Fintech

FinTechs Flounder as Investors Embrace ‘AI Mindset’


Has the FinTech industry hit bottom after years of skyrocketing investments?

That seemed to be the sentiment among some executives and investors at the Money20/20 event in Amsterdam earlier this month, CNBC reported Thursday (June 13).

Among them was Iana Dimitrova, CEO of embedded finance startup OpenPayd, who told CNBC that the market has “recalibrated.”

“Value is now ascribed to businesses that manage to prove there is a solid use case, solid business model,” Dimitrova said, per the report. “That is recognized by the market because three, four years ago, that was not necessarily the case anymore, with crazy ideas of domination and hundreds of millions of dollars in VC funding.”

“I think the market is now more sensible,” she added, according to the report.

Many conference-goers said attendance was much lighter this year, but three years ago, FinTech funding reached a record of $238.9 billion, the report said. By last year, funding for the sector had dipped to $113.7 billion, a five-year low.

Nium CEO Prajit Nanu told CNBC that investors have at times been too distracted with artificial intelligence to pay attention to innovative products and growth stories happening in the world of FinTech.

“Investors are now in the AI mindset,” he said, per the report. “Like, whatever it costs. I want in on AI. They’re going to burn a lot of money.”

As PYMNTS reported Thursday, many companies want in on AI, with 78% of chief financial officers saying the tech is “extremely important” to payments processes.

Sixty-three percent of CFOs said AI has reduced their need for lower-skill workers, although the technology may also require new skill sets. Fifty-eight percent of CFOs reported needing more analytically skilled employees.

“As applications for AI mature, the needs of all companies, large and small, will continue to evolve,” PYMNTS wrote. “However, one thing is clear: We are beginning to see the potential of AI.”

As for the FinTech space, Nanu said in the CNBC report that the current focus on AI matches the “craziness” the FinTech sector saw in terms of sky-high valuations in 2020 and 2021. He said the industry has reached a “bottom” when it comes to FinTech market values.

“I believe that this is the lowest end of the FinTech cycle,” Nanu said, adding that “this is the right time to make it in FinTech.”

For all PYMNTS AI coverage, subscribe to the daily AI Newsletter.



Source

Related Articles

Back to top button