FinTech 2020: While The World Waits, We Work


 A world-wide health crisis leaves a trail of destruction that moves through space and time. Beyond the horrible loss of life, people are stuck away from their family and friends, their favorite bartenders and baristas, even their annoying neighbors don’t come over anymore. While there has been plenty of hardship throughout our history, none in recent memory have left the human populace so isolated.

The hardship is even worse for those who have lost their jobs and businesses as a result of the pandemic. Quarantine measures and social distancing have left some lucky retailers and small businesses (SMBs) on life support and the less lucky out of business. Due to the economic crash caused by the pandemic, the role of FinTech has become more central to the lives of those forced to stretch their budgets and seek out new revenue streams. Even as we reflect on 2020 as the year of the pandemic, the fact remains that we are not still free of it. Businesses are still closed, socialization still needs to occur at a safe distance and masks are still the literal “must have” fashion accessory of our time.

But when I look back on 2020, through the cracks of tragedy and the stale fog of inactivity that blankets our world, I see the progress the world and FinTech has made through the effort of our shared tragedies.

This past year was a tempering by fire where you either chose to wait or you chose to work.The people and businesses in the FinTech industry rose to the occasion & I witnessed FinTechs like Kabbage, Tally and Robinhood come to the financial rescue of their consumers in their time of need. That’s no hyperbole, when there was a problem, a financial one admittedly, there was a FinTech team to the rescue.

But the year wasn’t entirely marred by the pandemic. We had over sixty glorious days where you could sit at a bar and order a drink, you could celebrate life’s special moments with more than eight other people. You could even cough in public without being run out of town on a rail. Those first few months, Covid-19 seemed to exist only on news programs.

At that time, our current reality was completely unimaginable. To stress that point, many of us in the industry were present at the San Francisco FinTech Hub in February, celebrating the companies and products created in the region. The event reunited FinTech firms of all shapes and sizes in the greater bay area that were leading innovations across areas like blockchain, payments, hyper personalized banking and AI; all expected trends of 2020. The interest was overwhelming with major companies like Mastercard Incorporated MA and PayPal Holdings, Inc. PYPL joined by interesting newcomers like Wealthfront, PayActiv, and Veem. The event was a resounding success, selling out tickets and energizing attendees for what the rest of 2020 would bring. It was going to be a great year.

Then the pandemic happened and the world was thrown into a period of great uncertainty and fear. The entire country was shut down and Americans were confronted with threats to both their lives and livelihoods. The medical world raced to find a cure for COVID-19 and the FinTech world raced for the financial cures to quarantine.

SMBs were arguably hit the hardest, making up most of the businesses that were unable to rely on a virtual marketplace. These companies often lack the long-term relationships with lenders that other, larger companies have cultivated; making obtaining loans both more important and more difficult. That is why the government created The Paycheck Protection Program (PPP). The loans were meant for SMBs to pay their staff, rent, utilities and remain operational.

Unfortunately, however well intended, the loan process was complicated and help completing the forms long in coming. The government only suggested patience to these SMBs as they went out of business while large companies consolidated their cash reserves, leveraged their size and even occasionally made fraudulent withdrawals from the program meant to help struggling small businesses.

In light of these issues affecting their clients, FinTechs like Kabbage, Numerated, and Betterfin, created tools to streamline the application process, enabled the launch of hundreds of banks and credit unions for PPP lending & helped streamline processing through self-service features. These tools enabled small companies to find banks that could help them, correctly fill out the forms efficiently and get the loans they needed promptly. Once again while the world waited on a problem, FinTech came to the rescue with a solution.

Making ends meet was even more exasperating for individuals. While some of us were thankfully able to continue working from home, that wasn’t an option for many, including many of society’s most vulnerable and economically disadvantaged. The difference in social class became even more exasperated with the onset of the lockdown. Where the rich were able to comfortably wait out the virus and the middle and lower classes were left to their own devices. Loss of wages, change in childcare situations and the increased price in goods among other things have a far greater effect on the poor and middle class, than the wealthy.

For the people who couldn’t wait, FinTech was working. And with so many FinTech companies already using AI and data to enable personalized experiences, it was not difficult for them to craft even more specifically tailored financial solutions. Tally, for example, began as a company focused on helping its member’s pay off credit card debt. After the onset of the virus, Tally created a program for their customers that, if affected by the pandemic, they could defer a credit card payment and create a custom payment plan. Since companies like Tally already invested in helping people toward financial wellness, the pandemic was an opportunity for them to use tools such as personalization to aim to serve the underprivileged more clearly.

Without income, however, there is only so much technology can do to help. Unemployment was rising to extreme levels, people who were able to work often had hours cut. Early on in the pandemic, the stock market fell into a bear market and, suddenly, Robinhood, already the world’s most popular trading app, grew its membership by almost one third in less than a year.

The abundance of free time, falling share prices, the prevalence of zero-commission brokerages - a strategy initiated and popularized by Robinhood - collectively aided in creating the largest ever surge in retail trading in history. The majority of Robinhood’s users are inexperienced investors with an average age of 31. Besides its creative business strategies, the simple clean user interface has been credited with people’s quick adoption. While some forecasted a large exodus of users, Robinhood continued to grow its user base throughout the year. While so many large old companies struggled or dug in amidst the changing pandemic landscape, Robinhood garnered over 3 million new users across 2020. Not only did Robinhood open the door of investing to a new market of underserved people, but its immense popularity has even caused its larger older competitors to adopt some of their most innovative changes. Companies like Robinhood did more than create much needed revenue streams. They empowered the consumer, encouraged financial literacy and wellness, and gave smaller investors a chance to grow.


I encourage everyone to look back over the past year and see that when the world came to a halt, FinTech never stopped. And so, whether looking backward or forward, you can do either with confidence. Last year proved that FinTech is going to be instrumental in whatever future is cobbled out of our current economy. Every company will eventually, at least partially, be a FinTech company. And just like the suddenness of the Pandemic created opportunities last year, it’s enduring longevity is creating opportunities for 2021. Because while so many are waiting to see what the world will be once the dust settles, we in FinTech are working to create that world.

So as we leave the still smoldering ruins of 2020 behind us, let us take a brief but glorious look forward at a few areas of immense potential within FinTech. The industry is at a place where there are so many opportunities. And because of this vast opportunity, I will narrow my focus to three, cryptocurrency, vice markets, and B2B.

Money is dirty. That is not a controversial statement. It is said to carry bacteria and even traces of drugs on it for up to weeks at a time. There have been calls for a cashless society for years, to the fear of bankers and Christians alike. The pandemic has obviously brought renewed attention to the idea. Since hygiene has been such a popular topic of conversation, and considering money is one of the things we touch and exchange most frequently between each other, it has been a specific target. Couple that with the fact that the average American now invests in some form of cryptocurrency, and you can see the environment is ripe for big changes. Bitcoin, for example, went from $4000 to $23000 per bitcoin from March to December. And this is not some fluke due to overly cautious people. Cryptocurrency was always the direction that we were heading, Covid-19 is not the basis for its success. Its rise is better explained by Professor Scott Galloway’s assertion that, “Covid-19 is an accelerant…not a change agent.

Whether governments are going to be earnestly debating the merits of a cashless society this upcoming year is unlikely, there have been government regulatory changes through our country and the world that provides FinTech with unique opportunities. Cannabis for example, only recently legalized in most regions, is currently a multi-billion dollar industry that not only doesn’t use digital payments but they have for the most part not even evolved to using checks. The outlaw mentality, like the moonshiners of Appalachia, has made leaving a money trail one of the tenets of survival and success. The transition to legality may have literally happened, but ideologically a lot of these business owners are still operating as if their money is dirty. FinTech has a real opportunity to show these business owners the benefits to digitizing payments. The same opportunities for cannabis exist for gambling and other vice markets.

P2P payments has long been a primary focus of FinTech, much more so than B2B payments. Some quick surprising facts, 51% of companies still pay by check and 44% of these companies still receive payment by check. B2B does $125 trillion in total yearly payment volume, dwarfing P2P which does $52 trillion in total payment volume. The B2B process is over forty years old and is the last system in banking that is document -rather than data-based. The movement toward working from home has exposed the inefficiencies associated with paper checks in the B2B payments space. Banks were closed and these checks sat in unopened envelopes in empty offices. Coupled with a system that relies so heavily on COBOL programming, banks have long had solutions built around the inefficiencies. With such wide scale digitization taking place representing a tremendous amount of money, there is no better opportunity for FinTech to change the back office.

There is no denying that 2020 was a hard year and there is nothing wrong with seeing 2021 with similar apprehension. But if you are able to look over the past year and see the strength shown in the moments of the greatest adversity then you should be able to look forward to 2021 with the same optimism that I do. 2020 reaffirmed my belief in the human spirit, our ability to persevere and overcome. We all have our place and our responsibility and in our own corner of the world, FinTech answered the call and came to the rescue.

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