Definitely, The year 2023 has tested the resilience of fintech. The geopolitical situation put renewed pressure on the economy immediately after the end of the pandemic. However, many of them have demonstrated their adaptability, an advantage that will be tested again in 2024. Mangopaythe modular payment platform, analyzes what the biggest challenges will be for fintech companies and how they can overcome them.
The rise in interest rates will continue to modulate the economy
Controlling inflation has become the main goal of global central banks, which have chosen to raise interest rates and keep them high to limit the availability of liquidity and drive down prices. The goals were largely achieved, but it had an impact on the purchasing power of consumers, who not only experienced rising fixed costs such as mortgages, but also had less money available due to the credit freeze. This also applies to fintech companies, which have lower debt and growth capacity.
But for Fintechs offering BNPL products (Buy now, pay later, or Buy now, pay later) It will represent an opportunity. In order not to completely weaken purchasing power, consumers will increasingly look for such installment payment solutions and adapt them to their personal economic situation, especially if interest rates continue to rise.
It will also be a defining moment for fintech as there will be more mergers and acquisitions than in 2023. Therefore, with more expensive money, it will be easier to buy something than to build from scratch. This brings new players and competitors into the market that can open up new opportunities.
Greater regulatory control requires greater adaptability
The expansion of Fintech has democratized the financial landscape through very attractive innovations. However, the proliferation of tools and mass adoption of technologies such as artificial intelligence (AI) and blockchain, which are accessible to a wider audience, has attracted the attention of regulators. Increase in regulatory oversight expectedwith fintechs facing regulatory changes in areas such as data protection, cybersecurity and financial services.
Regulators are increasing their focus on the capitalization and risk management of regulated fintechs, responding to the growing role of fintechs in the financial system, where regulators want to ensure their financial strength and ability to protect their customers’ deposits.
It will be crucial for fintech companies to anticipate these changes and pursue customer-centric strategies that are usually dictated by regulations. Planning for all possible scenarios before regulations are approved and adopting technologies that are flexible and easy to change in light of a possible change in regulations. Collaboration with regulatory authorities, with the possibility of even entering a “regulatory sandbox” where the regulation is tested before it comes into force, can also be very useful.
““We are convinced that 2024 will bring as many challenges as 2023 and that innovation, the driving force of our work, will be crucial.” has explained Nicolas Fournié, Country Manager in Spain at Mangopay. At Mangopay, this year we will focus on further improving product features, increasing capacity and speed of new customer acquisition, while maintaining a secure, scalable and compliant technological environment.”
“We are constantly working to improve and adapt to new market trends as well as staying ahead of new regulatory requirements, which will undoubtedly continue to be one of our main priorities in the new year.”