FinovateEurope 2020, which took place in Berlin in mid-February 2020, was one of my last big trips that year. It was also the first time I bought and liberally used hand sanitizer. Still, as events go, it was pretty “normal.” So I approached the digital edition of FinovateEurope 2021 with some curiosity. Would the energy that accompanies the demos still be there? Will the industry insights and networking deliver the same value? I think we can all get better on digital networking, but as my colleagues Luis Deya, Corrado Loreto, and I compared notes, we agreed that the event did unearth four big themes that are top of mind for industry executives at the moment.

The Pandemic Has Accelerated Digital Adoption, But Executives Are Now Planning For Hybrid Experiences

Forrester data shows that even the most digitally resistant of customers embraced new digital behaviors during the pandemic. While some customers are eager for the return of in-person and in-branch experiences, when restrictions are lifted, many will still rely on digital channels. At FinovateEurope, executives from banking brands such as BNP Paribas, HSBC, and Nationwide Building Society talked about their plans for hybrid experiences. They’re embracing experience design to match services and channels to customer needs. Customers still value the empathy that a human advisor brings, but digital technology can augment that experience. Digital should not be just about simplifying repetitive tasks; it has the power to transform customer experience.

But the pandemic hasn’t only challenged consumers to do things in new ways. For some businesses, it was a painful manifestation of their inadequate digital resources. Until 2020, every company was on its own digital transformation journey, but the sudden need to serve customers through digital channels only, combined with remote working, has forced businesses everywhere to adapt and innovate. HSBC’s FinTech Partnerships Lead Finance and Risk Innovation, Rita Martins, shared how she has been running labs to incentivize innovation and suggested partnering with fintechs on a regular basis. As we wrote in our piece on the new, unstable normal, we expect smart firms to retire technical debt fast and then ride the tech disruption wave as a result of COVID-19.

Cashless Payments Reached A Historic High, Redefining Payment Experiences Forever

Consumer adoption of digital payments accelerated amid the pandemic, alongside online sales. In Q4 2020, Shopify’s total revenue increased up to 94% compared with Q4 2019. All panelists agreed that as consumers experience the convenience of using e-commerce and digital payments, these new habits will persist post-pandemic. Retailers have been adapting to the new environment, focusing on contactless payments, the removal of a wet signature requirement, and omnichannel experiences. Financial institutions will increase the use of APIs and expand open banking use cases. Digital identity combined with real-time technologies will play a central role in identifying payers and validating accounts. Open banking tools will also provide more visibility around reconciliation, liquidity, and real-time payments.

Global Uncertainty Has Skewed Fintech Investments Toward Late-Stage — Less Risky — Players

Venture capital firms reacted to the COVID-19 pandemic with caution and put money into late-stage companies they considered to be safer bets. Our analysis of 2020 fintech funding revealed that COVID-19 only accelerated the existing trend of investments moving away from seed and early-stage funding. As FinovateEurope presenters highlighted, despite vaccine rollout offering some optimism for 2021, uncertainty continues to affect the fintech market. The pandemic has made innovation a mainstream business goal, but investors continue to reward fintechs that have strong roadmaps, a clear path to profitability, and solutions that help consumers and businesses adapt to the “new normal.” Stripe raised $600 million in Series H funding as it benefits from the rise of e-commerce and digital payments. General Partner at Mouro Capital, Manuel Silva Martinez, stated that in 2021, “some late-stage fintechs will blossom to the point of being really big companies.” Startups and incumbents will need to find a way to collaborate or compete with them. Fintech is already a market where quality is skyrocketing. Laggards will struggle to differentiate their propositions and eventually will exit the market.

Businesses And Governments Are Taking The Opportunity To Reset And Rebuild

The impact of climate change and the transition to more sustainable business models are hot topics in many company boardrooms. Most firms have focused their efforts on reducing their carbon footprint and becoming greener. But Finovate attendees noted that the social element of environmental, social, and governance strategies was gaining importance and more companies were addressing this aspect of sustainability, which includes emerging initiatives such as financial well-being, protection, literacy, and inclusion as well as community engagement and donations. As Citi’s EMEA Commercialisation Lead for Spring, Lola Adebanji, pointed out, the pandemic-driven reliance on digital channels has revealed access issues for a large number of people, usually the most vulnerable, and has forced companies to rethink their services. We certainly agree and have launched a whole research series dedicated to financial well-being.

I would like to finish by thanking Finovate for inviting me to present again this year and congratulating Dbilia, Proptee, and Quantum Metric for winning best of show.

(Corrado Loreto contributed to this blog post.)