays Corporate Banking in Northern Ireland

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