This year UppLabs started new FinTech podcasts with industry experts. This time we prepared an article based on our FinTech podcast with Tal Sharon, Managing Partner at Equitech, President at FinTech-Aviv – The Israeli FinTech Association.

Besides, Tal is a FinTech lecturer in several Academic Institutions in Israel and abroad and one of the curators for the first accredited FinTech course in Israel. 

In this interview, we will discuss the current trends in Fintech and how the market adopts it. In addition, we will explore emerging trends, discover the best FinTech use cases, and find out how COVID-19 influenced the financial sector.

Below, you will find an expert opinion about the current situation in FinTech Tal provided during the interview with UppLabs.

How would you describe FinTech?

FinTech is a broad term. It relates to any technology that provides financial services to end customers or supports internal processes in providing such services.

Fintech is not limited to financial institutions. The global adoption of Fintech indicates that almost any company can utilize FinTech to provide additional financial services. With sufficient data, companies can add an additional layer for the value proposition for their customers.

Due to open banking, companies are globally taking this path, providing a range of services from banking to financing and insurance. Shopify is a great example of a company adopting financial services, which currently generates about 50% of its revenues.

What is the best use case for FinTech?

There are a lot of cases that can be considered to be a solid ground for FinTech. Maybe the one I like the most is how FinTech can create an impact, especially in developing countries. 

A worrying example is the status of unprivileged women and children in African countries who have limited access to cash due to the cultural issues, as men handle the household financials. 

Another example is a regulation technology that is a blue ocean for opportunities due to the constant change in compliance. Financial institutions adopt regulatory changes. Companies are offering automation of regulatory frameworks using AI and ML. As a result, financial institutions can adopt solutions to reduce the cost and ease the process.

Covid-19 accelerated digital adoption in 2020 and changed the landscape for remote engagements, which became crucial. Two main aspects of FinTech that were impacted by the Covid-19 for the better are Trading and Lending

1. Trading. People are stuck at home with high uncertainty about their work future. This element increased dramatically the amount of people who trade online. FinTechs are offering ease of process and unique experiences, such as social investments. As a result, the retail trade volume increased significantly in the past year. 

2. Lending. Many businesses seek financing in this time of uncertainty but banks are not always interested in providing such funding. Alternative credit scoring, automatic underwriting, distributing debts, and collection are technologies to reduce the cost of financing for both lenders and consumers. 

About blockchain and smart contracts

When blockchain technology started, most financial institutions were afraid of it and tried not to engage in it. But that changed. In the early days of blockchain technology, companies positioned themselves as “blockchain companies.” It is similar to a company referring to it as an AI company or a Machine Learning company. It’s the technology behind the solution itself.

If we take a look at crypto-assets, PayPal’s entry into the crypto space sent a shock of waves in the FinTech world. This astounding validation of the future of cryptos as payment instruments, rather than only as a store of value, sets a clear direction to the days ahead – cryptos turning into real usable money.

Platforms are currently allowing users to buy anything online with their cryptocurrencies. 

A good example is OpenBlocks – an Israeli-Swiss startup company that aims to change the way we use our cryptocurrencies and enables a secured crypto purchase on the consumer level from any platform. With OpenBlocks, users can buy anything online with their cryptocurrencies with one click, thus enabling online merchants to get access to a huge untapped market of crypto holders.

In time, the current distinction between crypto-assets and FIAT, regarding utilization and availability will become blurry, and possibly mitigate completely.

The challenges in FinTech consulting

There are plenty of challenges in FinTech consulting because of the variety of clients that require Fintech consulting. 

Equitech is a FinTech consultancy providing a wide array of services for financial institutions. Our expertise includes FinTech Transformation Advisory Services, innovation scouting services, research & analysis as well as professional workshops, seminars, and FinTech courses.
Equitech provides tailored services for FinTech and Cyber Security start-ups, supporting their needs with a holistic approach that includes strategic advisory, business development, investment banking, market analysis, and penetration, bookkeeping, and financial controlling, as well as FinTech, focused digital marketing and PR services.

A note about Israeli FinTech

In 2019, Israel had 1,8 billion-dollar invested in FinTech startups, representing more than 5% of global investments in FinTech. With a population of 0,01% of the global population, we generated more than 5% of FinTech. These figures caught many multinationals’ eyes, which Equitech actively supports in scouting, localization, and digital presence.

How will you direct entrepreneurs who are looking to launch a Fintech initiative?

My best advice is to find what is wrong or discomfort, what you are passionate about, and explore how FinTech can improve it. We see many startups that believe they have a great idea, but no one is ready to pay for their value proposition. Before running and saying, “We have a great idea!” understand the problem you are looking at. Make your research and make sure your product is given the required value for the end customers. Talk to them in advance, ask questions to understand if the need exists at all.

Let’s talk about your Fintech opportunities!