Fintech Market Insights

During the ascent of #fintech as a disruption driver in #finance, digital banks have been the first and most impactful use case. Let’s take a look at their playbook. The term itself – alternatives include challenger banks or neobanks – characterizes players (usually new entrants) challenging the traditional banking model with a #technology-first approach that involves flexible, branchless, digital-native (mobile) banking, often focusing on or starting from niche segments and customers. An increasingly digital arena, a shift in consumer behaviour and a gap in product and customer focus by incumbents have enabled these new players to challenge the status quo. Their success and proliferation around the globe is a clear sign of agile, digital-first, product-niche strategies prevailing over traditional, monolithic, vertical banking #business models. Whereas different patterns can be identified in their evolutionary path, the successful models can be aggregated to two broad categories: — Greenfield players starting completely from scratch by means of identifying a niche market or segment, often neglected by incumbents, and focusing on seamless customer experience, attractive design, competitive pricing and a digital or mobile only set-up. In terms of strategy two elements clearly stand-out: 1) hyper-growth and scale as the core - sometimes only - metrics (which explains why so many have been unprofitable) 2) an ecosystem play, driven by horizontal partnerships (vs the vertical traditional model). N26, Revolut and Nubank are typical examples of this model. — Large, closed-loop ecosystem players with a non-finance business geared on technology and an anchor in #ecommerce launching (digital) #banking spin-offs as a means of converting (and monetizing) their existing client-base. Most (or almost all) of the examples here come from Asia (i.e. Webank, Kakaobank), mainly due to the set-up of the #economy (lacking a robust, finance architecture and, in effect, benefiting private, BigTech players covering the gap). Webank, for example, is owned by Tencent, China’s largest social-media BigTech company (owner of WeChat, China’s equivalent of Facebook). It has managed to reach a value of $33 billion and a base of more than 320 million active users by focusing on building a modern IT stack (as a competitive edge to traditional banks) and leveraging on the data generated by the Tencent ecosystem (i.e. retail lending credit scoring built on Tencent data, resulted in a non-performing loan ratio of just 1.2%, about half (or less) of the industry average for such non-secured loans). Irrespective of their origins, both models have been (fast) converging to what has become the new holy grail of modern finance: platform #economics and ecosystem plays. These are the concepts that will be defining the boundaries in an increasingly network and technology driven field. Opinions: my own, Graphic source: Momentum Works, Decoding digital banks

After reviewing more pitch decks these past few days, I see African fintech founders are still flogging the dead horse that is "banking the unbanked" as a lazy fundraising pitch. From Yaounde to Cape Town, it’s the same story, another mobile wallet, payments app, another promise to bring financial inclusion to the masses. Truth is: most Africans are not unbanked because they lack access; they’re unbanked because they lack income. A new app won’t change that. The Brutal Truth Lack of Disposable Income – People don’t need more fintech solutions; they need more money. Without increased economic productivity, most “financial inclusion” solutions remain useless. Broken Unit Economics – Many fintechs rely on unsustainable VC fueled growth, acquiring “users” who don’t generate revenue. Regulatory Capture & Infrastructure Gaps – Governments protect banks and telcos dominate mobile money. The real bottlenecks are systemic, not just about "access." Startups often underestimate how slow, expensive, and political it is to scale across markets. Real Problems & Better Solutions Income-Generating Fintech – Instead of just moving money, fintech should help people make money. Platforms enabling gig work, SME financing, and export-focused businesses can drive real financial inclusion. A fintech that helps informal traders access larger markets, rather than just helping them "save." Decentralized Credit & Alternative Lending – Traditional credit models don’t work in Africa. Instead: Use supply chain data, mobile behavior, and transaction flows to build more dynamic credit models. Integrate fintech into cooperative lending structures like tontines or village savings groups, where trust already exists. B2B Payments & Trade Infrastructure – Cross-border trade needs work, killing SME growth. Fix it: Build better escrow and invoice financing tools that help African businesses transact across borders securely. Verticalized Fintech in High-Impact Sectors – Fintech should power real economic activity, not just payments. Agritech fintech: Give farmers access to dynamic pricing, supply chain finance, and better insurance. Healthcare fintech: Enable embedded payments and credit for medical services, helping people afford care without predatory loans. Logistics fintech: Provide financing for truckers, warehousing solutions, and real-time supply chain support. Infrastructure-First Fintech – If power, internet, & ID verification are problems, solve those first. Payments without stable connectivity? Build USSD-based financial services. Weak credit infrastructure? Build platforms that help lenders pool risk and share credit data across borders. The era of cheap fundraising gimmicks is over. African fintech must shift from vanity metrics to real impact, solving income generation, trade inefficiencies, and credit access at scale. I'm tired of saying this, founders who build with these in mind won’t need to beg for funding; investors will come looking for them.

A few weeks ago, I shared an analysis on how the homepages of #banking apps around the world compare. Now, I've gone a level deeper, dissecting how #digitalbanks across different regions structure their #products and features, and how these approaches reflect the unique needs and expectations of their customers. #SEA digital banks emphasize ease of use and seamless navigation, making sure that customers can quickly access essential banking services and discover additional offerings that suit their needs. #US digital banks, on the other hand, is all about empowering users with financial incentives, #credit-building opportunities, and tools to manage their money effectively. European banks homepages highlight capabilities like balance checking, transaction histories, #card controls, and other functionality that helps users stay on top of their everyday banking needs in a simple, user-friendly way. And #SuperApps? They seamlessly integrate services like shopping, transportation, and food delivery, all powered by #EmbeddedBanking, making them an essential part of everyday life. Each region's approach tells a story about what customers #value most—whether it's simplicity, #rewards, holistic account management, or #lifestyle integration. Understanding these differences can help us anticipate where digital banking is headed and how customer needs will continue to shape the evolution of #finserv. #CX #Innovation #Design #Strategy #Technology #FinTech #CustomerResearch #FirstPrinciples

In 2021, I became the first woman to head a unicorn in Israel, AKA Startup Nation. In many parts of the world, women are excluded from even the most basic financial services, so leading a fintech company is far from their reality. United Nations data estimates that 3.8 billion women live in the world, 50% of which are adults. According to the World Bank’s Global Findex Database, 1.4 billion of those 1.9 billion adult women, are unbanked. That’s 73.65%. Visit that statistic again. It represents a disturbing gender gap in financial access, with women being far less likely than men to have bank accounts or access formal financial services. This financial exclusion has personal impact. It diminishes women’s economic empowerment by restricting access to education and limiting their potential for personal growth and independence. It makes women more financially dependent, and therefore, more vulnerable. There's economic impact, too. Research by McKinsey highlights the economic loss due to financial exclusion of women, noting that closing the gender gap in labor force participation could add trillions to global GDP. Financial inclusion isn’t just a matter of equality – ensuring the same opportunities for all. It’s a matter of equity - ensuring women have the tools and access they need to fully participate in the global economy. That’s where technology enters the picture to level the field. The rise of mobile banking is a great example of innovation enhancing financial inclusion. According to a report by the International Finance Corporation, mobile money accounts are more popular among women in regions like Sub-Saharan Africa, where access to traditional banking is limited. Various fintechs provide financial literacy resources, helping women understand financial products, budgeting, and saving strategies. Other solutions include AI-driven platforms that offer personalized recommendations and advice, empowering women to make informed financial decisions. Aside from personal apps and solutions, fintechs can facilitate community-based lending and saving initiatives, allowing women to support each other through group savings or microfinance schemes, fostering a sense of solidarity and shared purpose. This International Women’s Day’s theme is "accelerate action". In my mind, nothing accelerates action like innovation. As we mark International Women's Day, let’s advocate and innovate to enhance financial inclusion for women worldwide. #IWD2025 #financialInclusion Papaya Global

India just did something that should have taken 47 years in 9 years. 561.6 million people gained bank accounts through Jan Dhan Yojana since 2014. That’s nearly 1.5 times the entire US population brought into the financial mainstream. Most countries take half a century to do this. Anil Padmanabhan something that stopped me cold. Here’s what makes this unprecedented: ↳ Stats that demand attention: • Gender gap in account ownership: 17% → 6% in just 6 years • Education divide collapsed from 29% → 10%• Rich-poor banking gap narrowed from 14% → 5% • ₹38.49 trillion transferred directly to citizens via JAM trinity • 116 million retail investors on NSE, 72% from tier-II/III towns ↳ Three insights reshaping financial inclusion: 1/ From access to empowerment The real challenge isn’t opening accounts—it’s transforming savers into investors. 561 million people now have economic identity, but only 4.2% are truly financially literate. Infrastructure creates leapfrogging 2/ JAM trinity (Jan Dhan + Aadhaar + Mobile) became economic GPS. It saved ₹3 trillion by eliminating middlemen while restoring trust in government welfare. 3/ Inclusion without literacy creates vulnerability India’s retail investing boom is exciting but dangerous. Millions entering markets without capacity to navigate volatility. Financial inclusion 2.0 must prioritize education. ↳ my take after 20 years in this industry What India achieved defies every textbook on financial inclusion. As Anil notes, countries typically need per capita income to rise from $5,000 to $20,000 over 47 years to reach this scale. India did it with incomes rising only from $1,500 to $2,700. The secret wasn’t just tech—it was reimagining the social contract. JAM how 500+ million people relate to the formal economy. But here’s the catch: access without financial literacy is like giving someone car keys without driving lessons. But the story everyone’s celebrating has a massive blind spot. That’s why my co-authors Ayush Tripathi and Soham Jagtap and I wrote “Ushering into the New Era of Financial Inclusion: Enabling Women and Women-Led Organisations.” last year ↳ What our research revealed: • Women make up only 32.8% of India’s workforce vs 47% globally • Despite being nearly half the population, women contribute just 17% to GDP compared to 37% worldwide •Women receive credit equal to just 27% of their deposits, while men get 52% • Only 10% of women are borrowers compared to 15% of men The infrastructure is built. Now comes the harder part—ensuring these accounts become instruments of wealth creation, not just welfare delivery; the women become employment drivers and borrowers not just subsidy recipients. Which other emerging markets do you see balancing rapid financial inclusion with financial literacy? What lessons can others learn from India? (link to the articles in the comments)

Re-Bundling the Bank 💡 Costs are growing for fintechs, but it's not just higher interest rates affecting their margins. Customer acquisition costs (CAC) are also on the rise and contributing to overhead. In response, some fintechs are seeking partners with existing customer bases. In June, for example, eBay and Venmo announced a partnership, allowing shoppers to pay for their purchases with their Venmo balance or methods linked to their Venmo account. Other fintechs, including big names like SoFi, have applied for bank charters. There is also a move to diversify revenue streams, illustrated by Robinhood’s reduced reliance on transaction fees for the bulk of its income. Both trends underscore a clear reality: As fintechs get squeezed, it is less viable for them to offer single, standalone products 💳 At the center of these moves is a focus on customer value. One effective way to reduce CAC is offering customers value on the financial side through products that help build savings or offer rewards. Another strategy is to add products to an existing customers base. Driven by their customers' growing expectations for digital solutions, Large Financial Institutions are increasingly partnering with, investing in and acquiring fintechs, leveraging the functionality and customer bases that fintechs have built in their specialized areas. Acquisitions such as JPMorganChase’s purchase of wePay for payments are one way for retail banks to add capabilities without building them in-house. At the same time, strategic partnerships can create efficiencies in customer acquisition. However, achieving a proper win-win in those relationships can be difficult to strike 🤝 Fintech partnerships are intended to be symbiotic, with tech companies like Chime providing a user-friendly front-end while a chartered partner bank such as The Bankcorp or Stride Bank, N.A. provides the FDIC-insured accounts and handles risk and compliance. This allowed fintechs to walk like a bank and talk like a bank while leaving the actual banking to someone else. In the last decade, deposits in fintech partner banks have skyrocketed, growing 9x faster than deposits in small US banks overall 🚀 Regulators are stepping up their oversight by issuing 50 severe enforcement actions in the last six months. A lopsided number of these actions are targeting partner banks. Startups are responding to the increased regulation by beefing up compliance talent and by reviewing existing processes, in some cases severing ties with partners. That opens the door to AI-native startups who can meet a high bar for regulation. Source: Silicon Valley Bank - https://t.ly/LfKVy     #Innovation #Fintech #Banking #OpenBanking #EmbeddedFinance #API #BaaS #FinancialServices #Payments #Lending #Blockchain #Compliance 

After credit cards, people are going to create debt using UPI transactions as well... I am absolutely not against innovation. But I am against the behaviour of spending money we never had. Paytm has just launched ‘Paytm Postpaid’ on UPI, offering 30 days of interest-free credit across QR codes, shopping, bills, and more. On the surface, this looks like a brilliant convenience, no need for credit cards, universal acceptance, and instant flexibility. But here’s where it gets concerning. Credit card debt in India has already ballooned from ₹87,686 crore in 2019 to ₹2.7 lakh crore by 2024, growing at 24% CAGR. At the same time, BNPL loss rates stand at 5–7% in India, much higher than traditional credit cards, highlighting how quickly small-ticket credit can spiral into bad loans. Now imagine this debt culture extending to UPI, which is already used by 350M+ Indians every month. Credit cards at least had friction applications, approvals, and eligibility. BNPL made credit easier, but still limited in scope. UPI postpaid, however, removes almost all barriers. Debt creation becomes as simple as scanning a QR code. This isn’t just a financial product launch. It represents a cultural shift in how Indians borrow. And unless financial literacy keeps pace, it risks leading to overspending, hidden debt, and repayment struggles, especially among young, first-time credit users. Financial inclusion is necessary. But without financial discipline, inclusion can turn into illusion. The bigger question is: as India digitises rapidly, are we creating an economy of savers… or debtors? Share your thoughts in the comments below! Follow Sanjay Kathuria, CFA for more! #UPI #Paytm #Fintech #Credit #BNPL #FinancialLiteracy

I recently had an engaging conversation with a client about #EmbeddedFinance - the integration of financial services into non-financial platforms via APIs. While industries like #telco and #retail have embraced this, #banking faces unique challenges that make implementation far more complex. 𝗞𝗲𝘆 𝗣𝗶𝘁𝗳𝗮𝗹𝗹𝘀 𝗶𝗻 𝗘𝗺𝗯𝗲𝗱𝗱𝗲𝗱 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 🛑 Regulatory Pitfalls: Delegating compliance without oversight can lead to failures, as seen with Lietuvos bankas | Bank of Lithuania, who revoked a vendor's license for AML violations. Solaris SE mitigated this by deploying automated compliance tools and partnering with #RegTech firm Alloy to centralize audit trails. 🛑 Reputation Damage: Data breaches at white-label partners can harm brand trust, as Blue Ridge Bank experienced, leading to stock losses and partnership terminations. Stripe avoided this by implementing end-to-end encryption and transparent disclosures in its 2024 Trust Report. 🛑 Technical Debt: Over-customizing legacy systems can lead to unsustainable costs, as evidenced by a major EU bank abandoning its embedded lending project after spending €42M on incompatible APIs. JPMorganChase succeeded by building a cloud-native embedded finance platform using modular APIs. 🛑 Customer Confusion: Unclear liability for disputes can frustrate users, as seen in BNPL firms where 40% of complaints stemmed from merchant-lender conflicts. Klarna addressed this by launching a unified resolution portal that tracks disputes across all merchant partners in real time. 🛑 Profit Margins: Commoditized services like BNPL face intense price competition, causing margin compression and forced some European providers to exit the market. Synchrony differentiated itself through hyper-personalized patient financing using AI to match repayment terms with insurance claim cycles. 𝗞𝗲𝘆 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀 𝗳𝗼𝗿 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝘀 ✔️ Partner with #RegTechs for automated compliance to prevent regulatory failures and enhance oversight of fintech partners. ✔️ Invest in cloud-native architectures to avoid technical debt and ensure scalability for embedded finance solutions. ✔️ Build customer trust through transparent partner roles and centralized dispute resolution systems to reduce confusion and improve satisfaction. We all agree that embedded finance offers immense potential but requires strategic execution to navigate risks while driving innovation in financial services ecosystems. What are your thoughts on the challenges of #embeddedfinance in the #banking industry?

🔵 The 2025 Nobel Prize in Economics Explains Fintech "Disruption" 😉 This week's Nobel Prize in Economics was awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their explanations of 𝐢𝐧𝐧𝐨𝐯𝐚𝐭𝐢𝐨𝐧-𝐝𝐫𝐢𝐯𝐞𝐧 𝐠𝐫𝐨𝐰𝐭𝐡 𝐚𝐧𝐝 𝐂𝐫𝐞𝐚𝐭𝐢𝐯𝐞 𝐃𝐞𝐬𝐭𝐫𝐮𝐜𝐭𝐢𝐨𝐧. Their framework reveals something critical for all financial services innovators: Disruption doesn't mean Destruction. 🔷 𝐀𝐠𝐡𝐢𝐨𝐧 & 𝐇𝐨𝐰𝐢𝐭𝐭'𝐬 𝐋𝐞𝐬𝐬𝐨𝐧: 𝐂𝐫𝐞𝐚𝐭𝐢𝐯𝐞 𝐃𝐞𝐬𝐭𝐫𝐮𝐜𝐭𝐢𝐨𝐧 𝐇𝐚𝐬 𝐋𝐢𝐦𝐢𝐭𝐬  Aghion and Howitt constructed mathematical models showing that when innovations replace older technologies through Creative Destruction, it creates conflict between emerging and established firms—and if incumbents use power to suppress competitors, innovation stagnates. But here's the twist: They also showed that societies need institutional stability alongside innovation. 🔷 What This Means for Financial Services ‣ Look at what actually happened over the past two decades: Traditional banking services were disrupted in many ways ·     Peak Branch in 2015 😉 ·     Millions of Customers served by the 400+ neobanks globally   ·     Payments unbundled from banks: Adyen, Stripe, etc. ‣ Yet incumbents survived. Why? Not because they blocked innovation, but because they adapted: ·     Strategic partnerships became the norm—"co-opetition" replaced pure competition ·     Banks that adopted digital transformation reduced costs while increasing engagement ‣  The Reality of the Fintech Creative Destruction ·   𝐃𝐞𝐬𝐭𝐫𝐨𝐲𝐞𝐝: Basic services commoditized (payments, FX, investing) ·   𝐓𝐫𝐚𝐧𝐬𝐟𝐨𝐫𝐦𝐞𝐝: Incumbents digitized and partnered their way to relevance ·   𝐂𝐫𝐞𝐚𝐭𝐞𝐝: Entirely new categories (Embedded finance, BNPL, Open banking, Blockchain for Finance) 🔷What This Means for the Agentic and Post Web era in Finance We're at this crossroads again: ·      Then (2008-2025): Cloud/Mobile transformed banking ·      Now (2025+): AI and Blockchain transforming financial services ❓ Will we design for Creative Destruction—or Stagnation? Creative Destruction built a fintech industry worth hundreds of billions and employing hundreds of thousands alongside traditional banking. ❓ What will happen next? ❓ What institutional frameworks do we need to develop and lean on? "Economic growth cannot be taken for granted. We must uphold the mechanisms that underlie creative destruction, so that we do not fall back into stagnation" Sustained growth requires BOTH: - Innovation that challenges the status quo - Institutional frameworks that prevent chaos #fintech #innovation #Nobel

🔴📈 What’s the Banking Reinvention Quadrant (BRQ)? It’s the core framework I developed to explore how banks and fintechs are digitalising their services to stay competitive and transform value creation—sourced from my bestseller "Banks and Fintech on Platform Economies". 📊 Where do most banks stand today? As indicated in the BRQ, most banks—whether traditional or digital neobanks—are still stuck in the bottom-left quadrant, relying on outdated transactional models. But to unlock higher business value, they need to shift upward and rightward toward the top-right quadrant. ⬆️ Moving up the Information Quotient (y-axis) means shifting from "output-focused" engagement (closed transactions) toward "outcome-oriented" value creation across open ecosystems. ➡️ Moving right on the Communication Quotient (x-axis) means evolving from "product distribution" models toward "transparent advisory services" that build trust and long-term engagement. 💡 Why does this matter? Understanding the BRQ allows banks and fintechs to maximize returns on technology investments by pivoting from linear strategies to platform strategies, such as: ✅ Contextual Banking – embedded finance, ecosystem orchestration ✅ Conscious Banking – monetized advisory relationships 🚀 The future of banking isn’t just digital—it’s about reinventing value creation in a hyper-connected world. 📖 Want to dive deeper? Grab your copy of "Banks and Fintech on Platform Economies" on Amazon. Let’s keep the conversation going! #fintech #innovation #strategy #books