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Shaping the future of finance

2022: hard times, massive opportunities

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2022 is proving to be a challenging year and, if my experience proves true, is harder than anything since we have seen since the pandemic began. After two years of lockdown, funding is still freely available but harder to find, and valuations are way down on previous years. Nevertheless, according to new data released by Innovate Finance , the industry body representing the UK’s fintech sector, UK fintech investment grew to US$9.1 billion in the first half of the year – a 24% increase from the same period in 2021 – compared to flat investment growth globally.

Markets are tightening and, for the first time, many fintech startups are experiencing a recession. If you’ve never been through one, what does this mean for your business and the future of our industry?

First things first, a recession means that everything becomes hard … unless you are cash rich. There are some who are still feeling flush and, if you’re one of them, then I expect you are prospecting. Many fintech startups – bear in mind there are over 26,000 of them – have great ideas, strong vision, passionate leadership but, if they don’t have funding, then their runway is leading to a cliff-top. That’s a great moment for a cash-rich competitor to step in and buy cheap. As they always say, when everyone is buying, sell; if everyone is selling, buy.

Second, we are seeing fintechs struggling, laying off staff, cutting back on excess. It’s a good time for management and leadership to learn new lessons. These are not new lessons. For those of us who have been around the block, they are lessons that we learn every few years. When asked what’s a recession? Jamie Dimon (Chair and CEO of JPMorgan) said something that happens around every seven years. Nevertheless, this is a big one and, for all the newbies out there, my only advice is to make sure you have liquidity and funding. Without that, the predators will circle.

Third, there are actually some fintechs who have seen a recession before. Remember 2008? That was a great financial crisis and several fintechs were around back then and are still here now. Ask them how they coped and learn from their experiences.

Finally, the fact is that there is still a bubbling and explosive market here, that is vibrant and cool. We are going to get through this because we can. I was particularly taken with a comment made by NuBank, the biggest challenger bank success in the world with almost 50 million customers. When they started, their then CFO Cristina Junqueira, made the comment: “if banks are Darth Vader, credit cards are the Death Star”. I loved this comment and particularly that, when NuBank began in 2015, they could not get a bank license. The regulators would not allow it. So, they launched a credit card that charged a quarter of what banks would charge in fees, in what was then a barricaded and protected marketplace. Their approach blew that market open and now they are valued more than most banks in South America.

This generally holds true for most successful fintech unicorns and demonstrates the strength of change due to the networked world we live in today. We saw the networked world change retail over the past two decades; we are finally seeing how the networked world is changing financial services in this decade. This does not mean that old banks die, and new banks take over, but it does mean massive change. For old banks, their challenge is to create a business that exists as though it was born digital; for new banks, the challenge is to have a business born digital that needs traction.

My guess is the outcome of this is that new banks and old banks will acquire and merge over the next decade – as markets tighten, predators bite – and don’t be surprised if, before 2030, one of the new banks acquires an old bank. In fact, some already have (Lending Club, FNZ, etc). Equally, as mentioned, don’t be surprised if fintechs merge or banks buy fintechs, as some already have (Tink-FinTecSystems, Truist-LongGame, GoldmanSachs-NextCapital, JPMorgan-GlobalShares).

In fact, this is the year of huge challenge and massive opportunity. For those who can buy, buy now, as there are lots of firms that are being forced to sell. To be even clearer, buy now, pay later.

Therefore, although we may be living through hard times and huge challenges, there are still huge opportunities and new times we can create for tomorrow out there. Back in the early 2000s, I created a company called Shaping Tomorrow with some futurist friends. That’s where my focus lies, and always has. Tomorrow is the only thing we can change. You cannot change yesterday. So, move on, look upwards, stride onwards and be the change you want to see.

Did someone ever say that?

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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