Fintech in the Post-Pandemic Era

English Version (中文版本在下方)

Preface

Because of the pandemic, nearly every industry experienced major changes in 2020. This article focuses specifically on fintech and looks at the sector from the angles of both data and business models, in order to understand what kinds of changes fintech faced during the pandemic and to identify possible post-pandemic trends.

Fintech Categories

Under today’s mainstream classification, fintech can be roughly divided into eight categories: payments, digital banking, alternative lending, wealth management, insurtech, capital markets, small and medium-sized business services, and real estate.

Funding Records

The pandemic strongly accelerated demand for the digitization and online migration of many services, including financial services. Because many fintech providers are still startups, funding records offer a good way to observe this trend. Even in the second half of 2020, when the pandemic was still raging, fintech continued to receive a large amount of capital. Fundraising activity did not show a significant decline compared with 2019 and remained at a similar level.

Pandemic and Digitalization

At the root of fintech’s strong momentum in 2020 was the rising need to move financial services online. Because the pandemic made in-person interaction far harder, everyday life was pushed toward digital alternatives. Digital transformation that might otherwise have taken another five to ten years suddenly became urgent and unavoidable because of COVID-19.

Square

Square and Stripe are both good examples of this shift. Square originally provided ordinary merchants with fast, low-cost, diversified payment channels and integrated POS systems. Looking at its business model as a whole, it can be seen as a classic case of disruptive innovation: it targeted small and medium-sized merchants that traditional financial institutions had largely ignored, used technological progress to serve those customers, and then gradually expanded upward toward larger businesses, taking share from banks’ established markets. Yet the explosive rise in Square’s stock price during the pandemic was mainly driven by another, newer line of business.

Cash App

Cash App’s rapid development during the pandemic was the key factor behind Square’s stock surge. At its core, Cash App is an integrated mobile payment service, but because Square had already spent years building deep fintech capabilities, Cash App was able to stand out among many payment apps through its broad yet well-integrated services, intuitive interface, ease of use, and thoughtful personalization. It rose quickly during the pandemic and became an unexpected challenger in US mobile payments. It is fair to say that much of Square’s appreciation over the past year came from Cash App, since merchant-facing in-store payment services were naturally harder to expand, or even shrank, during the pandemic. It will be interesting to see how Square eventually creates synergies between its B2B payments business and its B2C Cash App once society returns to normal.

Stripe

No discussion of payment services would be complete without Stripe, whose business also expanded rapidly during the pandemic. Stripe mainly helps SaaS companies integrate online payments quickly. Since SaaS companies soared during the pandemic, Stripe rose with that wave as well. During a previous internship, I had the chance to study how to introduce online payments into an existing company setup, and among the many payment solutions available, Stripe stood out as the strongest in integration. Put simply, integration here means the ability to connect smoothly with many different systems. Stripe supports the widest range of API integrations, whether with accounting systems such as QuickBooks or CRM systems, making connection almost one-click in practice. Beyond that basic integration capability, Stripe has made integration its core value proposition from the beginning, so its own API structure is clear and developer-friendly, which is especially attractive to SaaS companies with technical teams. Stripe does have weaknesses, of course. For example, PayPal’s Braintree is known for more convenient cross-border payments and a wider range of payment methods, and Braintree’s tight connection with PayPal still gives it a meaningful position in the market.

High Integration

Looking at Stripe’s competitive advantage as a whole, I believe the low switching cost created by high integration is the key to its success. Everyone knows digital transformation is unavoidable, but how to transform simply, quickly, and with as little pain as possible remains a major problem for companies. That pain point is not limited to large enterprises; small and medium-sized businesses struggle with transformation friction too. In that environment, digital services that require minimal modification to the original system can quickly win favor. Once they are adopted, providers can use higher-value add-on services to lock customers into their ecosystem. And because integration is so easy, they can also keep pulling more and more diverse services under the same architecture, allowing the ecosystem to continue expanding.

Buy Now, Pay Later

Beyond the digital financial services mentioned above, we can also observe how new patterns of everyday life are shaping the fintech market. From 2016 to 2020, the Buy Now, Pay Later market saw very significant growth. Buy Now, Pay Later, or BNPL, refers to a model in which consumers make a purchase first and pay later. This new payment form emerged alongside the development of ecommerce and emphasizes installment-style and cardless payment experiences. It mainly targets frequent online shoppers by allowing them to receive products without paying upfront and then settle the payment afterward.

In addition, BNPL lets customers choose another form of installment service in order to avoid credit card interest and handling fees. In one Insider survey, we can see that the main reason consumers chose BNPL channels was to avoid credit card interest, with the appeal of enjoying consumption first and paying later coming second.

Just like the historical development of credit cards, getting the market to accept a new payment method inevitably requires a long adoption period. But compared with the earlier era, BNPL now benefits from a wide base of digital services and the support of ecommerce, which should significantly shorten that adoption time. Among providers, the better-known names in the United States include Affirm, Afterpay, and Klarna, while in Taiwan there is the Japanese company Net Protections. Although the earliest beneficiaries of BNPL growth will naturally be these direct providers, traditional payment institutions such as banks and credit card companies are also watching this market closely, so the future balance between competition and collaboration remains worth observing.

Fun Fact

Guess what: Stripe has also recently launched its own BNPL integration. Once again, high integration looks like the key advantage that can remain durable in a fast-changing business world.

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後疫情時代的金融科技

中文版本

前言

由於疫情的肆虐，各產業都在 2020 年經歷了很大程度的改變，本篇文章將具體聚焦金融科技領域，帶大家從數據和商業模式的角度出發，看看疫情時代下的金融科技將面臨何種變化，並且嘗試找出後疫情時代金融科技的趨勢走向。

金融科技 - 分類

金融科技以現在主流的分類大致上可分為八類，分別是：支付服務、數位銀行、另類借貸、財富管理、保險科技、資本市場，中小企業、房地產。

融資紀錄

而疫情大大地刺激了各項服務數位化以及線上化的需求，其中也包含金融服務。由於許多提供金融科技服務的公司尚為新創企業，因此從融資紀錄觀察此趨勢可清楚地發現一些端倪，在疫情仍肆虐的 2020 下半年金融科技依舊獲得大量的資金注入，募資程度較 2019 年相比並無顯著下滑，維持在相近的水平。

疫情 - 數位化

金融科技在 2020 年備受青睞的原因，追根究柢可說歸根至金融服務線上化的需求，由於疫情的影響人與人的關係難以藉由實際接觸來達成，也造就一切日常生活的數位化，原先可能需要再歷時 5–10 年才會得到的數位轉型，因為 Covid-19 的加速變得更加急迫且必須。

Square

在這方面，Square和 Stripe 都是很好的例子。Square 原先是提供普通店鋪快速、且低成本的多元支付管道和整合的POS系統，綜觀其商業模式可稱為破壞式創新的範本，瞄準原本不被傳統金融機構在乎的中小店舖作為利基市場，藉由科技更迭的進步提供服務給這些客群，逐漸壯大後切入更大型的店家，搶食銀行固有的市場。但 Square 在疫情期間飛速成長的股價卻是因為其另一項新推出的業務。

Cash App

Square 在疫情期間快速發展的 Cash app 才是造成股價暴漲的關鍵因素，Cash 其實說穿了便是行動支付的整合服務，但由於 Square 深耕金融科技多年，在眾多行動支付的應用程式中，憑藉多元但整合良好的服務、直覺且便於操控的介面、以及個人化的巧思， Cash app 在疫情間快速崛起，成為美國行動支付的程咬金，可以說 Square 在過去一年間的漲幅都是由 Cash app 所貢獻，畢竟服務實體店家的支付服務在疫情間難以擴張甚至萎縮，是無法避免的。但我們也期待 Square 在社會恢復正常時，將會如何發揮 to B 的支付服務與 to C 的 Cash app 之間的綜效。

Stripe

提到支付服務便不能不提及，在疫情間業務也飛快擴張的 Stripe。其主要提供 SaaS 公司快速導入線上金流服務的服務，由於疫情間 SaaS 類股漲到天邊去了，Stripe 也搭上這班特快車聲勢扶搖直上，筆者有幸在先前的實習經驗時，研究過如何在公司現有的基礎上導入線上支付，當時在眾多線上支付服務中，Stripe 是整合服務做最好的，所謂的整合服務間單來說是指與各式不同的系統之間的串聯。Stripe 是支援最多 API 串連的服務，不僅是與會計系統 (如 Quickbook ) 或是 CRM 系統，都能達到一指串連。除了基礎的整合服務，由於 Stripe 從最初便是以整合性作為賣點與核心，自身服務的 API 架構不僅清楚且易於開發，對於多為科技背景的 SaaS 特別有吸引力。當然 Stripe 也是有其劣勢，像 Paypal 旗下的 Braintree 便以更方便的跨國支付和更多的支付管道著名，尤其和 Paypal 的一體性也讓 Braintree 在此市場依舊占有一席之地。

高度整合性

綜觀 Stripe 的競爭優勢，我認為高度整合性所造成的低轉換成本是其成功的關鍵，眾所周知地，數位轉型是勢在必行的趨勢，但如何簡單、快速的無痛轉型一直是所有公司的心頭刺，而這樣的痛點不只存在大型企業，中小型公司也因為各式各樣的轉型不便而煩惱著。此時能在原本系統做最少改動的數位服務便能快速地獲得青睞，簡單的導入後，再藉由更多功能的增值服務將客戶牢牢鎖在自身生態系將成為市場顯學。且由於易整合的特性，在未來更加多樣化的應用市場中，也能將眾多包羅萬象的服務通通整合到自身架構底下，讓生態系一再擴張。

後支付

除了上述提到的數位轉型金融服務，我們也可以觀察到新型態的生活型態正在影響金融科技市場。在 2016–2020 年期間，「後支付」市場有十分顯著的提升。後支付，在英文叫做 Buy now, Pay later (BNPL)，意即先進行購買後交付款項，這樣新型的支付型態是隨電子商務的發展而誕生的服務，強調無卡分期與無卡支付，目標為經常使用線上購物的族群，讓消費者能在避免先交付款項的情況下獲得商品，之後再進行付費。

除此之外，後支付服務也使顧客能選擇另一種分期服務以規避信用卡的利息和手續費。在 Insider 的一則調查中，我們可以看到消費者選擇後支付管道的最大原因是為了規避信用卡的利息，其次才是滿足消費者先享樂後付款的需求。

正如信用卡的發展歷史一般，要使市場接受此新穎的方式勢必需要很長的導入期，但相較當時的時空背景，後支付有各項數位化服務打頭陣，且伴隨電子商務的支持，也將使導入時間大大縮短。在提供商方面，美國較為知名的有 Affirm，Afterpay、和Klarna，而台灣則有日商 Net Protections。儘管在後支付的成長中，最先受益的勢必是上述這些直接廠商，但各大傳統支付機構，如銀行、信用卡公司，也都虎視眈眈後支付這塊大餅，因此未來的競合關係尚待進一步觀察。

Fun Fact

Guess What? Stripe 近期也推出了自身服務與後支付的整合功能，果然高度整合性才是在瞬息萬變的商業世界中屹立不搖的關鍵。

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