Flashy fintech largely absent at NRF
NRF Retail’s Big Show featured giant cloud services, robotics and shelf-picking technology, but notably crypto, web3 and BNPL were quiet participants, having lost their luster last year.
Why it matters: The pandemic forced retailers to jump on the digital bandwagon, but in 2022 shoppers began returning to the store, prompting demand for financial solutions to engage customers in-person and online.
What they’re saying: “Both of those [crypto and BNPL] have not necessarily run their course. But I think the whole world has sort of reimagined itself,” FreedomPay president Chris Kronenthal told Axios this weekend at the NRF in New York.
- As the pandemic winds down, people are going back to the way they engaged with merchants, and “they’re going way back to needing omnichannel to be a thing.”
- Consumers are rapidly adopting the digital piece of the merchants' ecosystem.
- “To tie that to the show, I think as you walk around and see the different things, pretty much every story going around is [about] integrating the channels,” Kronenthal says.
Zoom in: Credit and banking companies raised about $6.5 billion in venture funding in the first three quarters of last year, a 48% decline from the same period last year.
- “Neobanks and BNPL remain in the spotlight but will need to prove business model resiliency in a challenging macro environment,” PitchBook said in its Q3 2022 Retail Fintech report.
- The deceleration shouldn’t come as a surprise, PitchBook says, because this reflects the broader slowdown in funding that started in the fourth quarter of 2021.
Zoom out: Retail fintech startups received about $16.2 billion in the third quarter, a 48% decline from the previous year.
Of note: BNPL companies were hit by rising interest rates and the expensive costs of acquiring customers.
- Kronenthal says as BNPL customer rolls swelled, they started to challenge merchants for consumer relationships.
- “I think the merchant started to second guess the reliability of [BNPL] as just like friendly options,” Kronenthal says.
- Plus, as consumers returned to the stores, the need for additional credit options in online checkout became less desirable.