Prepare to unlock the secrets of fintech's future as Ben Siklós from Budapest's PEAK joins me for a captivating exchange. This episode is a treasure trove of insights, with Ben, a trailblazer from Hungary's foremost fintech firm, guiding us through the industry's twists and turns. Together, we chart the resurgence of mega-round financings and dissect the implications of fluctuating equity funding and acquisition rates. With Bence's sharp expertise, get ready to glimpse the sector's promising path to recovery.
Venture further with us as we unravel the complexities of artificial intelligence in fintech, spotlighting AI's role in revolutionizing fraud detection and personalized banking services. Ben illuminates the rise of generative AI, offering a vision of how it's poised to transform the financial landscape. Moreover, we tackle the entwined fates of cryptocurrencies and 'buy now, pay later' models under the watchful eye of regulation. Our conversation promises a deep dive into how government intervention legitimises crypto, shaping its future and ours.
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Welcome to the Connector Podcast, an ongoing conversation connecting fintechs, banks and regulators worldwide. Join CEO and founder Cohen van der Hooydonk as you learn more about the latest available trends and solutions in the markets.
Speaker 2:
Welcome to another episode of the Connector Podcast, and today I've got with me Ben, and Ben is joining us from Budapest. Ben, can you explain me who you are and what you do?
Speaker 3:
Yeah, of course, hi Koen, and thanks for you having me here in the podcast. I'm Ben Szyklos, from Budapest, Hungary, and I'm a consultant working at PIK Financial Services, which is a Hungarian fintech company one of the oldest ones, if not the oldest, I guess.
Speaker 2:
Somebody has to be the oldest one.
Speaker 3:
Yeah, yeah, yeah, maybe it's us, because it was established in 2013. So in the beginning of the fintech craze, and since then it has came along a long way. Now we are around 70 or 80 employees there. We are working on fintech solutions and we also have advisory and media departments as well, so we are compiling consulting reports and documents on the fintech sector every month. Also, we write news articles daily, we have our own radio shows and we make publications about the fintech sector every year, in which we assess the industries last year, what happened, what were the notable events and some interesting numbers as well. So, yeah, we do a lot of things here at Peak.
Speaker 2:
No, that's great, and a lot of that sounds very familiar like what we do at the Connector, but it's good to hear a different voice. It's good to hear something new from another market. So what have you seen? What have been the sort of the major hurdles that you saw in the financial sector, and how did we overcome them?
Speaker 3:
Last year we could see that the number of uh equity funding events were decreasing since 2021, and it has continued in 2022 and 2023 as well. Uh also uh, the number of FinTech acquisitions has decreased, but in the meantime, there is more hope because we could see that mega rounds financing rounds has returned in the last year. So I had an ambivalent feeling about the fintech sectors last year because, on the one hand, there were some challenges regarding the funding. There were some promising signs. We can believe that the fintech sector is going to recover in this year.
Speaker 2:
after that would be really, really good news, ben, you make my day. You make my day. I think one of the things that today is very actual is it's about artificial intelligence. So how do you actually look at artificial intelligence? Ai is one of the biggest buzzwords of last year, artificial intelligence.
Speaker 3:
So how do you actually look at artificial intelligence? Ai is one of the biggest buzzwords of last year and it is this year and AI can significantly shape the whole fintech industry in the future, I guess. And the two main areas which I see AI can have the biggest impact is fraud detection and prevention, because AI systems can analyze transaction patterns in WASP datasets to identify suspicious activities and potential fraud in real time suspicious activities and potential fraud in real time. So it's a really, really big thing in the industry now. And the other one is the personalized banking services, because through machine learning, algorithms and fintech, companies can analyze customer data in real time and offer customized products, recommendations, etc. Investment advice and financial planning services. So I think these are the two most important use cases of ai in the fintech sector makes sense.
Speaker 2:
Well, what I'm surprised, ben, is that you don't use the word generative ai. Is that by purpose, or when you say AI, you actually mean it all?
Speaker 3:
No, no, I mean, when I say AI, I mostly think about generative AI. But yeah, it was my fault that I didn't highlight it.
Speaker 2:
No, no, no worries.
Speaker 3:
I was referring to generative AI. Well, in the report, I also like the fact that you talk about cryptocurrencies buy now, pay later but you make the link to regulation. So what sort of do you see in regulations? Happening in this space is always a double-edged sword and a hard question, but I think it will have a really positive effect on the cryptocurrency market, mostly because, by introducing regulations, governments have acknowledged cryptocurrencies as a legitimate part of the financial ecosystem. So this January we could see that the SEC has approved the small Bitcoin ETFs which led to the development of new crypto-related financial products, of new crypto-related financial products, and this is mainly because large institutional investors could enter the space. But also it will increase compliance costs for crypto companies because they have to comply with anti-money laundering laws and they have to increase their KYC processes, so that we will have a cost on which companies crypto companies have to consider and because of this, there will be a barrier to entry to smaller companies. I think.
Speaker 2:
And what about the BNPL?
Speaker 3:
BNPL regulations, I think they are focusing mostly on consumer protection, so new regulations for BNPL services often focus on customer protection, and this includes the requirements for clear communication of terms and conditions, checks to ensure affordability and protections against unfair lending practices.
Speaker 2:
Well, another thing I wanted to ask you. I mean, considering you're in Hungary, what does that actually mean in terms of the fintech community in Hungary? Is there a big community has just started to grow rapidly in the last year.
Speaker 3:
So now, well, I can't tell you the exact numbers, but there are more than 40 companies Hungarian fintech companies in this association now. So yeah, the Hungarian fintech ecosystem is growing now and I hope it's going to be a much larger and compelling ecosystem.
Speaker 2:
In the report you also mentioned a chapter around neobanks and the fact that they have been gaining momentum in the last couple of years. But how would you see the future for these neobanks and the fact that they have been gaining momentum in the last couple of years? Um, but how would you see the the future for these neobanks? How do you see them taking a further position into our financial ecosystem?
Speaker 3:
question mark neobanks always put a large emphasis on customer experience. This, I think, is one of the number one things they could become so successful. So they have to keep up this feature. They have to prioritize customer experience and also they should keep their costs low, as they can compete with larger banks in the long run. As neobanks don't have physical branches, they can lower their operational costs, so they can offer lower fees to customers, which can be compelling for some users. So this is also a thing that they have to keep in mind.
Speaker 3:
The global expansion of neobanks is an important step in their success, so they have to adopt, when they are going global, they have to adopt local strategies that cater to specific market needs and regulatory requirements. Yeah, they should form strategic partnerships with other fintech firms or traditional banks as well in order to be successful in the future, and most neobanks I mean the most successful neobanks, such as Nubank, for example is also focusing on the underserved markets. So neobanks have made financial services more accessible to underserved and underbanked population by removing barriers to entry. So I think if they use, so I think if they continue on this path, they can grow more in the future as well.
Speaker 2:
Well, talking about the future and we're almost at the end of our discussion here um what do you see? Are the trends? What are? What is your prediction for 2025? For?
Speaker 3:
2024. I think, uh, this year will be, uh, the year of cryptocurrencies. Maybe, uh, mainly two reasons One of the previously mentioned the spot Bitcoin ETF introduction, and also the Bitcoin halving is upon us. I guess it's like a one week from now, so this is also a huge. It will have a huge impact on the price. Huge, uh, it will have a huge impact on the price. Uh, also, uh, I think that ai and machine learning will will keep this trend that we saw last year, so ai is not going to go anywhere in. In fact, they will play a more significant role in personalizing financial services and enhancing flow detection. Cbdcs will be another interesting area which we should look for, because many countries are researching how can they implement their own central bank digital currency, and many companies have in the development phase, and also some countries are getting into the implication phase. So, regarding cross-border payments, cbdcs could have a huge impact, maybe not this year or next year, but I think in the next five or ten years for sure.
Speaker 2:
No, I agree, and I don't know if you know, but Hungary is one of the first European countries that has a CBDC installed by the central bank. Thank you very much, ben, for your insights. Maybe one last question for the audience when can they find the reports and all the insights?
Speaker 3:
The report can be found on fintechhu If they search for fintech sparks. If they search for FinTech Sparks, they can have all of our previously created FinTech Sparks publications, so they can find many, many publications on the FinTech sector.
Speaker 2:
I love it and thank you for sharing that. We can find those interesting insights on the website. It's great having you here, Ben, in this podcast. I wish you all the best and hope to see you soon in Hungary. Thank you very much for joining.
Speaker 3:
Thank you very much for the opportunity.
Speaker 1:
Bye-bye. Thanks for listening to another episode of the Connector Podcast. To connect and keep up to date with all the latest, head over to wwwjointhekonnectorcom or hit subscribe via your podcast streaming platform.