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Motive Insights: The View for 2022

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January 9 · Issue #287 · View online
Motive Insights
As we closed out 2021, you heard from us in our last episode on some of the important trends that shaped 2021, from payments, to crypto, to Buy-Now-Pay-Later (BNPL). And in a world still under siege from coronavirus, we expect more of the same exponential digital growth to prevail through 2022. Here are some of the key themes we think we’ll continue to see a lot more of over the coming 12 months…
Hyperpersonalization Supporting Inclusion
Anyone who engages with financial products knows that it isn’t one-size-fits-all, and the good news is that financial institutions have caught on. Uniquely tailored products for specific customer segments are upon us, making financial services increasingly relevant for all demographics and helping to close the gap on the unbanked (even in developed markets, the US unbanked number sits at over 7 million households, and the FCA counts 1.3 million unbanked in the UK). In the same way we saw the proliferation of dating apps via hyperpersonalization, we fully expect to see more in FinTech, from Daylight’s LGBTQ+ community, to Aspiration for environmentally friendly consumers, to Stretch for those recently released from prison sentences.
DeFi Gathers Pace
Many are expecting continued growth and investment in the DeFi space. While Decentralised Finance (DeFi) remains in its relative infancy, it is gathering pace, and we expect to see forward-thinking incumbents of scale benefit from the significant yields DeFi platforms can offer compared to traditional time and capital intensive channels. The launch of AAVE Arc, the first permissioned DeFi platform, has opened the door to compliance conscious institutions. We expect to see the ecosystem of companies facilitating secure institutional access expand. This, alongside a maturing regulatory stance, an increasingly sophisticated NFT market and continued growth of the blockchain gaming industry could drive another strong year for the sub-sector… Given the benefits and tailwinds, it’s a trend that shouldn’t be ignored in 2022.
Embedding FinTech in to Every Company
Throughout 2021, we covered the emergence of Embedded Finance, in fact it makes up a significant portion of the $9.6 trillion market value opportunity we believe exists over the next decade, but what can we expect to see in 2022? It began with embedding payments in apps - think Uber - and in 2021 it evolved dramatically with the proliferation of BNPL, but the future looks set to streamline credit and investing, to automatically create efficiencies for consumers and small businesses alike. Acorn is an example of an embedded investment app that aggregates spare change from purchases to allow consumers to save and invest. Further into this decade we will see a rapid expansion in unattended payments and financial services accessed by connected devices, we expect to see a maturing ecosystem of players dedicated to this space begin to emerge this year.
And with Innovation comes Scrutiny
As the world went digital, and FinTech had another shot in the arm, regulation became evermore critical as financial technology further cemented its place as an essential lifeline, not a luxury. All the areas mentioned above warrant further regulatory attention, but we also expect to see an increase in peer-led scrutiny applied to business. The increased focus on businesses’ approach to ESG has never been so important, and the evolution towards ESG&T (Technology) seems to be in the line of sight for 2022. Many of the world’s most prominent technology businesses endured a chastening 2021 on the PR front, regularly bought in front of politicians and regulators. As AI and automation are ever more central to financial services, being able to ensure fair and equitable decision making and explain the logic will become increasingly important.
About the Author: Sam Tidswell-Norrish is a Principal at Motive Partners in the Investor Relations Team.

Quote of the Week
Investment in UK fintech companies continued its upward trajectory in 2021, attracting $11.6 billion (£8.56 billion) in capital and outpacing the rest of Europe.
A year of “mega-rounds” by the likes of MonzoStarling and Revolut helped total UK fintech investments surge by 217% year-on-year across 713 deals.
Janine Hirt, CEO of Innovate Finance, said: 
“Our FinTech sector is reaching new levels of maturity, and investors are responding to the growing market demand for the products and services our entrepreneurs are able to provide. We are on the right trajectory in terms of levels of funding and now it’s time to also properly address the funding gap for underrepresented founders, if we are to create a truly sustainable and forward-looking sector.”
Motive Portfolio Highlights
  • If you’re a private company, you may have thought an ESPP wouldn’t make business sense – well, think again. As more and more private companies start to embrace this type of equity compensation, Global Shares caught up with Chuong Pham and Elizabeth Stoudt from Infinite Equity to find out why.
  • We were delighted to see InvestCloud’s Global CEO John Wise was recognized on the Financial Planning‘s 22 to watch in 2022 list.
  • Register for Wilshire’s webinar on Monday where they will discuss the economic outlook for 2022, inflation, the implications of the Fed’s shift in monetary policy, and more! Register here today to get your spot.
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What We're Reading This Week
UK fintech investment soared to $11.6bn in 2021
Fintech Led VC Investment Last Year. Here’s What To Look For In 2022
The Fourth Industrial Revolution will be people powered
British fintech PrimaryBid close to finalizing $150 million funding from SoftBank
BNPL Fine Print Must Not Be Skimmed by Consumers To Avoid Unpleasant Surprises
Alternative retirement investment platform Alto raises $40 million in Series B
The Seven Biggest Fintech Stories Of 2021
In What Could Be A Watershed Movement, A Multibillion-Dollar Fintech Company Bolts Into A Four-Day Workweek
Bitcoin slumps to a three-month low as cryptocurrencies extend losses
Fintech company Transigo earns $70M in funding to expand cross-border B2B marketplaces services
Goldman-backed digital bank Starling boycotts Meta over scam ads
Regulation, Protection & Privacy
Fintech CEO: SEC’s Peirce Talks Regulatory Expectations and Raises Custody Questions
India’s Central Bank Creates FinTech Department as Challenges Posed by Crypto, CBDC Grow
Key Hires & Talent
JPMorgan Hires Former Paytm President Nayyar for Europe Fintech
Food for Thought
“To laugh often and much; to win the respect of the intelligent people and the affection of children; to earn the appreciation of honest critics and endure the betrayal of false friends; to appreciate beauty; to find the beauty in others; to leave the world a bit better whether by a healthy child, a garden patch, or a redeemed social condition; to know that one life has breathed easier because you lived here. This is to have succeeded.”
~ Ralph Waldo Emerson
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