A New Era For FinTech

Praem Capital
3 min readFeb 4, 2021


Praem Capital

The pandemic impacts almost every aspect of life and business. The question of how it has and will continue to reshape FinTech has been a major concern for industry members. Financial sector experts agree that a new era for FinTech is coming, and the old expectations and ways of doing business no longer apply.

The biggest challenge for small- and medium-sized enterprises and consumers is basically the same — a sharp income decline. The market volatility is also not reflecting what is happening right now, which creates a lot of uncertainty for businesses that run on AUM (assets under management) models. The numbers suggest we’re in a v-shaped recovery, but unemployment numbers don’t match that at all, so basic expectations for the market do not apply right now.

That uncertainty has led to demand shifts that would have been impossible to foresee several months ago.

Many SMBs are looking for lending products, as there’s a need to supplement revenue and payroll to stay afloat. For some places, that means demand is actually up, but other industries have gone way down. All businesses have had a lot to respond to: from excessive demand to maintaining some income.

Despite that basic volatility, Fintech has had some important advantages over legacy firms as the world has forcibly moved in digital directions.

“Digital platforms have moved from optional tools to important for disaster recovery and continuity plans,” noted Margaret Hartigan, CEO and Founder of Marstone Inc., enterprise-ready digital wealth management and robo-advice platform. A kind of institution matters a lot. Core technology companies are like a big, complex electrical grid. Many users successfully apply certain products and services, while there are unclaimed tools, the scope of which is not entirely clear.

So while it may sound like a great idea to have some FinTech come in to overhaul, there are so many interconnected pieces that the unintended consequences of pulling the wrong one can be quite dramatic.

The COVID-19 crisis affected virtually every industry in the financial sector. In these circumstances, modern financial, technological solutions have proved to be more than worthy and stable in changing conditions: they’re more scalable and transparent. We’re going to see many innovations in FinTech.

The question of sustainability is especially core moving forward. Profitability will be a key aspect for investors as we advance in Fintech.

In general, we see much more focus on EBITDA (earnings-focused) than we’ve ever seen in recent history.

But whether it’s a sponsor or private equity, the tolerance for losses is going to change. Everyone has an unprofitability period, but you will need to have a clear path that doesn’t rely on extraordinary events.

It’s a shift that necessitates a core change to the way many Fintech startups think.


Praem Capital