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The Future of Fintech In A Coronavirus World

The Future of Fintech In A Coronavirus World




There is little doubt rapid innovation is occurring in the financial technology space. While a paradigm shift in financial services was already well underway, the COVID-19 pandemic is likely to exacerbate that shift. My role as CEO at SuperMoney has provided me with some insight into how things are evolving in the fintech space. Below are some of my predictions for the future of fintech.

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Q1 2020 hedge fund letters, conferences and more

An acceleration of branch closures

Banks have been pruning branch locations for years. The net loss of branch locations will accelerate.

While most bank services are more conveniently accessed from our phones, branches have historically been an important part of bank customer acquisition and retention as many people prefer to open an account and seek financial advice in person.

The COVID-19 pandemic will change consumer behavior and shift account openings online. We will also see the adoption of AI and teleadvisory services replace branch-based advisory services.

A new model for advisory services

The trend to digital is not limited to banks or other brick and mortar financial institutions. All sorts of financial professionals will see more of their business shift towards a digital remote experience.

Real estate agents, independent financial advisors, financial planners, and wealth managers are being forced to take their business digital. These are services where in-person interactions are the standard way to acquire customers and fulfill services.

These professions were already under attack. The COVID-19 pandemic is accelerating the need to adapt.

Contactless payment adoption

When you hand over cash or a credit card, you put yourself and the person accepting your payment at risk.

survey from early March shows that a growing number of people in the U.S. consider contactless payments a basic need after the spread of COVID-19. These tap-and-go payments don’t require any physical contact between your phone or payment card and the sales terminal while being more secure than traditional cards.

Germs aside, it’s pretty wild to me that in American restaurants we still hand our credit cards over to strangers who then walk away out of sight to process our bill.

This is going to change. Various forms of contactless payments will gain traction but ultimately, mobile wallets will broadly replace physical wallets.

Accelerated adoption of artificial intelligence

A world with fewer in-person financial service interactions means a world with more cybercrime and financial fraud. Fraud prevention is a key area where AI’s ability to recognize patterns is proving valuable and will expand.

Automated customer service interactions via AI chatbots are already being adopted but will expand to include more tailored financial advice. In the future, increasingly personalized AI advisors may be perceived as more trustworthy, objective, and reliable than in-person advisors.

The use of machine learning to improve credit decisioning models isn’t new to the financial service industry. The applications of this technology will expand to new applications, such as monitoring borrower spending behavior post-funding to identify risk patterns for default so a financial institution can proactively take steps to intervene.

Banks and other financial service providers were early to adopt AI broadly. AI allows for faster transactions while giving customers the convenience they demand and significantly reducing operating costs. The adoption of AI will accelerate to broaden existing implementations and expand into new ones.

A return to bundling and financial intermediation

Over the last decade, financial technology upstarts scrambled to digitize specific product categories that had been traditionally bundled into a diversified set of product offerings by traditional banks. LendingClub for consumer loans, OnDeck for business financing, Chime for deposits, Wealthfront for wealth management, and the list goes on. The underlying idea being that disaggregating the components of traditional banking would result in targeted solutions with better experiences for both retail consumers and businesses.

With billions of venture capital dollars going to startups building an app for every specific financial service, you inevitably end up with a customer base that is overwhelmed. Consumers can’t keep up with 10 different applications to manage their finances.

At least a few firms who touted disintermediation and disaggregation of traditional banks in their early days have shifted their strategies in the last couple years towards aggregating an ever-growing set of product lines, often as intermediaries to banks or other financial partners. It seems in the end that bundling financial services makes a lot of sense for both businesses as well as customers, and we can expect that trend to continue.

The resurgence of banks

Many fintech companies who positioned themselves as challengers to or disruptors of banks ironically ended up building on top of the business or technology rails of the banks they were supposedly disrupting. Some built front-end skins on top of the technology backbone of existing banks, such as Chime’s relationship with The Bancorp Bank. Others built an entire technology stack of their own but used partner banks to address licensing requirements, such as LendingClub’s partnership with WebBank for loan originations.

We’ve seen a gradual shift towards these companies attempting to become banks themselves. For example, SoFi filed an application to the Federal Deposit Insurance Corp. to charter an industrial loan company unit called SoFi Bank. It later decided to back out of the process in the wake of sexual harassment allegations. LendingClub recently went so far as to acquire Radius Bank.

Behind the scenes, banks have kept busy and are moving forward with new or improved direct to consumer online offerings in lending verticals, deposits, and mortgages. By launching Marcus, Goldman Sachs disproved the idea that banks are too slow to compete against Silicon Valley online. Other incumbents like Chase have invested heavily in their digital experiences and typically offer a more unified experience than the competing upstarts.

The economic fallout of the COVID-19 pandemic has hit many fintechs hard bringing significant liquidity and demand shocks. Pandemic aside, a wave of fintech companies were reaching mid-stage, and are at the point that they must raise a mega venture capital round, become profitable, or sell. All three options have become more challenging due to the pandemic. I expect we are going to see considerable consolidation as banks with ambitions for digital expansion swoop in and buy up these companies to extend their own platforms.

The return of personal finance management apps

Both banks and fintechs trying to be banks face the same problem – consumers like choice.

Google and Amazon gained monopolistic positions within their respective industries by enabling consumer choice, not by focusing on selling their own products.

Regulatory, technological, and financial market constraints have mostly kept financial products undifferentiated. Some entrants believed customer experience would help them differentiate and win market share. While customer experience is hugely important, financial service providers are primarily differentiated on their rates, fees, and other key terms. A lender can build an awe-inspiring digital experience, but at the end of the day if a competitor offers a competing loan at a 5-point APR reduction, that competitor is likely to win the business. So, I can’t see a scenario where any one of these direct financial service providers achieves a monopolistic position in the market.

Personal finance management (PFM) apps are a neutral intermediary that can help consumers bundle a variety of financial service providers into one financial picture. The PFM tool Mint showed promise of becoming a major player. But after getting acquired by competitor Intuit in 2009, Mint has largely withered away ever since.

Credit Karma managed to bring on a sizeable userbase by offering free credit reports, but the core product offering remains surprisingly unchanged (not to mention that you can get a free credit report just about anywhere these days). Credit Karma was moving towards a more unified personal finance experience with the launch of Credit Karma Tax. However, they were treading too close to Intuit’s TurboTax business and Intuit has gone forward with a $7.1B acquisition of Credit Karma. It remains to be seen whether Credit Karma will follow the same fate as Mint.

The opportunity to develop an Amazon-like financial services marketplace intermediary with accompanying personal finance management tools remains wide open. The SuperMoney financial service marketplace aims to capitalize on that opportunity.

Growth in embedded finance

Acquiring financial service customers is getting more expensive. A challenger bank or a new fintech must build a customer base from scratch in an incredibly competitive market. Rather than slog it out, some of the most exciting fintechs are opting to build platforms that enable embedded finance for brands that already have customer loyalty. Brands with mindshare are leveraging these platforms to integrate financial services and make their product or service easier.

We’re seeing that with Uber Money, which includes a digital wallet and upgraded debit and credit cards. We will likely see that trend continue and expand with big brands that you wouldn’t typically associate with financial services. We will almost certainly see major tech companies like Amazon and Google make a more focused run at your wallet.

Digital layaway will disrupt credit cards

In the 1930s Great Depression era, retailers nationwide came up with an innovation to make it easier for people to shop. It was called layaway. Customers placed a down payment on the goods they wanted so that the store would hold them for a set amount of time. The customer would then pay off the purchase over the course of a few weeks or months until the full purchase price had been paid.

In the 1980s, credit cards came around and reversed the order of operation – allowing the customer to buy now and pay later.

In the 2020s, an emerging trend in e-commerce is the adoption of a new breed of digital layaway companies like Klarna and Affirm. These firms combine the instant gratification of credit cards while giving the customer a more structured way to pay it all off in a short installment period.

The COVID-19 lockdowns undoubtedly broadened the usage of e-commerce into new product and service categories while igniting a recession to rival the Great Depression. The combination of an expanding addressable market with the need to be more financially conscious will likely accelerate the use of digital layaway services and take a significant cut of credit card transactions.

This trend is not limited to e-commerce. Any small business will be able to offer financing without having to pay additional fees or discount rates to do so. Financing will be available for anything that is consumable.

Bitcoin may face a day of reckoning

At the height of COVID-19 panic, pretty much every asset in the world fell in value, even supposed safe-haven assets such as gold and bitcoin. This was bitcoin’s time to shine as the digital currency is supposed to be completely uncorrelated with the rest of the market.

With central banks globally adding many trillions to their balance sheets, significant fiat currency inflation is expected to occur. There is a non-trivial risk of collapse of confidence in the monetary system. In this scenario, the real test for bitcoin will occur.

Bitcoin will either show that it can succeed as a global, apolitical store of value and medium of exchange. Or, given that bitcoin does not have any real industrial or consumer value in the way that precious metals do, bitcoin will go to zero as investors flood to an asset-class with an underlying intrinsic value.

Regardless of the performance of bitcoin as an asset class, blockchain technology adoption will grow as we continue to apply the technology where it is best suited.

America will become a nation of savers

America is facing the biggest economic recession since the Great Depression and it’s all happening as about 30 percent of Americans have zero emergency savings, and only one-fifth have savings sufficient to last six months. The consumer financial pain that comes out of this will have long-lasting behavioral effects.

As Americans emerge from this financial crisis, many people will start saving, not for a rainy day, but for years to come. This change in behavior will be enabled by fintech services that make savings easy and automated. For example, savings apps that round-up the pennies from your purchases and allocate them to an investment account.


These are interesting times for the financial services sector. Fintech startups have revolutionized what we expect from financial institutions. However, this has not been a wipeout for the old guard of financial institutions. On the contrary, some are riding the fintech wave and coming out as market leaders. Often it is a marriage of necessity between startups and major financial institutions in the pursuit of faster, simpler, cheaper, and more transparent financial services. We are on the brink of major technological changes that will change the way we manage money. However, transforming all this potential into reality in these challenging times will require resilience and partnership from all stakeholders.

The post The Future of Fintech In A Coronavirus World appeared first on ValueWalk.

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Revenge travel is coming to an end, says industry CEO — a recession will replace it

The CEO of Intercontinental Hotels Group says that the world has moved beyond revenge travel–even China.



Maybe revenge isn't so sweet anymore. Not so long ago the term "revenge travel" was making the rounds. The idea was that people were so fed up with the covid-19 pandemic lockdown that they packed their bags and took off for just about anywhere once travel restrictions started to ease.

Related: Delta adds a route U.S. tourists have been begging for

Last year, travel insurance company Allianz Partners projected that travel to Europe would soar 600% over 2021. “The pandemic made people realize you can't take travel for granted and many Americans are eager to visit Europe this summer,” Daniel Durazo, director of external communications at Allianz Partners USA, said in an April 2022 statement.

'Last stage of pent-up demand'

The Summer of '23 was also pretty strong, according to a survey by the Federal Reserve Bank of New York, which found that almost a third, or 32.8%, of all U.S. households took a vacation between May and August, up from 28.5% in August 2022 and a record high in data going back to 2015. However, it looks like the revenge travel upswing is coming to an end. The Federal Reserve's Beige Book said in September that consumer spending on tourism was stronger than expected, "surging during what most contacts considered the last stage of pent-up demand for leisure travel from the pandemic era." Elie Maalouf also thinks that the revenge travel dish has gone cold. The CEO of Intercontinental Hotels Group  (IHG) - Get Free Report said in an interview with CNBC that he believes pent-up demand is over. "People started traveling really by the end of 2020 as restrictions started to lift,” he said. “So we’re really past revenge travel — even in China.” Intercontinental Hotel Group operates hotels under several brand names, including Regent, Crowne Plaza, Holiday Inn Club Vacations, and Candlewood Suites. The company’s latest quarterly update showed travel demand remained strong during the close of the summer travel season. “We think we’re in a sustainable place,” Maalouf said. “Our bookings for groups and meetings going into 2024 and beyond are the strongest we’ve seen in a very long time.”

Average room rates increase

IHG’s third quarter trading update showed the company’s revenue per available room — or “revpar” — was up 10.5% compared to third quarter 2022, and nearly 13% higher compared with the third quarter of 2019, which was before the pandemic. This is despite a 3% drop in revpar, compared to 2019, in large cities in Greater China, which are more dependent on international travelers. Maalouf said that lack of “airlift,” or flight capacity, into China is below 50% of prepandemic levels, which is affecting travel recovery in cities like Beijing, Shanghai, Guangzhou and Shenzhen. “But if you look at the country as a whole, travel — which is mostly domestic in China — it’s recovered well above 2019,” he said, adding that more than 80% of IHG’s business in China is in mid-sized to smaller cities. Occupancy levels in the third quarter at IHG hotels was 72% — just 1% shy of pre-pandemic levels, according to the quarterly update. But average room rates have jumped well above 2019 levels — up nearly 6% in Greater China, 15% in the Americas, and 24% in Europe, Middle East, and Africa (EMEA) and Asia. But rising rates are barely keeping up with inflation, said Maalouf. “Room rates have not really exceeded inflation in any of our markets,” he said. “I think people’s willingness to travel is exhibited by the fact they’re willing to pay.” Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.

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How Novo Nordisk’s Rybelsus went from pandemic washout to blockbuster amid the GLP-1 boom

Novo Nordisk’s Rybelsus pill was long expected to be a hit out of the gate.
The Danish drugmaker cashed in a priority review voucher in early 2019 for…



Novo Nordisk’s Rybelsus pill was long expected to be a hit out of the gate.

The Danish drugmaker cashed in a priority review voucher in early 2019 for what would be the first oral GLP-1, primed by positive studies showing reduced blood sugar in patients with type 2 diabetes. Analysts and company insiders anticipated blockbuster status for the oral version of semaglutide, with peak sales expected to hit up to $5 billion — and potentially follow the trajectory of its sibling injectable Ozempic, which reached $1.6 billion in sales in less than two years.

Camilla Sylvest

“We have another monumental event with the world’s first oral GLP-1,” commercial strategy chief Camilla Sylvest said in November 2019. “This is not just a compressed pill. This is a pill that has a clinical profile to compete and [that has] the oral administration to compete. It’s an unbelievable opportunity for us.”

But then health officials declared the Covid-19 pandemic in March 2020, and everything changed. Novo’s sales reps couldn’t do in-person meetings. No commercial advertising shoots were allowed. Patients scrapped going to the doctor for elective purposes. As Novo’s launch plans crumbled, so did the promise of Rybelsus.

Three and a half years later, amid a frenzy of all things GLP-1, Rybelsus has come back to life — albeit slowly, and with skepticism over its efficacy for weight loss compared to injectables.

There’s fresh enthusiasm for other oral GLP-1s in development, and Ozempic, approved for type 2 diabetes, is now a household name. That’s in part because people have been taking Ozempic — and more recently, Rybelsus — off-label for weight loss amid shortages of Wegovy, the injectable version of semaglutide approved for obesity. But there are also concerns about tolerability in a market that’s increasingly crowded.

The pandemic disruptor

Back in late 2019 and early 2020, everything was going as planned for Rybelsus. The FDA approved the pill in 3 mg, 7 mg and 14 mg doses. Novo had expanded its manufacturing facilities in North Carolina, and it was working on plans for a broad direct-to-consumer ad campaign, including mainstream TV commercials.

The company was so confident that it priced Rybelsus on par with Ozempic at about $770 per month, to the surprise of some analysts at the time. The commercial strategy was to market its GLP-1 drugs side-by-side, positioning Ozempic as the first and preferred injectable for type 2 diabetes and Rybelsus as the first and preferred oral medication, Sylvest and then-chief scientific officer Mads Krogsgaard Thomsen said in an investor call, according to AlphaSense transcripts.

Mads Krogsgaard Thomsen

“With our two recent GLP-1 products, Ozempic and Rybelsus, we want to redefine type 2 diabetes treatment,” Novo wrote in its 2019 annual report. “We are at the forefront of innovation in the GLP-1 class and orally administered delivery devices and are pursuing several therapeutic opportunities with semaglutide.”

But then came Covid, and Novo had to switch gears from the splashy DTC ad campaign to animated work with an upbeat soundtrack that eventually debuted in the autumn of 2020. For the first six months of that year, Rybelsus brought in just $92 million.

By 2022, however, it rang up sales of $1.7 billion, more than twice its 2021 total, likely fueled by the demand for semaglutide sibling brand Wegovy, which was approved to treat obesity in mid-2021. Novo is reporting Q3 sales next week, with Rybelsus likely on track to top $2 billion in sales this year. Novo declined comment for this story, citing its quiet period ahead of its Q3 earnings release.

Off-label for weight loss

As Wegovy took off and supplies waned, clinicians used their off-label prescribing power to redirect desperate obesity and overweight patients to Ozempic.

Some physicians turned to Rybelsus. Tracking off-label prescribing is difficult, but data show that there were 157,500 Medicaid prescriptions for Rybelsus for weight loss in 2022. In the same year, Wegovy had 30,100 Medicaid prescriptions for weight loss, while Eli Lilly’s type 2 diabetes treatment Mounjaro had 30,700, according to a KFF analysis in August. Ozempic was the lead seller among Medicaid populations, at more than 978,000 prescriptions.

That said, Rybelsus does not seem to be as effective at weight loss as the other approved GLP-1s.

Diana Thiara

Diana Thiara, medical director of the University of California, San Francisco’s weight management program, calls the new GLP-1 meds in general “amazing,” citing an example of a patient taken off a lung transplant list after losing weight and improving lung function. But she also acknowledges the social trends driving low-dose oral uptake by “people so desperate to lose weight.”

“I have one patient who can’t even use our MyChart electronic health communications, but tells me about what Reddit says,” she said. “Reddit and TikTok people say stuff, but that’s not really what the evidence shows right now.”

Rybelsus’ current highest dose is equivalent to Ozempic’s lowest dose, though some experts say the lower doses can still help patients lose weight.

“The lower doses, based on my experience, are effective for weight loss,” said Kristin Baier, clinical director at Calibrate, a telehealth weight loss startup founded in 2020. “When used along with lifestyle changes, we have seen patients achieve up to 20% weight loss on the lower doses of oral semaglutide.”

The future of oral GLP-1 weight loss drugs

Novo is currently testing higher doses at 25 mg and 50 mg doses of Rybelsus in the Pioneer Plus (with type 2 patients) and Oasis (with people with overweight or obesity) trials against the 14 mg currently approved by the FDA. The results, published this spring and summer, show up to 15% bodyweight loss, which is on par with Ozempic and Wegovy.

Clinicians are also encouraged by differentiated competing oral candidates, like Pfizer’s danuglipron and Lilly’s orforglipron, both in Phase II trials. The candidates are non-peptide GLP-1s and can be taken with food. Rybelsus is directed to be taken on an empty stomach with small sips of water and a wait time of 30 minutes before other medications or food.

“With Novo Nordisk expected to file for the higher dose approval, I believe there’s going to be an uptake that hopefully would help with some of the manufacturing supply issues we see [with injectable semaglutides],” said Weight Watchers medical director Spencer Nadolsky. “It will be nice to have the larger dose option when it’s available.”

Yet, it’s not all upside on the weight loss front for Rybelsus.

“It’s equivalent to a pretty low dose of Ozempic. So in terms of weight loss, we don’t see much weight loss in terms of the average person at that dose of Rybelsus,” Thiara said.

She also has some concerns about the higher doses and gastrointestinal issues and tolerability.

“People just seem to have more side effects with oral Rybelsus than they do with the equivalent Ozempic dose,” Thiara said, adding that she does think it will be approved. “But head-to-head right now, with no supply chain issues and if 50 milligrams was on the market and I had a patient who was open to anything injectable or oral, I would probably skew towards injectable.”

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Popular mall retailer Express facing potential Chapter 11 bankruptcy

The brand has seen its sales fall and its costs rise dramatically which has caused it to fall behind on some bills.



The Covid pandemic hit malls hard. Even when they were allowed to operate, many people did not want to be confined in a tight space with other people breathing near them.

Mask rules and social distancing requirements made the once-fun experience of just wandering around a mall a whole lot less fun. Even when vaccines were introduced and life returned mostly to normal, some malls — generally the weaker ones before Covid — continued to struggle. 

Related: Beloved discount retailer faces significant bankruptcy risk

So far, no major mall-based retailer has filed for a post-Covid bankruptcy. Bed Bath & Beyond, Christmas Tree Shops, and Tuesday Morning, all of which went bankrupt and were liquidated, generally were located in strip malls. The same is true for Party City and David's Bridal, two chains that managed to survive their Chapter 11 filings.

But, mall retailers are not immune from the problems caused by Covid, where sales dropped to near zero for months, but expenses did not go away. That led to increased debt.

The pandemic also changed consumption habits. Some people still work from home full time and many Americans are now in hybrid work situations. That has changed their wardrobe needs and that's bad news for certain retailers, including Express, a mall favorite with over 500 stores nationwide.     

"Express is truly on a respirator and teetering on possible bankruptcy,” Shawn Grain Carter, a retail consultant and Fashion Institute of Technology professor, told RetailDive.

Some malls have seen smaller crowds, but that is not universal.

Image source: Getty Images

Express is struggling in many ways

Express has seen its sales fall and its cost rise,

The retailer’s consolidated net sales dropped 6.4% to $435.3 million, according to its second-quarter earnings report. In addition, the company’s selling, general, and administrative expenses have increased to $146.1 million (33.6% of net sales) compared to the second quarter in 2022. 

Perhaps most damningly, the chain's debt has consistently grown. In fact, its total debt was $220.8 million at the end of Q2 2023, compared to $202.2 million at the end of Q2 2022 and $122 million at the end of Q4 2022. 

"Over the last few months, speculation has been mounting about apparel retailer Express’ financial state. While some might speculate that one big thing has caused the retailer’s failure, that’s just not how bankruptcies work. Several things have been going wrong over a prolonged period," Matthew Debbage, Creditsafe CEO of the Americas and Asia, told TheStreet via email.  

According to Creditsafe data, 35% of the company’s owed payments are past due, which amounts to over $3 million.

"On top of this, Creditsafe data reveals that the value of these late payments is well over $3 million. While this might not seem like a big chunk of money compared to Express’ annual revenue, the fact that the retailer’s DBT (Days Beyond Terms) has increased consistently for the last six months indicates that its cash reserves are likely low, which will only drop even lower if sales continue to decline, operating costs keep rising and its debt load grows," he said.

It's a slowly rising tide that could ultimately swallow the company.

"When you combine all these factors, I can see why some analysts are speculating that the company could be at high risk of bankruptcy," he wrote.

Debbage believes the company should be taking steps to prepare for a Chapter 11 filing (even if it ends up not needing one).

"What Express needs to be thinking about right now is how it can cut operating expenses with a recession looming and consumer spending expected to drop significantly," he wrote. "The retailer’s finance leadership should also be prioritizing data, analytics and technology to make sure it has the right financial data so it can get a clear picture of its financial affairs, especially if it tries to secure financing to stave off bankruptcy."

Express did not return an immediate request for comment sent to its investor relations email.

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