Q1 2023 insights into Fintech.

Claudio Alvarez, Partner at GP Bullhound, commented: “Several trends emerged across the Fintech space in Q1. Artificial intelligence continues to transform the financial services industry, with fintechs responsible for a significant portion of AI growth when compared to other sectors. Digital-first fintechs are also changing the daily lives of CFOs, with the latter adopting technology at an unprecedented pace and doing away with outdated legacy tools. Lastly, we’re seeing Zero-Knowledge Proof methods on the rise, as they enable faster and cheaper payments by reducing the need for intermediaries.”

AI takes centre stage in the evolution of Fintech

• The market size of AI-powered financial services is set to increase from $12bn in 2021 to over $44bn in 2030, driven by improving efficiency, reducing costs, and adding value to customer experiences.
• Key areas to watch include enhanced fraud detection, predictive analytics, and automated investing.
• AI in Fintech presents exciting opportunities for financial institutions and consumers, but important ethical and regulatory questions must be addressed.

CFO priorities turning digital-first

• Enhancing the performance and technology stack within finance teams is a critical area of Fintech; technology budgets are now deeply strategic, looking past short-term technology costs to identify value drivers.
• Technologies that operate across the stack, at scale, are dominated by legacy players, but API-led companies focused on full-stack and sub-vertical solutions have sparked significant interest in the space.
• Underlying technologies are largely allocated to two main buckets: Core finance & accounting systems and case-specific financial applications; select companies in these spaces include AccountsIQ, Sage, and Xero, and AccessPay, Payhawk, and Nomentia, respectively.

ZKPs could be a game changer

• A Zero-Knowledge Proof (ZKP) is a cryptographic method that allows one party to prove to another party that a certain statement is true without revealing any additional information about the statement.
• ZKPs can enable faster, cheaper payments by reducing the need for intermediaries and reducing the risk of fraud and data breaches.
• Examples of ZKP-based payment applications include the Aztec Protocol and Hydro Protocol, and Dark Matter Labs is developing a decentralised identity verification system that uses ZKPs to ensure privacy and security.

Enquiries
For enquiries, please contact Claudio Alvarez, Partner, at claudio.alvarez@gpbullhound.com

About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s best entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 13 offices spanning Europe, the US and Asia. For more information, please visit www.gpbullhound.com.