Fintech Ecosystem in 2020
and the trends for 2021
Devie Mohan
30th November 2020

SOCIAL MEDIA USAGE
Global usage 51% during pandemic
Global usage 10% during pandemic
DIGITAL SHOPPING
More online shopping for business and non-
business buying after the pandemic than before.
Has doubled its online capacity between Mar and
Oct ’20. 100%.
Has its online capacity of home delivery slots
by 67% Mar to Aug ‘20.
COVID-19 HAS LED TO CHANGES IN CONSUMER PREFERENCES AS SHOPPING BEHAVIOUR HAS
EVOLVED
The uptick in e-commerce is likely to remain even after the Covid-19 pandemic is over

Property sales Online
education
Life
insurance
Digital
entertainment
HEIGHTENED CONSUMER INTEREST

The growth of PropTech companies and
platforms means investors now have a
greater number of ways to access the
market.
Leveraging technology to aid post lockdown recovery
LTVs return to pre-lockdown
levels - Jun ‘20
Digital transformation of the
UK housing market – May ‘20
Opportunity for peer-to-peer
(P2P) property lending
In collaboration with bank formed
a new distributed ledger
technology consortium to
streamline the process of home
buying in the UK.
Led by data driven growth strategy,
its platform is built on architecture
that includes over 20 databases. Its
depth of data helps it manage risk
for its funding partners.
Originated on an average close to
£100 million of loans per month
between May and August ‘20.

New demands on the EdTech industry
362%
Increase in Annual
Recurring
Revenue
(Y-o-Y June-20)
200%
New user
registration
during lockdown
110%
Sales
increase
during
lockdown
Online education will eventually become an
integral component of school education.

A rethink on insurance as it goes digital
130%
hours worth of flexible
insurance policies sold Sep
'19 to Jan ‘20
100%
sale of health insurance
policies
between Apr – Sep ‘20 Car ownership startup
launches insurance
product.
Insurers will need to deliver a better
digital experience, for both panic buyers
and long-term customers.
US-based group launches
in the UK with 1000s of
APIs.
A new insurance
challenger brand launches
targeting smart home
market.

Streaming and gaming led the way in entertainment
100%
Growth in hours
watched
70
million
New subscribers26
million
New users
31%
Shifted customers
from LAN to online
Revenue and profitability high in the sector. Some
companies looking to launch new services to
‘hedge their bets’.

Blockchain •
Intelligence Augmentation •
Deep learning •
Big data analytics •
• Virtual manipulative
• Virtual trips – Google cardboard
• Podcasts
• Gamification
• Multimedia
The tech behind it all..
ONLINE EDUCATION PROPERTY SALES
LIFE INSURANCE DIGITAL ENTERTAINMENT
Content delivery network •
Streaming technology •
Artificial intelligence and machine learning •
Metadata •
• Artificial Intelligence and
automation
• Chatbots
• Internet of Things
• Drones

Biometric cards
combine chip technology with fingerprints to conveniently and safely verify the
cardholder's identity for in-store purchases
600% rise in demand during the
pandemic
Digital payments has seen
tremendous innovation

7.4 million accounts
added in Apr ‘20, a new
monthly record
The World Health Organization has advised the public to
use contactless technology where possible.
Lockdowns and online retail boom have accelerated the
cashless journey of most countries.
Debit cards
Credit cards
Digital wallets
Prepaid cards
Payroll cards
ecash
Universally
gaining traction
13 million people
in Latin America
made their first-
ever online
purchases in Mar
‘20 using Visa
cards.
Most popular Slow emerging
One-click Google Pay Integration – May ‘20

Push towards cashless society
Push towards token based
wallets
Stress on fee revenues as
spending is curtailed
Cross border payments and
international remittances will
remain impacted
Payment fintech has done well,but is it a long term impact?
ACQUIRED
IN 2019
Cyber fraud will gain prominence
Government and health
initiatives to transfer monetary
assistance via digital transfer will
help boost volumes
Growing demand for cloud based
solutions

WILL FINTECH LEAD THE CHARGE IN THE POST COVID-19 RECOVERY?
Prior to the outbreak, it was
clear that fintech would play a
pivotal role in financial
services going forward.
COVID-19 has undoubtedly
accelerated that process.

ACQUIRER ACQUIRED DEAL VALUE ($) MONTH/YEAR
5.3 bn Jan ‘20
8.6 bn Feb ‘20
13 bn Mar ‘20
1.2 bn Apr ‘20
2.1 bn Apr ‘20
Justin Knowles, Director
of Digital and Payments
“I believe this pandemic has
created an urgency for all
financial services.
Partnerships with fintech
partners out there will be the
key.”
MAJOR FINTECH DEALS IN 2020

IS DIGITAL TRANSFORMATION NOW A MUST
FOR WEALTH MANAGEMENT COMPANIES?

Appointment bookings with advisors or
coaches were up 100% to 150% in Q1
2020 giving evidence of the efficacy of the
hybrid model.
The future of wealth management lies in hybrid models
Barclays Plan
& Invest
Avaloq wealth
platform
Aladdin

ESG portfolio of robo advisors is a hedge
during a bear market as witnessed during the
pandemic.
Across Europe and UK, there is a sentiment
prevailing (35% in 2018 and 59% in 2019) that
if a robo-advisor or fund is not engaging with
ESG portfolio then current and potential
investors will eventually stop engaging with that
advisor.
Blackrock CEO Larry Flink had stated in Jan
‘20 that they will put sustainability at the
center of its investment strategy going
forward.
ESG has gained a huge market in 2020 (but it may not be due to the pandemic)
-2.25% -1.80%
-0.25%
0.20%
-0.11%
0.20%

Estimated around 500,000
people will move their assets
onto the next generation.
This equates to more than $15
trillion worth of assets.
Americas
41%
EMEA
32%
Asia
Pacific
27%
The transfer will likely happen over
the next 5 years.Covid-19 may
accelerate this time frame.
WEALTH TRANSFERERS ASSET MANAGERS
Wealth management firms are building up on its
technology capabilities to provide services the
way millennial investor wants.
Inheritors of wealth will reportedly look for new
wealth advisors once they inherit. Old advisors
will not be retained.
Gen X and millennium children will be at the
heart of the wealth management industry.
This is a big risk for many advisory firms and a
big opportunity for others.
How to prepare for one of the greatest wealth transfers in history

Whatarethekeyelementsofarobo-advisor?
A ROBO-ADVISOR
An investment algorithm that augments the services
of a traditional financial planner
Onboards its robo-advisor users with a 12-
point questionnaire.
Based on the inputs, the algorithm can
present a hypothetical portfolio with
allocations to different types of stocks,
bonds and commodities, and offer a
general forecast on returns.
First large regional bank in the US to build
its own robo-advisor in 2019.
Once users have trained its algorithm,
Citizens Bank’s robo-advisor monitors
accounts on a daily basis, reinvesting extra
dividends, cash or interest and spreading
that money according to the user’s original
allocations.
SoFi Invest platform was the first to
combine robo-advisor technology with
unlimited access to financial advisors.
The trend is that technology will be used to
augment — rather than fully replace — the
work of financial planners and advisors.
Feeding the algorithm with the
right set of questions
Automatic
rebalancing
Keeping humans in
the loop

Technology Enablement
Digital transformation. Lenders need to embrace
new data sources and technologies in order to cope
up with rising funding needs of SMEs.
First FI in the UK to introduce technology that allows
its 2.6 million credit card customers to more easily
manage and pay their balances through the bank’s
“Pay by Bank” platform
Focus on environmental, social
and governance considerations
lost 60 clients after it
announced it would stop financing shale
and oil sands projects, which had an
impact on revenues.
In the post-COVID world, high demand for
low-value loans is predicted as small
businesses try to restart operations as well as
those looking to return to lifestyles that were
available before the pandemic.
What are banks focusing on?

SPIKE IN BORROWING – LED BY SME’s
Businesses have turned to banks to help them mitigate the effects of Covid-19
The lending landscape –the aftermath
• 1.23 million businesses in the UK have been supported by
banks through government-backed coronavirus lending
schemes.
• Lloyds Bank surveyed 100 business leaders within UK tech
companies in August-2020. 72% of UK tech businesses saw
an increase in demand for their services between March and
August 2020. This spans B2C and B2B technologies,
demonstrating the sudden growth in companies’ prospective
customer-bases.
• Lenders need to embrace new data sources and technologies in
order to analyse and understand borrower needs in this rapidly
changing environment. Data connectivity will play an ever-
increasing role in enabling SME lending.
• Using the wide scope of
transaction data available through
Open Banking can help lenders to
continue issuing loans in these
unusual times as they are better
able to determine creditworthiness.
• Lenders need a wider range of
real-time transaction data to make
the right decisions. More bankers
are looking to end-to-end digital,
automated solutions for help.

• Most challenger banks have announced layoffs during the second
quarter of 2020.
• Many challenger banks focused on travel offers, international cards
and lounge offers are struggling.
• Too many players and lack of product differentiation can ail long
term survival.
• New product launches delayed into 2021.
• Global banks’ digital arms have created a huge competition for
challenger banks.
• Marketplaces doing well: Starling Bank tied up with digital broker
Habito to provide customers access to a mortgage adviser through
the bank’s in-app; NHS lending and payment cards through
Mastercard + PFS partnerships.
Challenger banks may find the way forward quite rocky (without a plan)
-28%
-35%
+1.13%
-12%
-38%
-4%
APP RATINGS
BETWEEN JAN-20
AND JUNE-20

As challengers struggle,banks focus on their digital arms
Trust and lack of travel have impacted
challenger bank adoption.
The pandemic is an opportunity for
brick and mortar banks to transform
the digital platform as banks are
gradually shutting down branches.
Going digital is not a matter of choice,
it is a matter of survival.
50% rise in the number of
people registering for
online banking during the
pandemic compared to
last year
Rise of 137% in online
banking enrollments since
the lockdown started
200% rise in new
mobile banking
registrations since
Apr 2020
Launched ’Mine’, a millennial
one-stop digital banking
package; a new digital
storefront service; tries to
limit cash withdrawal

First bank in UK to allow customers to apply for
accounts using a selfie and a physical ID with AI
based verification.
Allowed customers to open accounts fully online
and use facial recognition and a dynamic selfie
to verify customer identities. Around 30% of all
new accounts have been opened online in 2020.
RegTech spend seeing a rise in automation tools for transaction monitoring, identity management and data
privacy like cloud technology, OCR scanning, remote AML.
• KYC to e-KYC conversion happening more quickly
than planned
• Due diligence approach simplified as per FATF
rules.
• Increased focus on cyber-hygiene and transaction
laundering.
• New norms of KYC API and artificial intelligence-
enabled systems during the customer
onboarding process.
• KYC API offers a single source for information
and documentation to support due diligence.
Cyber fraud,KYC and AML have seen major investment
KYC AND AML NORMS
E-KYC

Aims to break into new sectors with its
Contextual Decision Intelligence
technology.
Raised $64.7m. Jul ‘20
Raised $50m. Jul ‘20
Expands the business across the US, Europe
and the Asia-Pacific region as demand for
RegTech products increase during Covid-19 .
Outsourced KYC offering. Sep ‘20
Harness latest augmented intelligence and
human expertise to provide information for
regulated entities during the onboarding
process.
RegTech is used now,more than ever.
Funding seems to be flowing where compliance pains are the most; KYC, AML, compliance management and
data management with context.

BIG TECHNOLOGY
COMPANIES MAY BECOME
QUASI BANKS.
WHILE ONLY 3% TO 5% OF ACCOUNT HOLDERS WITH CHALLENGER
BANKS HOLD THESE ACCOUNTS AS THEIR PRIMARY ACCOUNTS,
BIGTECHS HAVE TAKEN THIS DIGITAL WAR TO AN ENTIRELY DIFFERENT
LEVEL IN THE WAKE OF COVID-19 AS THE FINANCIAL SECTOR HEATS UP.

Acquired for digital
payments -$100 mn
Announced
partnerships with 6
financial institutions.
“It is not fintech firms, but big technology companies, such as Facebook and Amazon, which pose a threat to
the banking space.” Shayne Elliott, CEO, ANZ.
Announced $100
million in loans to
small business.
Partnership to
provide lines of
credit.
All BigTechs have engaged in bank-like activities in the midst of the pandemic

There seems to be no relenting for Bigtechs in the midst of the pandemic.
Announced a 3 year strategic
partnership – Aug ‘20
Focus on supply chain finance and
rural lending
SME customer data in real time
Announced partnership for financial
APIs - Oct ‘20
Announced a 5 year plan to target
SME lending– Jul ‘20
A focus on “cloud”
BigTechs are moving beyond payment wallets and entering the lending space with focus on SMEs and
consumer lending.

• The world, leisure and travel industries are gradually
recovering from the onslaught of COVID-19.
• While at the one hand it has battered businesses
severely, on the other it has also enabled several
business areas to evolve digitally and prosper.
• We think social distancing will prevail as the
preferred norm at least till 2022.
• To do business while maintaining social
distancing indicates an increased preference for
“digital” channels and marketplaces.
In summary..
• SMEs will lead the path to recovery.
• Ability to provide paperless, contactless
and cashless services will define the
success path of every government.
• Technology is a huge enabler. Adoption
of artificial intelligence, machine
learning, data management and
analytics has helped with traditional
areas like KYC and contracts signing.
• Technology is ever-evolving – even
resource-strong players have struggled
to survive if not done correctly.

Devie Mohan
@devie_mohan
devie@burnmark.com