Over the past decade, the Fintech industry experienced a fast and furious growth, even helped by a digitization increase and a robust banking economy. According to a recent research by McKinsey, as of July 2023, publicly traded fintechs represented a market capitalization of $550 billion, a two-times increase versus 2019. In addition, as of the same period, there were more than 272 fintech unicorns at global level, with a combined valuation of $936 billion, a sevenfold increase from 39 firms valued at $1 billion or more five years ago.
However, the market slowdown happened in 2022 produced impacts felt even today. In fact, according to the analysis, after an extraordinary 2021, boosted by the hyper-digitization triggered by pandemic, in 2022 the funding levels returned to long-term trend levels as inflated growth expectations were reanchored to business-as-usual levels. Fintech funding faced a 40 percent year-over-year funding decline, down from $92 billion to $55 billion. But, McKinsey’s analysts alert that even if the fintech’s future remains challenging, there are several opportunities yet to be unlocked with a global industry CAGR expectation of 15% by 2028. A perspective that pushes fintechs at every stage and size to keep growing and innovating, but with different objectives than in the past. A new approach where sustainability, risk assessment and a higher maturity drives new trends to follow for the future of the market. So, what does it mean to be a unicorn in this new fintech paradigm and how to interpret the situation in right way to continue in succeeding? We tried answer this question together with Stefano Piscitelli, CEO at Younited Italy, who explained us what are the secret of this result, and what are the next steps to keep growing and competing in the financial technology universe.
Piscitelli, what does it mean to be a unicorn today in the world of fintech?
“To be a unicorn symbolize a remarkable milestone in the company’s growth journey. In our case, reaching unicorn status in 2022 was a result of being deeply engrossed in the transition from hyper-growth to sustainable growth and profitability. The unicorn label, though significant, felt more like a “cherry on top” rather than the main course of our focus. Competing in this financial market required a blend of innovation spirit and strong-choices. UX-Centric Approach: we prioritized a modern, seamless user experience from the beginning. Functionality wasn’t enough for us; we aimed for delightful and intuitive interactions. Data-Driven Decisions: we never settled; we remained obsessed. Continuous, in-depth, data-driven optimization helped us identify market gaps, refine our offerings, and stay ahead of emerging trends. Cutting-Edge Technology: we integrated the best technology at every step of our value chain, ensuring efficiency, scalability, and an edge over competitors who might have cut corners technologically. Mutualizable Initiatives: we maintained a disciplined approach in identifying activities or projects that could be mutualized among the various countries where Younited operates, ensuring optimal resource allocation and streamlined operations across products and geographies. In essence, our journey wasn’t just about identifying a gap in the market; it was about understanding the evolving needs of consumers and addressing them with a mix of technology, disciplined decisions, and an unwavering focus on user experience”.
What are the challenges and opportunities that you see in the market in which you operate today, between instant credit and split payments?
“In the current landscape, the challenges and opportunities are notably shaped by the evolving dynamics brought forth by the ongoing crisis. As this crisis is teaching all Fintech entities across the EU, there is no longer time for unsustainable business practices. Investor demands for profitability have intensified, and company valuation is no longer viewed as the sole attractive metric to follow. The focus has shifted from mere fundraising to ensuring sustainable and rapid profitability. In this context, the challenges lie in adapting to this paradigm shift, where financial technology companies must align their strategies with the pressing need for profitability. Meeting investor expectations for quicker returns becomes a paramount challenge. Concurrently, the market offers opportunities for those capable of adeptly navigating these challenges. Embracing innovative approaches in providing instant credit and split payment solutions that are not only efficient but also financially sustainable can strategically position a company in a favorable light”.
Talking about innovation, what could be the impacts or the benefits coming from the adoption of AI within the credit and split payments processes and analysis?
“By leveraging AI and incorporating alternative data sources, it enables the creation of highly accurate credit scores and enhances the overall efficiency of payment analysis. This approach allows for a more comprehensive evaluation of an individual’s creditworthiness, leading to better-informed lending decisions and improved risk management. However, it’s crucial to recognize that the use of AI in these processes raises ethical concerns. The algorithms need to be trained with a certain degree of “good inefficiency” to ensure fairness and avoid discriminatory practices. Striking the right balance between efficiency and ethical considerations is essential to harness the full potential of AI in credit and payment analysis while maintaining trust and fairness in financial systems”.
What are the next steps from your point of view to keep growing in this sector?
“The next steps, from my point of view, to keep growing involve a continuation of our successful strategies. Maintain Laser-Sharp Focus: We need to persist in our commitment to focus. In a competitive landscape where diversification is often the norm, our depth over breadth strategy has proven invaluable. Staying focused like a laser on our chosen field allows us to innovate with unparalleled insight and precision, providing unmatched value to our customers. This approach has been a key driver of our success, and we must continue to deepen our expertise. Emphasize People and Values: Our team is at the heart of our success. It’s not just about hiring skilled professionals; it’s about attracting and retaining individuals who not only possess the necessary skills but also resonate with Younited’s mission and values. These individuals are the driving force behind our vision, infusing our products and services with the ethos that sets us apart. To sustain our growth, we must continue to prioritize the recruitment, engagement, and retaining individuals who align with our mission and values, ensuring a cohesive and purpose -driven team”.
