Trends shaping fintech in 2021
Pandemic has brought more forms of digital money into the mainstream, helped by global payment giants
Whether you realise it, fintech innovation is probably playing a role in your daily life. In fact, 73% of Americans say using a financial technology application to manage money is part of their new normal as the Covid pandemic has accelerated the move to digital banking and payments.
In 2020, Visa saw a rapid acceleration of fintech providers creating new products that harness the payment company's global network to create new shopping experiences, enable new payment flows and increase the velocity of payments for consumers and businesses.
Our "Fast Track" programme, which helps fintechs to link up with the Visa network, grew 360% in 2020, and this group is developing solutions in areas such as digital banking, wallets, payroll, cryptocurrency and commercial payments.
Looking ahead, here's our take on some key categories where fintech companies are changing the payments game.
Digital payments for social commerce: The global pandemic has had a dramatic impact on the way people shop, and Thailand is not immune to this change. In fact, in a recent survey 67% of Thai consumers said they were likely to increase their use of e-commerce.
That's why we launched our "Everyone Speaks Visa" programme. It connects small businesses to leading fintech companies in Thailand to enable sellers to accept Visa payments from both local and overseas buyers and help them expand their businesses.
We believe the trend towards buying online will continue. Our "Covid-19 Barometer" study showed that payment habits formed today will continue after the pandemic is over, and almost seven in 10 Thais (69%) said they intend to stick with digital payment methods instead of reverting to cash, even when the current emergency is over.
Credit your way: Many fintechs got their start with debit offerings. Now, we're seeing interesting trends in credit. Companies such as Upgrade have created a new category of responsible credit, replacing the revolving credit feature with a personal line of credit to be paid back in equal instalments.
"Buy now, pay later" has become the norm in many markets. Interestingly, the early adopters in this category were developing markets such as Brazil where half of Visa transactions are paid in instalments.
Real-time payroll: If you think about how payroll has operated to date, workers essentially lend their wages to the employer until the first of every month. You've already earned the money, yet it's sitting on a company's balance sheet. We think payroll will start to become available in real time -- not only for gig workers, but also for salaried employees who are accustomed to seeing their pay arrive every month.
Today a popular way to access these funds is via Visa Direct, a real-time push payments platform. For workers, wages can be deposited to a bank account or Visa card immediately, versus waiting for the end of the pay period.
Dialling up digital currency: The emergence of a vibrant developer ecosystem building on top of public blockchain networks and stablecoins is leading to a new generation of digital wallets and financial services. Since the launch of Visa's Fast Track programme, about one-third of the participating consumer-oriented companies are building products that use digital currencies in some capacity.
Visa has been working closely with digital currency platforms including the crypto giant Coinbase, which recently announced Coinbase Card, a Visa debit card that lets customers spend their converted cryptocurrency easily.
We also work closely with platforms such as Fold to bridge digital currencies and our existing network of 61 million merchants. So far, we have brought into our network about 25 crypto-related companies at various stages of development globally.
Opening up digital wallets: Around the world, digital wallet adoption is on the rise along with a new generation of platforms such as Airwallex, Gojek and Line Pay. Working with digital wallet providers to embed Visa credentials into third-party payment services, Visa is expanding access to digital payments and transforming some formerly closed-loop systems limited to certain regions or functions into open ones. Interoperable payment systems benefit consumers, merchants and wallets.
It's a privilege to serve the companies that are creating these new payment flows and expanding the reach of financial services. We recognise our role to help identify, support and bring onboard the next generation of payment innovators who are creating a bigger pie for everyone. Now let's get to work on realising these trends.
Mr Suripong says fintech likely already plays a role in your life.
Suripong Tantiyanon is the Country Manager of Visa Thailand.