By Robert Kraal
Silverflow
Breaking into the U.S. market as a next-generation fintech is no small task. For European firms, the barriers are steep: the United States is a lucrative yet fiercely competitive market, often resistant to rapid technological change. Meanwhile, fintech funding has plummeted by 91 percent since 2021, with investors now more cautious than ever (see bit.ly/41t8ztz).
This article offers a roadmap for overcoming these challenges. By aligning product innovation with an understanding of U.S. market dynamics and investor expectations, fintechs can find opportunities amid adversity.
Throughout 2024, the COVID-19 pandemic continues to leave a profound mark on the U.S. economy. Soaring inflation and rising energy costs are squeezing household budgets, leaving consumer confidence fragile. This diminished optimism poses significant challenges for new businesses, particularly those that need to establish trust with both consumers and enterprises in an uncertain economic climate.
While it may seem as if the United States has a vast fintech landscape, there is a limited access to financial technologies in the United States, that many people in other parts of the world consider standard. Although peer-to-peer transfer apps such as Venmo, Cash App and Zelle exist, many Americans often rely on them because of the lack of bank-to-bank transfer infrastructure in the United States. On the flip side, bank-to-bank transfer is a common feature in Europe.
Similarly, other technological innovations like tap-to-pay, QR-code payments, and "super apps" that cluster payments, banking and shopping together are yet to effectively break through to the U.S. market. Cash also remains very much king in the United States – with 67 percent of Americans preferring to use it over other payment options (see bit.ly/4gewKAv), compared to just 11 percent in the UK (see bit.ly/3BwWEjJ).
It isn’t just consumers who are more conservative when it comes to fintech in the United States. Payment infrastructures are often built on old-fashion systems that are problematic to modernize, slowing down the pace of innovation in the industry. Companies that deliver products specifically designed to modernize these infrastructures will undoubtedly stand out ahead of their competitors.
In recent years, consumer trends and behaviors in the United States have shifted dramatically. A growing sense of caution has made Americans more hesitant to adopt new financial technologies, creating challenges for fintech startups. However, there’s a key opportunity: Americans are quick to embrace innovation when it addresses a tangible problem and delivers meaningful solutions.
A strong, persuasive value proposition is essential for success. Fintech companies that identify weaknesses in the existing system and deliver creative, effective solutions are better positioned to earn the trust of hesitant consumers. A different approach, however, is to focus not on end-users but on the core infrastructure of the payments industry, tackling key challenges faced by banks and payment processors.
There’s no denying that the early 2020s fintech boom has significantly slowed down. Since 2022, fintech investments have plummeted (see bit.ly/4itvHOK), with major deals becoming rare. In the first half of 2024, the United States saw just five deals surpassing $1 billion, all of which were buyouts. The IPOs and mega-venture funding rounds that once dominated headlines are now a distant memory.
Investor priorities have shifted dramatically. Once quick to back fintech startups and ambitious ideas, they now demand proven business models, seasoned leadership teams and demonstrable technology. The days of pouring money into untested concepts are over. Today’s fintechs must showcase not only their innovation but also their resilience in a fiercely competitive and cautious market.
Amid this tougher landscape, a bold mission for entering the U.S. market is to modernize the outdated infrastructure of the payments industry, with a focus that isn’t just on speeding up transactions but is also on fundamentally transforming how payment data is processed and utilized.
Unlike many U.S. payments companies still dependent on legacy systems, modern cloud-based platforms offer a much-needed upgrade. Such platforms enable faster, more transparent payment processing while providing real-time, detailed data that drives better customer experiences, reduces fraud and powers innovative payment solutions.
In an era of economic uncertainty and cautious investing, this new approach exemplifies the kind of value-driven innovation the fintech industry now demands.
Launching a fintech in today’s U.S. market demands far more than a bold concept. Success hinges on delivering a clear and compelling value proposition, addressing the market’s unique complexities, and assembling a team equipped to handle stringent regulatory and operational challenges.
Even in challenging economic conditions, fintechs that tackle real-world problems and modernize legacy systems can find significant opportunities. By prioritizing substance over hype and offering solutions that drive meaningful change, European fintech are not only poised to enter the U.S. market but to spearhead its next wave of innovation. 
Robert Kraal, co-founder and CBDO at Silverflow, has more than 20 years of experience in online payments. After completing his degree in geophysics, he started his career at Bibit, the first global Payment Service Provider (PSP) which was acquired by RBS/Worldpay. At RBS/Worldpay he went on to lead account management, before moving on to Google Netherlands. He joined Adyen in 2010 in the role of COO, where he was responsible for building and running the global acquiring and processing service. At Silverflow, Robert is responsible for maintaining relationships with the card schemes, acquirers, PSPs and regulators. Contact him via LinkedIn at linkedin.com/in/robertkraal. To learn more about Silverflow, visit www.wilverflow.com.
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