Despite economic uncertainty, Fintech leaders are ready to build

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With interest rate hikes, a “crypto winter,” and growing concerns of stagflation or recession, there is a general sense of uncertainty at best — and pessimism at worst — about the current state of the economy. financial markets.

This is forcing “Big Tech” companies and investors to scramble. But local fintech executives see unique reasons for optimism right now. That was the general consensus at two fintech-focused conferences this week, Fintech South in Atlanta and Fintech & Insurtech Generations in Charlotte. Both conferences highlighted how founders and investors are reimagining the role of technology in the post-pandemic realms of financial services, banking and payments. And as more complex challenges emerge, many local fintech leaders say the Southeast is ready for the next big fintech challenges.

Can Southeast fintech meet the moment?

“Meeting the Moment” was a key theme of the week, underpinning how fintechs are positioning themselves to help consumers and businesses weather any economic storms to come.

“Those of us who have been in business for a few decades have seen the cycles, but they each look different. There will always be nuances for which we are not ready. But the FinTech industry now has an incredible opportunity because payments, to me, are the great equalizer,” said Lara HodgsonPresident and CEO of Now.

Hodgson spoke to Hypepotamus after her presentation on financial inclusion at Fintech South. Financial inclusion is what Now is tackling by providing faster billing solutions for small businesses. As Hodgson explained, this helps “level the playing field for underrepresented small businesses” as they can compete for larger projects on more competitive terms.

Financial equity and inclusion was an important topic coming out of the pandemic. This has helped spark a new generation of alternative, credit-focused banking startups in the Southeast. As the pandemic takes on a new shape in 2022 and businesses prepare for an uncertain future, areas of fintech like BNPL, integrated finance, split investment, blockchain, crypto, and yes… even the role of the metaverse in financial services, take center stage.

“Many fintech pioneers focused on solutions that directly competed with banks and other traditional financial institutions. Since the start of the pandemic, we’ve seen a new wave of startups building tech solutions targeting credit unions and community banks, to help these organizations modernize their operations and better compete with fintechs and other large incumbents. “, said Lucas Timberlakeco-founder of Fintech Ventures Fund.

BNPL (buy-now-pay-later) is an area of ​​particular interest for large corporations and startups. As Mastercard’s Les Matthews explained during his panel in Charlotte this week, BNPL can be “another money management tool” and can help “diversity and expand someone’s purchasing power.”

But the space is constantly changing as big players, like Mastercard and Apple, enter and early players like Klarna have recently struggled with layoffs and losses. Despite the challenge in the BNPL space, Matthews said there is an opportunity for those who can bring a better customer experience to market and those who can understand how to improve loyalty and access to credit down the road.

THE STATE OF FINTECH: SIGNS OF OPTIMISM?

To what extent fintech startups can insulate themselves from market turbulence in the coming months is an open question. But outside capital hasn’t completely stopped, as investors seek out fintech startups tackling key gaps in the space.

I’m still fairly bullish on early-stage fintech investing and don’t yet see a significant slowdown in the pre-seed/seed stages in terms of dollar volume invested or valuations. At the Series A level and beyond, we are seeing a noticeable decrease in the availability of funding and valuation corrections, which was bound to happen at some point, given the evolution of the market,” Timberlake added.

Keep Financial (launched by Kabbage co-founders), FilmHedge, Groundfloor and Wayflyer have all announced major outside investment rounds this year. (TAG’s 2022 Fintech Ecosystem report delves into recent trends and big moves for those looking to learn more).

Pre-seed funding through Series A has also been in the news this year. Verdata, Charityvest, Uplinq, Hello Donor, Ledgible, Audit Sight, Layr, Gridline, Bear Tax and Alto Solutions all raised venture capital funds during the first part of 2022. Indeed, funding for global companies from fintech fell 18% in the quarter-quarter, according to CB Insights.

Funding isn’t the only reason for optimism. The local fintech scene has continued to attract new talent and expand the overall talent pool recently, with news that startups like Capital on Tap are expanding their footprint in the city.

Capital on Tap, which has just crossed the 200,000 customers in the small business credit card space said moving to Atlanta was a strategic move for the scaling company. It recently raised $200 million in funding for expansion efforts.

“In Atlanta, our customer operations officers sit in the same office as our corporate staff. We collaborate every day, sharing ideas from both sides, with the goal of better supporting and communicating with our customers,” Capital on Tap’s Kiera Wiatrak told Hypepotamus. “We can’t control the economy, but we can provide the best product and experience possible to help small businesses weather the tough times and thrive in the best.

Another reason to be optimistic: Companies like Visa are expanding their footprint in Atlanta specifically to attract local fintech talent. The credit card giant is ATDC’s latest corporate sponsor, and if the turnout at this week’s Entrepreneur Night was any indication, the local fintech community is ready to start building.

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