Fintech
FinTechs Flounder as Investors Embrace ‘AI Mindset’
Has the FinTech sector hit rock bottom after years of skyrocketing investments?
That seemed to be it feeling among some executives and investors at Money20/20 event occurred in Amsterdam earlier this month, CNBC reported Thursday (June 13).
Among them there was Iana DimitrovaCEO of an embedded finance startup OpenPaydwho told CNBC that the market has “recalibrated.”
“Value is now being placed on companies that can demonstrate there is a solid use case, a solid business model,” Dimitrova said, according to the report. “This is recognized by the market because three, four years ago, that wasn’t necessarily the case anymore, with crazy ideas of domination and hundreds of millions of dollars in VC funding.”
“I think the market makes more sense now,” he added, according to the report.
Many conference attendees said participation was much smaller this year, but three years ago FinTech funding hit a record $238.9 billion, the report said. Last year, funding for the sector fell to $113.7 billion, a five-year low.
No CEO Prajit Nanu told CNBC that investors have sometimes been too distracted by artificial intelligence to pay attention to the innovative products and growth stories happening in the world of FinTech.
“Investors are now in the Artificial Intelligence Mindset” he said, according to the report. “Like, no matter what the cost. I want to participate in artificial intelligence. They will burn a lot of money.”
As PYMNTS reported Thursday, many companies want to participate TO THEwith 78% of CFOs saying technology is “extremely important” to payments processes.
63% of CFOs said AI has reduced the need for low-skilled workers, although the technology may also require new skills. 58% of CFOs reported they need employees with more analytical skills.
“As applications for AI mature, the needs of all businesses, large and small, will continue to evolve,” PYMNTS wrote. “However, one thing is clear: we are starting to see the potential of artificial intelligence.”
As for the FinTech space, Nanu said in the CNBC report that the current focus on AI matches the “madness” the FinTech sector has seen in terms of skyrocketing valuations in 2020 and 2021. He said the industry has reached “bottom” when it comes to FinTech market values.
“I believe this is the low point of the FinTech cycle,” Nanu said, adding that “this is the right time to get it done.”
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