Fintech
Fortis CEO predicts ‘great restoration’ for FinTech and payments sector
The integrated payments leader outlines the future of FinTech after a period of hypergrowth.
PLANO, Texas , May 15, 2024 /PRNewswire/ — Fortis, a leader in payments and commerce technology for software providers, marketplaces and growth businesses, shares CEO Greg Cohen’s predictions for the future of payments and financial technology in the medium of significant industry changes with the onset of what Cohen coined “The Great Restoration.”
After a long period of rapid investment and growth, financial technology and payments companies must transition to a more sustainable and profitable business model, leaving behind bloated valuations, irrational business models and free-flowing investment channels. According to E&Y, there are more than 50,000 venture-backed startups dealing with high valuations and low liquidity. Many companies now find themselves unprepared to build lasting business models.
“We are only at the beginning of the Great Restoration: some will make it, some will not,” Cohen says.
“The next few months will be crucial for the future of payments. Companies that are built on solid foundations and embrace focus, discipline and strategic growth will be well positioned to weather the storm and emerge stronger; others will find these times a real challenge “says Cohen.
Recent headlines confirm this trend. Valuations in the payments industry have fallen significantly, some by as much as 50%, and even the most established players have seen depressed valuation multiples, not seen since the post-financial crisis era. While experts do not expect further interest rate increases, a return to the low rates of 2021 is unlikely. Combined with increased regulatory scrutiny and a challenging fundraising environment, overall financial technology investment sentiment has soured. These challenges have already led to FinTech sector failures, M&A activity below capital raising levels, and depressed market valuations across a broad range of segments.
Looking forward
Like after a natural disaster, the industry is in a period of recovery. The weakest homes and businesses are swept away, but structures with solid foundations mend their fences and move forward with renewed respect for their infrastructure. Replacement homes are built to new and updated codes and fortified to withstand the demands of the new world.
Similarly, incumbents have closed or divested non-core assets. The sector sees weaker businesses being filtered out, while established players are doubling down on core competencies and building strong financial discipline.
“The Great Restoration” predicts several future trends:
- More fights over money – Thousands of cash-burning businesses will need capital, thus pushing boards and investors to show profitability. These companies must carefully manage their operating expenses while exploring ways to improve margins for existing customers.
- Other sales – Organizations will prioritize core business operations and, due to limited capital or liquidity availability, will have to divest non-core assets.
- Increase in mergers and acquisitions – Strategic changes within businesses will lead to softer valuations and discussions about relative value, creating opportunities for mergers and acquisitions among industry players.
- More failures – Cash-strapped organizations without a buyer or investor will result in the closure of business operations.
- Emphasis on sustainable business models – “Growth at all costs” or “capture some users to get the next round of funding” models will no longer be tolerated by boards and investors. Companies will need to launch business lines with a keen eye on breakeven and ROI.
- Greater concentration – Payments and fintech companies will focus on their core competencies and profit from core operations before expanding into new areas. Gone are the days of simultaneously pursuing multiple smaller-scale ventures to obtain capital and resources.
“We are only at the beginning of the Great Restoration: some will make it, some will not. Be very cautious of your partners, as great changes lie ahead in the next year and a half,” says Cohen. .
Silver lining
Ultimately, the Great Restoration will create a more resilient payments and FinTech ecosystem. Companies built on a solid foundation with adequate compliance and financial discipline will remain strong. And opportunities will arise for established players and new entrants to find some strategic assets to acquire, drive long-term growth and deliver outsized returns.
To stay updated on ‘The Great Restoration’, visit us at fortispay.com and follow Greg LinkedIn.
Press Contact
Oliver Stephenson
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Greg Cohen, CEO of Fortis
Currently serving as CEO of Fortis, Greg is a recognized leader in the payments and financial technology industry with a history of building high-performing teams and driving growth across numerous FinTech organizations. He is the former president of the Electronic Transactions Association and a former member of the advisory boards of MasterCard, Discover and NACHA. As CEO of Fortis, he is responsible for the strategic direction and business operations of the integrated payments company. Fortis’ mission is to create extraordinary commerce experiences in collaboration with software vendors, and under Cohen’s leadership, the organization has grown more than 10x.
About Fortis
Fortis provides comprehensive payment solutions and commerce enablement to partners and software developers, processing billions of dollars every year. The company’s mission is to create a holistic commerce experience, guiding businesses to achieve uncharted growth and scale. As the preferred solution for the future of payments, Fortis brings commerce closer to the invisible with a proprietary platform that supports and strengthens the commerce and payments capabilities of software partners. For more information visit fortispay.com.
SOURCE Fortis payment systems