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New Report Shows Global Growth of Fintech in 2020

The new report from the Cambridge Centre for Alternative Finance, the World Bank and the World Economic Forum shows most fintech sectors grew in 2020 over 2019

December 3, 2020 By Peter Renton 1 Comment

This past summer the team from the Cambridge Centre for Alternative Finance (CCAF) in partnership with the World Bank and the World Economic forum embarked on the most ambitious research study in the history of fintech. They wanted to gather empirical data on the impact that Covid-19 was having on the fintech world. So, they sent out a survey to thousands of fintech companies in 190 countries.

LendIt Fintech was a proud partner in the survey as we promoted this Herculean effort and helped to encourage fintech companies to participate. Between June 15th and August 18th, 2020, the joint research team received completed surveys from 1,385 unique fintech companies operating in all corners of the world. From this large dataset they were able to draw a number of conclusions on the impact Covid has had on fintech.

Today, the 125-page Global COVID-19 FinTech Market Rapid Assessment Study was released and it contains a treasure trove of data. Not surprisingly, given the movement towards digital this year, the report found that 12 out of 13 fintech verticals reported growth in the first half of the year. The exception was digital lending, that reported an 8% decline in transaction volume. On average fintech companies increased the number of transactions and dollar volume by 13% and 11% respectively.

Growth was not uniform across regions. The fastest growing region was the Middle East & North Africa (MENA) at 41%, North America was second at 21%, with Latin America third at 13%. The data also showed those countries that had more stringent lockdowns averaged 50% higher transaction growth than those countries with low stringency.

One of my favorite statistics from the survey was the 92% of firms that reported either having launched or being in the process of launching new products or services. This is one thing that fintech has done very well this year. We have adapted to the changed environment and have continued to innovate.

Of course, the report highlighted many challenges that fintechs have faced this year. 40% of firms surveyed indicated that they have either introduced or are in the process of introducing enhanced fraud or security measures as a response to the pandemic. Costs also increased as companies had to pay more for onboarding customers and data storage.

Then, of course, we have the digital lending sector. I have already mentioned the 8% overall decline in transaction volume and as expected small business lenders were below average, particularly balance sheet lenders that saw an 18% decrease in volume. On average digital lenders made a 14% downward revision to expected 2020 revenue. This number is better than I expected and certainly better than several of the large lenders in this country. The best sector was Balance Sheet Property Lending that showed a 9% increase in volume.

Here is what Bryan Zhang, the Co-Founder and Executive Director of the CCAF had to say about the report:

This study reveals a global FinTech industry that has been largely resilient in spite of COVID-19. Nonetheless, its growth must be interpreted with nuance and in the context of unevenness, and the opportunities for the industry should be juxtaposed with the challenges it faces.

While Bryan and his team were the driving force behind this project it was a group effort with major contributions from the World Bank and the World Economic Forum. Caroline Freund, the Director for Finance, Competitiveness and Innovation at the World Bank said this:

Fintech has shown its potential to close gaps in the delivery of financial services to households and firms in emerging markets and developing economies. This survey shows how the fintech industry is adapting to the pandemic and offers insights for regulators and policymakers seeking to promote innovation and reap the benefits of fintech, while managing risks to consumers, investors, financial stability, and integrity.

Matthew Blake, the Head of Financial and Monetary Systems at the World Economic Forum, said:

It’s clear COVID-19 has disrupted the global economy with lasting implications for corporates and consumers. Despite this challenging backdrop, FinTechs have proven resilient and adaptable: contributing to pandemic relief efforts, adjusting operations and offerings to serve vulnerable market segments, like micro, small and medium-sized businesses, while posting year-over-year growth across most regions.

Finally, another major supporter of this report was the UK’s Foreign, Commonwealth & Development Office. James Duddridge MP, the UK’s Minister for Africa at the FCDO said:

Covid-19 is accelerating change in how people interact with financial services, which has led to unprecedented demand from developing countries to progress their transition to secure and inclusive digital finance. Whilst it is encouraging to see the growth reported by FinTechs in the study, there are also cautionary indicators that some firms are suffering a deterioration in their financial position and are concerned over their ability to raise capital in the future. This is something that the FinTech community should be mindful of given the significant economic opportunities that FinTech presents.

A few weeks ago the CCAF and World Bank released the regulatory component to the Rapid Assessment Study that showed an increase in the pace of regulatory innovation during the pandemic.

Cambridge Centre for Alternative Finance and World Bank Release Global COVID-19 Fintech Study

The World Bank and University of Cambridge report highlights the increasing digitization of financial services that has accelerated the pace of regulatory innovation during the pandemic

October 28, 2020 By Peter Renton Leave a Comment

The Cambridge Centre for Alternative Finance (CCAF) has become the world leader in fintech research, known for their thorough reports on most areas of alternative finance. This year, with the pandemic raging, they undertook their most ambitious project yet. Together with the World Bank the CCAF have published the Global COVID-19 FinTech Regulatory Rapid Assessment Study which was released today (download full study here).

The goal of the study was to shed light on the current state of the global fintech market and provide timely data to inform decision-making by market participants, regulators and policymakers. The survey may well be the most ambitious regulatory survey ever undertaken in the history of fintech. They gathered responses from 118 financial regulators (including central banks) in 114 jurisdictions across the globe. The regulators that responded from the U.S. included the Federal Reserve Board, the Commodity Futures Trading Commission, the Financial Industry Regulatory Authority and the Wyoming Division of Banking.

The study found that the vast majority (72%) of regulators had either accelerated existing regulatory innovation initiatives or introduced new initiatives. Not one regulator reported the cancellation of an innovation initiative due to Covid-19 but some indicated they had delays.

Almost two-thirds of regulators from emerging markets and developing economies said that fintech has increased in priority while more than half of regulators in advanced economies said it has remained high. Interestingly, central banks are more likely (at 65%) to have increased the prioritization of their fintech work relative to other financial regulators (at 38%).

The increased use of fintech products have been observed by 60% of fintech regulators, particularly in the case of digital payments and banking. At the same time regulators see an increased risk in the fintech market during the pandemic concerning cybersecurity (78% referencing as a top three risk), operational risks (54%), consumer protection (27%) and fraud and scams (18%).

Most regulators think they are doing a good job during the pandemic as 80% felt that they have been resilient and adaptable in their response to the challenges of Covid-19. At the same time, they identified key internal challenges when it comes to the regulation and supervision of fintech activities.

Bryan Zhang, the Executive Director and Co-Founder of the CCAF said of the study:

Global challenges such as COVID-19 require global efforts and local solution. We hope that the global regulatory community will find this empirical study immediately and practically useful in facilitating policy learning, formulating regulatory innovation initiatives and informing evidence-based regulation, both during the pandemic and beyond.

Caroline Freund, Global Director of Trade, Investment and Competitiveness at World Bank Group had this to say:

This research was undertaken in order to better understand the experiences of regulators as they face the impact of COVID-19 and increased utilisation of digital financial services and fintech. The findings show that COVID-19 has in many cases accelerated policies and programmes that support a shift to digital finance, such as innovation offices and regulatory sandboxes.

The study concludes with seven lessons learned based on the data collected from this rapid assessment survey, both short term and long term considerations. At the end of the day regulators the world over recognize the importance that fintech has to their economy and realize they need to do a better job in supporting the transition to a digital infrastructure for finance.

Deadline for the Global Covid-19 Fintech Survey is Fast Approaching

Please complete the most important survey in the history of fintech, the deadline is Monday, August 17th

August 12, 2020 By Peter Renton Leave a Comment

The Cambridge Centre for Alternative Finance (CCAF), in partnership with the World Bank and the World Economic Forum, is conducting the most important survey in the history of fintech: the Global Covid-19 Fintech Market Rapid Assessment Survey. See more details in my coverage here.

While the original deadline for the survey was July 31, they have extended it through August 17. But that is the final deadline as all the surveys have to be analyzed for the report that is due out at the end of September. If you have not completed the survey yet I urge you to do so now.

The pandemic continues to wreak havoc on economies all over the world. Fintech is in a good position to help but we need to be heard. It is really important that every fintech company responds to the survey so we can get an accurate assessment of where we are right now as an industry that will inform policymakers around the world.

Time is Running Out: the Deadline is Monday

There are two versions of the survey:

Global Alternative Finance Benchmarking & Covid-19 Rapid Assessment Survey
For marketplace lending and crowdfunding platforms this combines the annual benchmarking study along with the Covid-19 survey.
Global Covid-19 FinTech Market Rapid Assessment Survey
For all other fintech companies, the above link with take you to the Covid-19 survey.

It is imperative that every fintech company completes the survey. So, if you haven’t done so yet please take some time before Monday, August 17 to complete. The industry thanks you.

The Global Covid-19 Fintech Market Rapid Assessment Survey Launches

The Cambridge Centre for Alternative Finance, the World Bank and the World Economic Forum launch a new survey to analyze the impact on fintech of Covid-19

June 15, 2020 By Peter Renton 2 Comments

The most ambitious survey in the history of fintech is getting under way today. The Cambridge Centre for Alternative Finance (CCAF), in partnership with the World Bank and the World Economic Forum, is releasing the Global Covid-19 Fintech Market Rapid Assessment Survey.

It is a massive undertaking that will draw on the resources of these leading research institutions. They aim to reach more than 15,000 fintech companies in 190 countries to discover the impact of the pandemic on the fintech market.

LendIt Fintech is proud to be an official Global Industry Survey Partner and we will be helping to promote this survey over the coming weeks. It is really important that every fintech company responds to the survey so we can get an accurate assessment of where we are right now as an industry that will inform policymakers around the world.

Fintech plays a vital role in providing financial services to consumers and small businesses throughout the world. Governments are beginning to recognize the importance of fintech and one of the goals of this survey is to see what policy responses might be needed to support fintech in helping to stimulate the economy in these uncertain times.

The executive director of the CCAF, Bryan Zhang, had this to say about this survey:

Global challenges require global solutions, this survey is a collective effort to bring the global FinTech ecosystem together to share their insights, express their views and voice their concerns in light of Covid-19. In turn, the rapid assessment survey findings will inform market participants, regulators and policymakers to take swift, appropriate and evidence-based actions.

Take the Survey Today

On to the survey itself. It was just launched today and is available for all fintech firms to complete. It should take around 30 minutes to fill out and there are two versions:

Global Alternative Finance Benchmarking & Covid-19 Rapid Assessment Survey
For marketplace lending and crowdfunding platforms this combines the annual benchmarking study along with the Covid-19 survey.
Global Covid-19 FinTech Market Rapid Assessment Survey
For all other fintech companies, the above link with take you to the Covid-19 survey.

It is very important that you complete this survey in a timely manner. The goal of the CCAF, the World Bank and the World Economic Forum is to have the results for this survey published before the end of Q3. There will be a great deal of work to do to make this happen, so it is imperative that you complete the survey as soon as possible.

LendIt is a Long Time Collaborator With CCAF

LendIt Fintech has been collaborating with CCAF since 2014, even before the Centre was formally established. We have partnered on many surveys, the leadership there has spoken at LendIt in both Europe and the USA and I have spoken at their excellent event in Cambridge.

We partner with them because their work is important. While there are many universities around the world doing good research, no other institution has the global reach to take the pulse of fintech in every important region in the world. Their reports have become a must read for serious industry participants.

Please support their work and complete the survey right away. We will all be stronger because of it.

The Center for Financial Inclusion Digs Into the Global Findex 2017 Numbers

CFI has analyzed the Global Findex 2017 database, released by the World Bank in April, and finds a less than rosy picture

June 7, 2018 By Peter Renton Leave a Comment

A few weeks ago the World Bank released the triennial Global Findex Database for 2017. We covered the release on Lend Academy touting the progress the world has made towards more financial inclusion, particularly in developing countries. Now, the Center for Financial Inclusion, part of Accion, have released a follow up report digging into the Findex data and the picture is less rosy than what was highlighted in the World Bank’s initial report.

On the surface it looks like the world is making good progress towards financial inclusion with the Findex report showing that 68% of adults globally having some kind of bank account versus 61% in 2014 and 51% in 2011. That is rapid progress.

But CFI found a different story when just focusing on active accounts, those accounts that had some kind of transaction in the past 12 months. This takes the percentage down to 55% and what is worse the gap is widening between total accounts and active accounts indicating a growing number of people who open an account but never use it. This is true for both developing and high income countries but the gap is getting much wider in developing countries as shown in the graphic below.

For true financial inclusion to materialize we need to focus on account usage not just total accounts, that much is clear. But there are hundreds of millions of people now with inactive accounts. From the report: [Read more…]

World Bank Releases the Latest Global Findex Database

The Global Findex Database and accompanying report give a clear indication of how fintech is impacting access to financial services globally

April 23, 2018 By Peter Renton 1 Comment

In 2011 the World Bank released the first ever Global Findex Database as “the world’s most comprehensive data set on how adults save, borrow, make payments, and manage risk”. A new database was release based on 2014 data and last week the 2017 edition was released. The full database (in Excel format) and the summary and detailed report are all available for download here.

This is important work because it is the only in depth research of its kind that reaches to all corners of the globe. Here is the methodology quoted from the report:

Compiled using nationally representative surveys of more than 150,000 adults age 15 and above in over 140 economies, the 2017 Global Findex database includes updated indicators on access to and use of formal and informal financial services. It has additional data on the use of financial technology (or fintech), including the use of mobile phones and the internet to conduct financial transactions.

The Most Important Findings

One of the most interesting findings is that an additional 515 million people have opened some kind of financial services account between 2014 and 2017. This means that 69% of adults globally (around 3.8 billion people) now have an account, up from 62% in 2014 and 51% in 2011. This is an astounding change and one, I believe, that speaks to the growth of fintech around the world. Over the last six years it has become much easier to open an account digitally with both banks and non-banks.

What is even more interesting is that of the 1.7 billion adults who remain unbanked around two-thirds own a mobile phone. Now, this would not be a smartphone in most circumstances but many financial services are available on text-only flip phones. In China 82% of those people who are non-banked have a mobile phone, in India and Mexico it is more than 50%. This does speak to the potential to continue to increase the numbers of people with some kind of bank account in the coming years. [Read more…]