Looking for our most current insights? Read Navigating the Crossroads: Technology, Authenticity, and the Future of Challenger Brands for thought provoking observations and questions for 2024.
A Look at the Most Influential Trends that will Fuel Fintech Challenger Brand Innovation
Towards the end of 2020 we shared our thoughts on trends that will shape the food and healthcare sectors in the year to come, informed by our work with the world’s most exciting Challenger Brands. For this edition we’re looking at the world of fintech, from planning beyond the pandemic to a rise in values aligned investing.
The rise of Challenger banks
Whether it’s people choosing to go digital with their finances or feeling taken advantage of by big banks, opportunities are opening up for Challengers to redefine the status quo. 2021 will see those opportunities become reality. Building on our success with other Fintech challengers, we’re currently helping to brand and launch a Neo Bank in the US to support the unbanked, and challenge the predatory and egregious fee structure of incumbents that generate $45bn in fees from these 60 million Americans. We’re hopeful that 2021 will invite more players that are in true service to customers rather than lining their own pockets.
Consumer planning post-pandemic
With the harsh and pervasive financial challenges of 2020, consumers will seek out brands that provide greater transparency and visibility into the state of their finances, including risks, opportunities and education. As a leading credit education startup north of the border, 5&Vine client Borrowell is one such brand consumers will turn to. Alongside offering free weekly credit score and report monitoring, Borrowell provides free credit improvement tips and education, as well as personalized financial product recommendations. We believe 2021 will bring stronger offerings to the market to help customers plan for anticipated and unanticipated risks.
Digital banks for digital natives
It’s been reported that over 14m in the US and almost a quarter of people in the UK consider a digital bank to be their primary management system (Cornerstone Advisors). Because of their accessibility and ease, digital banks are set to surge, with marked uptake from Gen Z. Given that 41% of Gen Z feel anxious about their finances, 30% feel self-conscious about them, and almost 70% used budgeting tools of some kind in 2020 (NerdWallet), there’s a huge desire from the younger generation to embrace fintech to strengthen their financial literacy. 5&Vine client Greenlight is a leader in this space and helping to strengthen financial literacy among kids. They do this through a kids debit card that empowers young people to learn about saving, earning, charitable giving and investing, all the while supported by their parent(s). We expect more financial tools and offerings to emerge in 2021 in service of young people.
Investing in what we believe to propel social impact
2021 will see investors actively taking steps to ensure their money is making a measurable impact. One brand at the forefront of this is 5&Vine client CoPower. After noticing how difficult it is for most investors to ensure both a compelling return and positive ethical impact, CoPower offers Green Bonds backed by a diversified portfolio of loans to clean energy and energy efficiency projects that reduce carbon emissions and generate steady income. It follows a greater call for ESG standards which will allow investors to better understand the societal impact of their money and brands to be more transparent in delivering their social promises. We believe 2021 will bring a greater awareness, call for, and adoption of financial products that strengthen our society and better the environment.
Embedded banking
At the end of last year, fintech challenger Stripe launched Treasury, a new banking-as-a-service solution that allows clients to embed financial services in their marketplace or platform, and offer bank accounts to their customers in the process. It was big news for the fintech industry, marking the next step of embedded finance and bringing banking services closer to the end consumer by integrating them in the services they’re using. Treasury launched with Shopify, where it will help small businesses bypass the lengthy process of setting up a traditional business bank account. 2021 is likely to bring more of this, particularly with the continued rise of gig workers, with employers facilitating neo-banking relationships for their employees.
Personalization shaped by financial data
A 2020 report found that more than 64% of Gen Z consider personalized banking experiences as important or very important. As digital natives fluent with entertainment services that promise personalization, they’ll want the same from their banking. One such way to do this will be via rewards directly linked to their banking. As the only platform to provide personalized offers linked to credit or debit cards, Drop is a platform that benefits both consumers and brands. Where brands can effectively target customers with personalized card-linked offers to identify and acquire high-value customers, consumers are automatically rewarded for shopping with the brands they love. With new and incumbent financial institutions sitting on copious amounts of data about our transactions, we expect 2021 to bring greater levels of personalization based on what they know about us.
This is the third in a series of 5&Vine posts dedicated to looking at the trends that will shape 2021. Be sure to check out our round-up of trends that will change food and healthcare in the year to come.
