How can fintechs weather the financial storm?

Olga Shikhantsova,
07 Nov 2022

Alongside pretty much all businesses, it seems inevitable that fintech startups will be hit hard by the economic downturn.

The sector is inextricably linked to macroeconomics like inflation, and subsequent interest rates and the way that we all consume on a daily basis. If and when this consumption is limited by an economic downturn, we can naturally expect the sector to slow as well.

However, in some cases, a downturn can create a vacuum for opportunities. That is not to say that these opportunities come without risk – whether factoring in consumer purchasing power or lenders risking credit – but nevertheless opportunity will remain.

Risk and purchasing power

Fintech is governed by capital and the cost of capital, therefore changing interest rates directly impacts the sector. This hit is especially hard on balance sheet-dependent models. Add to this, unemployment and decreasing consumer purchase power, and direct consumer payment plays and lending are under serious danger of decreasing.

Olga Shikhantsova, Speedinvest

A lot of services will see a negative impact. Whether direct-to-consumer services, like payment solutions, or deeper infrastructure players, there is an inherent expectation that someone will be paying for the service at some point in the value chain. Therefore, the removal or diminishing power of said user will cause the inward collapse of services.

It is difficult to forecast every eventuality but, among rising interest rates and looming unemployment, the health of financial technology businesses is inevitably dependent on consumer power.

Risk increases during a downturn in the economy, and it is a fact of life that many businesses will struggle or not survive. But businesses with genuine innovations and solutions will come through these tough times, and the founders who are best prepared will prevail.

Early-stage startups must manage their risk and the market’s increased competition by striving for efficiencies and keeping their focus on their core objectives. Whether by making teams leaner, or ruthlessly prioritising value-adds and essentials, startups will need to do more with less in order to keep on top of their burn.


No matter the macroeconomic outlook, there always remains an opportunity for fintechs to shake things up and make a difference. As I’ve mentioned, traditional wisdom says that, in a downturn, startups should become more conservative and mitigate their risk, but there is also always a time and place for big, creative solutions.

Recent fintech proliferation can trace its origin to the financial crisis of 2007-08, and many of today’s most successful startups were founded directly to tackle issues that arose as part of that macroeconomic event. As witnessed before, crises create a tectonic shift in markets and fine-tune the efficiency of companies. Today’s downturn can similarly present opportunities for startups to provide a better option.

One such area for innovation will be the opportunity to disrupt less digitalised industries, such as construction, logistics and agriculture. The inefficiencies of these industries create a vast impact on our day-to-day lives and our overall standard of living. These industries will survive economic downturns, but the fact is that inflation and the unsolved systemic challenges present a huge opportunity for technological improvements. Fintechs embedded in these industries can be a driver here too, by improving efficiency and thus releasing the strain on the operation of aforementioned industries.

Alongside incremental technological advances in legacy industries, we should be looking into tectonic technology shifts, where sectors can be completely disrupted. Decentralised finance (DeFi), is yet to find the direct product market fit, as well as market adoption. But with payments, lending and trading volumes, there is a trillion-dollar potential in the industry.

Weathering the storm

To weather the storm, founders need to have a ruthless focus on business fundamentals. By this, I mean all things numbers: unit economics, margins and retention, monetisation potential, gross and operating margins, and burn multiple. Getting more with less; this mindset is crucial for surviving.

My advice for existing founders, and especially those in the early stages, is that now is the time to hustle. What investors are looking for has changed and will continue to change, so founders must hustle for every opportunity.

For new founders in particular, I would advise you to search for new ideas powered by your own unique innovative insights. Look beyond copying what has already been done or jumping on an existing hype, and use your unique insights and experience to hack into big markets, or create new ones.


As investors, we are always on the lookout for big solutions. We look for ground-breaking and game-changing; what could be revolutionary for future generations.

We have not yet entered a full recession, so we can rely on the fact that things are likely to get worse before they get better. However, the silver lining for fintechs in an economic downturn is that the best will survive, and there is the opportunity for era-defining solutions that could dominate the economy for years to come.

Olga Shikhantsova is a partner at Speedinvest