Fintech: A Hot Trend Turns Ice Cold
A forecast for “a jaw-dropping setback”
by Bob Stokes
Updated: May 11, 2023
We don't hear about fintech as much anymore.
Fintech stands for "financial technology" and it was all the buzz for a while, as this Forbes headline from 2015 reflects:
The Fintech Boom And Bank Innovation
Fintech refers to software, mobile applications and other technologies which enhance traditional forms of finance for businesses and consumers. Think mobile banking and peer-to-peer payment services such as Venmo and CashApp. There are many other fintech companies which have the goal of making financial transactions more accessible to more people.
However, like with many other hot trends, our European Financial Forecast (which is part of our Global Market Perspective) issued warnings that a cool-off was ahead.
For example, in September 2018, after observing skyrocketing valuations, our Global Market Perspective noted:
Fintech [is] on course for a jaw-dropping setback.
In March 2019, this was a follow-up Global Market Perspective fintech warning:
Fintech remains the focal point of the current mania.
About a year later, Germany's fintech giant Wirecard collapsed in a fraud investigation.
More recently, here's an April 16, 2023 Financial Times headline:
How London Lost Its Luster for Fintechs
Our May Global Market Perspective provided an update on its ongoing warnings with this chart and commentary:
Since 2018, [the Global Market Perspective] has discussed the [fintech] sector's sky-high valuations and stratospheric optimism. … About half of those discussions spanned the sector's transition to a bear market over the course of 2021.
Much has happened since then. [This chart captures] a 56% decline in the Global Fintech Thematic Index.
Our Global Market Perspective is currently keeping subscribers ahead of other major financial trends.
In addition, in our May issue, you'll find a special section titled:
BANK TREMORS FORESHADOW FULL SCALE QUAKE
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