Fintechs could see $100 billion of liquidity in 2021 – TechCrunch

The Matrix Fintech Index weighs in on public markets, liquidity and a new e-commerce trend

three years ago, We released the first edition of the Matrix Fintech Index. We believed now, as we do, that fintech represents one of the most exciting major innovation cycles of this decade. In 2020, all long-term trends of change in the sector continued and even accelerated.

The widespread movement away from credit towards debit, especially among younger consumers, represents one such macro shift. However, the epidemic also created new, unexpected drivers. Among them, millennial companies and Challenger mortgage players alike decenned from their rentals in crowded cities to accelerate the purchase of their first homes for profit.

E-commerce saw a huge jump in growth, advancing the adoption of online payment platforms. In the end, low interest rates and rising inflation paved the way for the bitcoin price to move to $ 30,000. In short, several tailwinds are combined to produce a blockbuster year for the category.

In this year’s Refreshment of Matrix Fintech Index, we will divide our focus into three parts. First, a look at the performance of public shares. Second, liquidity. Third, we highlight a major trend in this area: pay now later, or BNPL.

Public FinTech stock increased 97% in 2020

For the fourth straight year, publicly traded fintechs outpaced large-scale financial services providers as well as every mainstream major index. The underlying performance of these companies was tremendous, yet the epidemic yielded more results, as consumers avoided personal exposure for both shopping and banking. Instead, they sought – and found – digital alternatives.

For the fourth straight year, publicly traded fintechs outpaced large-scale financial services providers as well as every mainstream major index.

Our own representation of the performance of public fintech is the Matrix Fintech Index – a market cap-weighted index that tracks the progress of the portfolios of 25 major public fintech companies. The Matrix Fintech index rose 97% in 2020, while the S&P 500 saw a 14% increase and a 10% decline for incumbent financial services companies over the same time period.

2020 performance of SPX versus individual fintech companies

2020 performance of the individual fintech companies vs. the S&P 500. Image Credit: pitch book

Fintech incumbents and S&P 500 vs. new entrants

Fintech incumbents and S&P 500 vs. new entrants. Image Credit: pitch book

E-commerce undoubtedly emerged as a major driver. As a category, retail e-commerce grew 35% YoY as of Q3, with PayPal and Shopify adding a market capitalization of over $ 160 billion. For its part, PayPal signed 15 million net new active accounts (the highest ever) in the third quarter.