Top Strategies Fintech Leaders Can Use to Drive Growth During Economic Uncertainty

How has the fintech sector fared in today’s ongoing economic uncertainty?

A December 2022 CNBC report asserts that the “fintech reckoning is upon us” and that business shutdowns or sales are imminent for many fintech companies, especially those dealing with retail borrowers. In a more recent CB Insights report from 2023, a rebound in the global fintech ecosystem can be seen, with funding increasing 55% quarter-over-quarter in Q1 of 2023.

This year is shaping up to be a crucial time for fintechs, as the industry strives to prove its resilience and regain ground in terms of funding and investments.

Yet, the world is far from healed from the economic headwinds of recent years.

This makes it paramount for fintechs to remain conscious of the challenges that lie ahead. The key to success in the upcoming years will come down to a fintech’s ability to effectively strategise and turn economic uncertainty into new opportunities for increased growth and resilience.

The Impact of Economic Uncertainty on Fintechs in 2023

Global business growth has slowed substantially since the pandemic events that played out in 2020.

As the business world continues to progress along a slowed pace of growth, fintech leaders need to reassess their 2023 trajectory to match current economic conditions.

Even if a fintech is based in a more stable national economy, it is still critically important to consider the impact of financial struggles in developing countries — especially in countries with markets that fintech leaders want to expand into.

Fintech is a global industry that thrives on international business connections and partnerships. Economic uncertainty in developing nations can cause disruptions to the supply chain and make finding the right international financial services and banking providers all the more difficult.

Though today’s risk appetites may be reduced, the wisest fintech leaders believe that this economic uncertainty may just be the key to unlocking new opportunities that can amplify long-term growth.

How Fintech Leaders Can Tackle Economic Uncertainty with Innovation

An economic downturn does not need to spell disaster for the fintech industry.

To make it through times of economic uncertainty not only unscathed but poised for sustainable growth, fintech leaders must determine how that uncertainty can be overcome through innovation.

Adaptability is a crucial component of a fintech’s innovation efforts. Fintechs need the ability to continuously evolve their products and services according to both current financial scenarios and the constantly changing needs of their clients, making it of the utmost importance to utilise a business strategy that prioritises operational and digital flexibility.

Accomplishing this requires the adoption of new technologies that can help not only increase operational resilience but also enhance efficiency across the board for the entire organisation.

However, adopting new technologies alone is not enough to overcome economic challenges. To create a truly effective strategy that can turn uncertainty into opportunity, the strategy must combine technology with the right mix of deep business insights and collaboration.

To illustrate this further, let’s imagine a fintech that specialises in cross-border payments and what key components this fintech should prioritize in its business strategy:

• Artificial Intelligence: This fintech could leverage artificial intelligence (AI) to both improve its payment system’s cybersecurity and enhance its predictive modeling that informs the organisation of relevant payment risks in various scenarios. Simultaneously, AI can also greatly increase automation within a cross-border payment system, making the system easier to maintain and update according to regulatory changes. In the global banking industry alone, McKinsey predicts AI will generate up to $1 trillion in additional annual value, highlighting the clear benefit of AI for driving profitability in the financial sector.
• Clear Strategic Tech Goals: Setting clear goals that define not only which technologies a fintech plans to implement but also the purpose of new implementations and their potential impacts is essential. This helps fintechs to maintain clear overarching objectives and provide business partners, service providers, and customers with a stronger understanding of what the business hopes to accomplish with its innovation efforts. For example, Harvard Business Review recently emphasized the need to base more goals around improving a fintech’s social impact, stating that the fintech industry “currently receives approximately one-quarter of all impact-oriented investment, more than any other industry and representing almost $250 billion in assets under management.”
• Strategic Partnerships: Speaking of business partners and providers, establishing these types of collaborative relationships is vital in times of uncertainty. When faced with challenges like supply chain disruptions and rapid regulatory change, fintechs and SMEs need partners they can trust to keep their systems up-to-date and to supply them with the digital resources necessary to accomplish true resilience and efficiency.
• Ongoing Support: In some cases, an organisation may take on a strategic partnership for one crucial purpose, such as building an improved payment infrastructure or facilitating instant payments. However, it is important in these types of scenarios to not just consider how a solution is designed and deployed but also how it is maintained in the long run. Economic uncertainty can require significant time and effort on behalf of business leaders to keep the trust of clients. Having a trustworthy partner that provides ongoing support for the maintenance and updating of various technologies helps to ensure business leaders have the freedom necessary to focus on fostering those client relationships and driving business innovation.

Streamline Your Cross-Border Payments and FX with Freemarket

Though many aspects of a fintech business model can be complex, none are quite as complex and crucial as the payment system a fintech has in place. Payment systems are necessary for all types of operational tasks, from collecting payments from clients to invoicing suppliers and completing payouts.

These systems only become more complex when dealing with cross-border transactions, as your organisation must also consider the varying regulatory requirements across the different jurisdictions and on the ground correspondent banking relationships.

At Freemarket, our cross-border payments and currency exchange platform gives you the technological resources and ongoing support necessary to build a resilient payment strategy.

Each of our solutions are tailored to meet the specific needs of your business, ensuring you receive payment technology services and resources that are compatible with your business objectives.

The world economy is in a tumultuous time. To stay ahead of the curve, fintechs need the right strategic partnerships that help to enhance the organisation’s adaptability and flexibility in the face of hardship.

Get started with Freemarket today to begin building a payment strategy that can bring you into new markets while also streamlining your processes and reducing overall complexity.