Fintech: Once a Disruptor, Now Critical Business Technology

A candlestick chart overlayed on a business desk – meant to represent fintech intertwined with business

Despite an overall drop in technology spending during the pandemic, companies continue to invest in fintech to meet their goals of personalized, safe, and adaptable solutions. These tools range from simple payment processing to advanced cash flow management programs, and they are revolutionizing how consumers and businesses manage their finances.

The adoption of fintech products and services rapidly accelerated during the COVID-19 pandemic, and this trend is expected to continue for the next decade. Therefore, those who do not adapt to these new technologically advanced financial markets may be left behind in the coming years.

Fintech Investment During the Pandemic

In 2020, many businesses saw budget cuts across the board as they dealt with economic uncertainty, supply chain issues, and decreased sales. Deloitte estimated that budgets for technology decreased by an average of 2.5% in 2020. Despite budget decreases, Deloitte said that “COVID-19 highlighted the need for organizations to…reallocate existing investments to build resilient technology environments and boost security, infrastructure, and collaboration tools.” One of the ways that businesses are accomplishing these challenging goals is by investing in and developing fintech.

In 2020, overall global fintech investment reached its third highest level with funding of $105 billion and a total of 2,861 deals, and the Americas led fintech investment with $79 billion in funding. According to KPMG, “Despite its major impact on some sectors, the pandemic showcased the value of many fintech sub-sectors as consumers and businesses shifted to digital solutions to meet their financial needs.” In general, these digital solutions tend to be more agile and adaptable than previous solutions, so they are providing businesses with key advantages.

Fintech Adoption Continues to Increase

Total fintech adoption in the US has increased steadily over the last five years. In 2019, for example, 46% of all consumers had used some form of fintech. This represents a 270% increase from the number of users in 2015 – and this doesn’t even include the fintech boom seen during the recent pandemic.

For business, the advantages of fintech are more significant. Business to business fintech has grown into an important part of the financial services market and has been growing steadily since the early 2000s. Forbes predicts that the number of B2B fintech companies will triple in the next ten years and will generate over $1T in value.

Businesses Need Fintech to Remain Competitive

Fintech can create major advantages for many businesses, but this technology is critical to financial services companies that want to remain competitive. In fact, recent research suggests that financial services companies will be completely reliant on fintech to run their businesses in the coming years.

According to Ernst & Young’s 2019 Global Fintech Adoption Index “FinTech has redefined the rules of the game in financial services. What was considered new and disruptive in 2015 has since become a prerequisite for all players.” In other words, consumers and businesses have higher expectations for their financial services technology than ever before. Fintech’s rapid growth is led by innovators who can offer services that are “at once personalized, accessible, transparent, frictionless and cost-effective.”

Business Cash Flow Management Powered by Fintech

At the American Deposit Management Co. [ADM], our proprietary fintech is revolutionizing the way businesses manage their cash. With fintech powered services ranging from deposit management accounts that provide access to extended FDIC / NCUA insurance while providing next-day liquidity, to escrow services that provide protection and competitive returns, ADM streamlines cash flow management for business.

The team at ADM is our secret sauce, and we are always working hard to ensure your money is being managed efficiently. If you’re interested in extended protection for your corporate cash, reach out to a member of our team.

If you’re looking for even more valuable insights on banking, interest rates, and effectively managing your business cash, be sure to check out our Insights page and follow ADM on TwitterFacebook, and LinkedIn.