Fintechs must "adapt to the market" or face failure, says Just Cashflow executive chairman

By John Reynolds on Tuesday 22 June 2021

Alternative LendingDigital Banking

John Davies gave a wide-ranging keynote speech at AltFi's Festival of Finance, touching on several fintech hot topics.

Fintechs must
Image source: John Davies

The executive chairman of Just Cashflow has urged fintechs to “adapt to the market” and blend expertise in finance and technology or they are in danger of failing.

In the keynote speech at AltFi’s Festival of Finance, John Davies gave a wide-ranging speech touching on several hot fintech subjects.

Davies admonished lenders which failed to adapt to the market, spoke about the need for neo banks to differentiate themselves, talked about the impact of the pandemic, and the dangers of fraud in the payments industry.

Davies, who is also chairman of the Association of Alternative Business Finance, was speaking as Just Cashflow launched The Just Cashflow 2021 Perseverance and Determination Award.

In his keynote session headlined Darwin Might Have Had A Point!, Davies called on fintechs to adapt to the market, saying otherwise they are in danger of failing.

Davies said: “That has borne itself out in the last few months in the SME marketplace where we have seen several lenders either close or have to shut the business at a knockdown price.”

Davies pointed to examples of Growth Street, and RBS-backed Esme Loans, as examples of fintechs that had failed to adapt to the market.

Both Esme Loans and Growth Street have recently exited the market.

Davies said for fintechs to be successful, they needed to have a blend of financial and tech expertise.

Davies said: “The establishment would argue that fintechs are great at the tech bit but not at the fin. And to be honest, I can see that argument.

“So possibly, the best marriage is where each party brings their respective skills. Experience, talent, and new approaches and learn to live together."

“Unfortunately, seeing many of the high-profile exits over a number of months from start-ups suggest that those lessons have not been fully learnt.”

Davies urged fintech leaders not to chase “shiny stars”, like current hot sectors, such as payments, embedded finance and crypto.

“My advice, don’t chase them but seek to understand what you can learn from them and bring it to your own business,” he said.

On fraud, Davies likened it to a “disease”.

He said: “It is a disease just like Covid. People’s lives are being ruined.”

“Unfortunately, the criminal activity know how to get to our systems. We are part of that problem, because we allow them to be able to use all the great tech that we built.”

On whether neo banks had proved themselves during the pandemic, Davies stressed that the challenge for neo banks like Tide and Tandem was whether they are able to differentiate themselves in the market.

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