The previous decade of record liquidity and rock bottom interest rates unhinged the market from reality, precipitating extraordinarily large investments in FinTechs. With that era of easy and affordable credit behind us, and moving towards one of “crisis as usual” mode, this report recommends how FinTechs can remain resilient and continue to grow.
Drawing from EY research and the proceedings of the ‘Resilience’ track at the Singapore FinTech Festival 2022 organized by Elevandi, FinTechs are urged to shift their focus to ‘first principles thinking’ instead of being distracted by proxy measures of success like fund-raising or valuations. This means prioritizing financial discipline and governance, boosting technology productivity, finding growth opportunities in the ecosystem – and paying even greater attention to customers’ evolving needs.
It’s time to be realistic about valuations and reassess business strategies to drive performance improvement and accelerate toward profitability. That said – despite growing economic uncertainty – the region’s FinTech sector has continued to see impressive growth and increasing maturity over the last 12 months. Further digitization and emerging threats to the sector will only elevate the need for agility to respond to market changes and new opportunities to remain competitive.
The stage is set for greater opportunities for innovation in alternative funding and incentives beyond venture capital or traditional forms of finance. There is still capital for investment but it is being deployed differently.
It’s up to FinTechs to work in the areas they can control – attracting, motivating and retaining talent with strong employee value propositions as well as better cost management and working capital to ‘do more with less’. By going back to first principles, FinTechs can navigate the current “perma-shock” conditions and build large, successful, resilient businesses.
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