The second day of Fintech Week Lithuania had a lot of expectations after the stellar speech of Brittany Kaiser the day before. Nonetheless, day two had a solid start with the London Stock Exchange and discussion about digital assets and the future of capital markets.
Panellists discussed how will the future lifecycle of the financial instruments look like, considering that they will be issued in a digital form and handled on updated digital accounting and settlement systems. What was stressed is that collaboration among stakeholders is required in order to create synergy in the industry and reap the benefits. Right now, a lot of groundwork has to be done from technical and regulatory perspectives and once the initial stages are completed in a couple of years, we shall see a big shift and explosion in fintech.
Panellists listed the benefits of digital exchanges that use the distributed ledger technology (DLT) and gave examples of pioneers, such as the Australian Stock Exchange, which was the first one to work on DLT. It is clear that innovation is making significant changes in the capital markets industry and is redefining business models.
A similar question was asked by the second discussion of Fintech Week Lithuania, where fintech companies Twino and ConnectPay, among others, discussed whether the Covid- 19 crisis has helped companies to shift from being product- centric to customer-centric? Twino, which is an online investment platform and a Peer-to- Peer lending marketplace, said that fintechs and their products have always been customer-centric. However, the crisis has made companies change their behaviour and communication with customers, being more proactive in their approach. In general, according to the Deputy CEO & Board Member of ConnectPay, which is offering alternative banking services to online businesses, people have become more focused during this crisis.
Indeed, the focus is a must when businesses are suffering from closures and lack of financing. This was the topic of the following panel, which discussed lending options to Small and Medium Sized Enterprises (SMEs) in order to enable recovery after the Covid-19 crisis. Panellists, that included lenders to SMEs, such as Finbee, Saldo Finance, Factris and Lithuanian state agency for investment and business guarantees, INVEGA, said that companies will need capital quickly after being hit by the Covid-19 crisis. However, banks tend to prefer to on-board bigger clients, rather than going through lengthy onboarding processes with the SMEs.
Here is where a niche where the fintechs come in: Factris, for instance, said that they have developed a system, which enables for a fast on=boarding of companies that want to receive business loans.
Notwithstanding, the development of technology and advancement of regulation, such as open banking and APIs, will enable to operate even faster. INVEGA said that this crisis caused by the Covid-19 has broken some logical barriers and opened up discussions about bigger state involvement indirect lending to businesses.
We can see that although we are talking about technology, which is perceived as an independent, forward-thinking tool, it is clear that technology alone cannot promote the adoption of innovations. There is a need for cooperation with governments and regulators, which are instrumental in synchronizing global order.
The next panel was exactly about that: digital currencies, initially viewed as anarchic tools, are now coming closer to the governmental level. Fintech Week Lithuania guests in a panel about Digital Programmable Euro included three professors, who spoke about national currencies created on a Distributed Ledger Technology. We know that the adoption of digital currencies will be certainly fast-forwarded with the encouragement of governments.
The day has ended with perhaps the most awaited panel for newly aspiring fintech startups: Startup Wise Guys was answering an important question whether Venture Capitalists are still interested in fintechs? And the answer is yes. Startup Wise Guys, which is an accelerator that has over eight years of experience and over EUR 32 million fundraised for portfolio companies, said that investments in fintechs have been growing. However, trends are changing. While previously, the old normal was ‘fintech fetishism’ with skyrocket valuations, right now; there is a ‘fintech realism’.
The accelerator has noted that in 2019, key trends in fintech were Know Your Customer solutions, customer lending, API integrators, Apps for wealth management, payment gateways, cashback, encryption and compliance. While in 2020, the trends differ. We see lending already emerging as a winner, together with debt management, mortgage refinance, e-commerce payments, as well as health savings accounts, capital markets, cyber insurance and digital identification and biometrics. Apparently, VCs will be investing in companies that are using financial technology as an ingredient, versus a primary business model. Attention was brought to sustainable finance as a visibly emerging trend in finance and investments.
What we see is that fintech is an exciting area of growth and innovation, which joins everyone- businesses, consumers, technology, governments and regulators. Fintech Week Lithuania is certainly happening at the right time, at the right place.
