The global stock market is tumbling, the oil and gas prices are climbing up, inflation is increasing. It’s hard to think of a sphere where the economic shockwaves of the war in Ukraine are unfelt. Fintech and technology are the industries closely related to Ukraine and Russia, with numerous companies outsourcing their software development to these countries or rooting from them. This is why the question of the implications of this war in the long-term perspective is the one that the fintech community has been pondering since February, 24 – the first day of the Russian aggression in Ukraine. We are now witnessing the situation that no sane person could have imagined happening in the XXI century. Therefore, what happens next in the fintech industry would be very hard to predict. However, unlike the unprovoked war, the global market has its laws and tendencies, analyzing which we can at least approach the understanding of what’s in store for the fintech community in the coming months or even years. So, we have addressed experts in different areas of fintech – from crypto to emotional banking to academic research, with the same question: How will the war in Ukraine impact global fintech in the near (and even distant) future, based on what’s going on now and on your own analysis of the situation? We were blown away by the readiness of the thought leaders to participate – and are grateful to everyone who took the time to share their views with our audience. Find the responses received below, listed in an alphabetical order. Table of contents Russia before February 24th 2022 was a very different place than it is today. The country has cut itself out of the major channels of financial integration with the Western World its most important markets by far (China accounts only about 16% of exports). The impact on Russian economy is already substantial and it can only get worse. SWIFT Cybersecurity Russia is already ramping up cyberattacks to its adversaries. Ukraine was hit with a massive cyber attack at the beginning of the conflict. We will need to expect more of these. That will mean that the rest of the world will inevitably enhance its ability to manage cyberattacks – and they will probably do this as a more concerted effort than in the past. Talent There are anecdotal accounts of tech savvy young people leaving Russia. If this is actually the case the Russia technology ecosystem will be badly hurt with its best and brightest leaving the domestic industry and moving to other countries. The impact this will have on Russia’s ability to evolve technologically will be great. As I write these lines, the beautiful city of Kyiv is being bombed by the Russian army. Thousands of people try to flee, others fight and many die. What is the point to talk about anything else? First, I think we all came to realise that finance is critical national infrastructure, and we know little or almost nothing about it. Fintech industry kept a holly distance from thinking about the how things are connected or the robustness and the resilience of the whole system. What Jenga piece you remove in order to isolate financially a country which starts an aggressive war? Is blocking seven banks from SWIFT enough? On the other side, what type of systems you need in place for the millions of people who had to leave the country to still have access to their pensions? Secondly, the wave of Ukrainians who must leave their country and settle across the world where they have friends, family or feel more welcome – challenge the status quo of access to the local everyday banking systems. You cannot anymore ignore that millions of people in Europe don’t have anymore an address, a bill or their name or a credit history. We must think smarter as an industry not only as technologists about access to everyday banking for migrants and refugees and how through access to finance we contribute to their integration in our communities for however long they choose to stay. Third, fintech brough together in every team I’ve seen, people from all over the world. Ukrainians are our respected colleagues and many of them right at this very moment hold a weapon defending themselves. Their families probably dispersed the world. Apart from big structurally different solutions we will have to build local solutions which fit the locals and the international waves of migrants and refugees if they are from Ukraine or Syria. Founder and President of the Rudin Group, top marketing strategist for the financial services, wealth-management and family office sectors. Recognized by Onalytica as the #1 “Influencer” in wealth management, a speaker about wealth, next-gen, and fintech. Tragically, this war in Ukraine has dislocated so many people from their homes, offices, and families. This sad situation will force more people to access their banks, wealth management accounts, insurance companies, etc via digital. The fintech community in Ukraine has an opportunity (if they can under such stressful conditions!) to solve for this set of challenges. The investigation of the end beneficiaries, and their relations to Putin’s structures becomes much more sophisticated. The role of an AML/compliance officer within financial institutions, which is one of the key ones now, might become even more important. Nonetheless, it is important that in pursuit of following all the AML procedures, fintechs don’t sacrifice the customer service. It’s hard to try walking in customer’s shoes when your priority is regulation and sanctions. The accessibility and convenience, the impeccable customer service is under threat of becoming a random victim of this war. Hope it will not happen. The Ukraine – Russia war clearly has a number of impacts on the fintech and financial services industry, particularly those involved in any aspect of money movement. However, the impact that worries me the most is the humanitarian aspect of the war and the potential of long lasting collateral damage. Specifically, Ukrainian technology companies had been enjoying the benefits of economic expansion in Europe and a robust outlook by venture investors. Lives are now shattered or at the minimum, disrupted. Some Ukrainian businesses simply will not survive, nor will many in Russia. Almost all technology companies have some exposure to the war. I know a number of fintechs that have colleagues and partners that work and live in Ukraine. It’s heartening to see Fintechs For Ukraine to step and offer direct support https://www.fintechsforukraine.org/. At the same time, fintech innovations have emerged from the war, most notably in the form of new funding sources for humanitarian causes. The crisis has galvanized the crypto and NFT space, resulting in very creative fintech solutions. For example, It would seem that Ukraine is the first government in wartime to accept cryptocurrency donations. Right now I have more questions than answers. The looming question remains; how will the world’s second-largest economy, China, ultimately respond to Western restrictions. Such responses could have ripple effects felt around the globe. Several factors have helped Ukraine in its tech market growth journey so far – success stories from firms like Grammarly or Preply; a huge amount of investment from foreign investors and VCs, tremendous growth in mobile phone use and a large percentage of banked population. This was a fast-growing fintech market with over 150 fintech startups already well established in the market with advanced levels of funding. This is not counting Ukrainian founders or those with very strong ties that have established their startups elsewhere in Europe, mainly for EU access. What will happen now remains to be seen. War doesn’t help the case of economic activity, fintech or not, and all we can work towards is solving new problems that will arise as a result of the economic and socio-political instability, and ensure the market is still available when a time of peace arrives. The focus should now be on utilising existing fintech infrastructure to drive innovative solutions as quickly as possible, helping the common man – be it using open banking and open KYC to quickly open new bank accounts in other countries or driving cashless charity efforts. This will also be a great opportunity for remittance and microlending startups to actively enter the market. Sharing KYC data across borders, utilising cryptocurrency networks and providing low-fee access to cross-border transactions are phenomena already being seen across Europe. Ukrainians have already shown the world that their attitudes are made of steel – we can only hope that technology will play a major role in building and re-building the lives affected when the time comes. All-round view of your payment business performance Co-Founder and CEO of PeopleNotTech, author of “Emotional Banking” and “People Before Tech: The Importance of Psychological Safety and Teamwork in the Digital Age”, an entrepreneur, an industry influencer, a blogger, a writer for Forbes, an international keynote speaker. The volatility of the situation is so great at this time that many a prediction will fall flat but in my opinion, providing we collectively manage to eschew international escalation and if this abominable invasion were to end very soon, we should be able to retain the level of advancement we have achieved in technology of all types, FinTech included. Should this not be the case, we could well be faced with disastrous and devastating consequences all around. Equally, the undeniable and humbling bravery and resilience of Ukrainian people in the face of extreme adversity will have served them well so I am hopeful that from the ashes of this horrendous situation, some good will come in the future, in particular since, limit situations aside, the future of technology rests firmly with our ability to focus on our people and pay off some of the HumanDebt™ that we have incurred by treating our employees as emotion-less, disposable resources. On the part of the Russian leadership, we are experiencing a war of aggression against Ukraine, against freedom and democracy in Europe and, as a result, also against the Russian people. An end to the war and the consequences are not yet foreseeable. But the kind of international cooperation we took for granted until recently has changed almost overnight. The up-and-coming FinTech industry in Europe is also affected by this. In recent years I have advised several Russian banks in Moscow on FinTech, Innovation & Transformation. And with a technology team in Ukraine, I was able to support a Danish-German FinTech startup. Both are hard to imagine today. Previous cooperation models will be severely or completely disrupted for years, maybe decades. In recent years, investors have invested hundreds of billions of euros in FinTech startups. However, in view of the greatly changed European security situation, I assume that social priorities and, as a result, also economic investment priorities will change significantly in the short and medium term. These changes will primarily affect the European FinTech industry. Investments in FinTechs will tend to decline in favor of investments in sectors such as energy, environment and security. And founders and investors will focus much more on these urgent issues in the future. I expect that in the short term, FinTech investments will focus even more on existing FinTech startups in growth mode. It is very likely that noticeably fewer FinTech startups will be founded in Europe in the next few years. And most sadly, the FinTech industry in Ukraine will be set back many years. It is now up to all Europeans and democrats to support the democratic and freedom-loving Ukrainians in the best possible way. This war will be the catalyst for an entire restructuring of the global financial system. That’s because, for the first time, countries like Russia and China – which now have a real incentive to abandon the existing system – also have the technological means to do so. This war will spawn a digital currency war. Traditional economists tend to dismiss dramatic predictions that the dollar will lose its reserve currency status on the grounds that, for all of the concerns about U.S. global leadership, big money managers see no acceptable alternative. The Chinese yuan brings political risks associated with mistrust in Beijing’s motives, and the euro’s markets are not deep or liquid enough. But this misses the point. The “programmable money” powers of crypto technology, based on a combination of tokens, smart contracts and the power of decentralized validation via blockchains, will enable cross-border transactions that do not require the intermediation of a trusted reserve currency. It’s not that the yuan will replace the dollar as a reserve currency; it’s that governments and businesses in countries like China and Russia now have less of a need for any reserve currency. Thanks to blockchain inventions such as atomic swaps and decentralized escrow, it’s possible to create automated trade contracts in which both parties to a cross-border transactions – the importer and the exporter in a trade deal, for example – can obtain sufficient trade finance over the terms of the deal and remain protected from volatility in their respective exchange rates without having to denominate that contract in a third-party currency such as the dollar. That’s a game-changer because the risks posed by exchange rate volatility are the reason reserve currencies – including their role as a store of value for national reserves – exist in the first place. Until now, the world has collectively acceded to a dollar standard – many countries, begrudgingly. That standard is built on the expectation that the U.S. will maintain its international commitments to protect its trading partners’ property rights. (While it was arguably the right thing to do, Washington denied Russia that right when it froze access to its central bank reserves.) Now, Russia and other rogue states have an alternative: a math standard. Instead of having to trust the U.S. political system, it can trust a decentralized protocol based on mathematical rather than human laws. Russia and China still have much work to do to get such systems in place and their past hostility toward key elements of the crypto community has hindered development. They will now accelerate that work, however. And with China having built a nationwide blockchain and central bank digital currency system that’s far more advanced than any other nation, a sufficient foundation exists for both countries to build a blockchain-based trade finance system for bypassing the dollar-based system of correspondent banking. All of this will set off a race among nations to create the best technological and regulatory foundations for digital money, essentially a currency competition. Will that spell the end of the dollar’s dominance? Not necessarily. The U.S. can still win the looming digital currency war. If it embraces the spirit of permissionless innovation and privacy preservation that lie at the heart of the crypto movement it can leverage the world’s pre-existing “trust in the greenback,“ to out-compete the closed, surveillance-heavy models that authoritarian governments such as China will feel compelled to build. The U.S. and its allies must look to private-sector solutions such as stablecoins that are built on open platforms and which, by design, do not allow the kind of centralized surveillance that a full central bank digital currency entails. The hard part for Washington is that it will require giving up on at least some of the existing surveillance power that it wields via Wall Street banks to sanction governments and individuals and to control the global flow of money. If the U.S. can cede some of that power and work with its allies to build smart blockchain forensics methods for managing financial risk and fighting international crime on a system-wide basis, it can offer up the dollar as an instrument of freedom to the world. The end result is that Wall Street will lose its dominance, but true U.S. power – that which is manifest as an expression of the liberal, free-market values upon which the American economy was built – will be extended even more comprehensively. Powerful foundation for your digital-only commercial bank First, I want to say that all of us at Railsbank are horrified as to what has been happening in Ukraine and we are all desperately hoping for a peaceful and speedy resolution. We are also working on supporting the Ukraine people with aid. On a personal level, my family has been working on helping people out of Ukraine, finding a home in Ireland and helping them register for healthcare, schooling and support. As for global fintech, there has been an initial impact for those companies like ourselves with teams who are based in Eastern Europe. I know that many People departments have been working very hard to ensure their people (and families) are safe and have help within a developing humanitarian crisis. And it is humbling to see the efforts of this industry as it has added its weight to a superb humanitarian effort and implementation of financial sanctions against the aggressors As for the longer term, one thing that marks this industry out is the international nature of our workforce and how the motivation of many founders and their teams is to promote and expedite global financial equality and inclusivity. Even though a company might have a particular base for its HQ, it will draw on all nationalities for skilled team members and look to expand into other territories as soon as their roadmaps permit. What’s more, financial inclusivity is important to all of us. One of the reasons why fintechs expand is that they can release their innovative products to a wider audience as possible. Think how many more populations around the world would benefit from access to fair and transparent financial services. Fintech works across the world, not just in our own backyards. What we are currently witnessing is an aberration – the future, with the fintech industry playing its part, is still something to be very confident about. Global Fintech is all about re-inventing the client experience and building new products and infrastructures over the long-run. War, as always, is something transitory that will not impact the fundamental goals of Fintech. That said, the war in Ukraine, as Covid, has highlighted that globalisation and financial interconnections can become a weakness. A country excluded from global payment infrastructures – SWIFT – or with foreign assets frozen is going through hard times and its own people suffer in their day to day life. In that context, bitcoin and cryptos could have been an alternative solution but, surprisingly, it has not really happenned. My key takeaway here is that many countries will understand that it is becoming more and more important to build alternative payment rails and financial infrastructures. This post was intended as a chance for our audience to get an all-round analysis of the situation from experts, so we will let everyone draw their own conclusions. The only thing is clear – the war that’s going on in the centre of Europe geographically, is disrupting the financial and fintech spheres globally, and is likely to drive numerous changes in the industry.
Alessandro Hatami
Founder of an advisory firm Pacemakers.io, Non-Exec Director of Cashplus Bank, author of “Reinventing Banking and Finance”, mentor to fintech start-ups, speaker at fintech events.
Being excluded from SWIFT, the most likely outcome is that Russia will seek alternative ways to pay and receive payments. Its own alternative payments processing system SPFS, is only accepted by Russian Banks and some Ex-Soviet Union members. There are rumours that it could connect to the Chinese Cross-Border Interbank Payment System (CIPS). But CIPS still processes a fraction of the transactions SWIFT does and will never become its replacement.
Andra Sonea
An advisor for FintechOS, a Research Fellow at the University of Oxford, focusing on financial services infrastructure, ‘everyday banking’ architecture, open banking and ‘access to banking’.
I write though with the hope and knowledge that the war will end and Ukraine will be free. The horrors we witnessed will hopefully drive us to build more wisely organisations, systems and structures for a quite different world.
April Rudin
Alex Malyshev
CEO at SDK.finance – a white-label core banking and neobanking software vendor; a mentor at Startup Wise Guys Accelerator and a speaker at numerous fintech events. A sociologist by education, he’s got strong experience in sociology research, PR, marketing and management.
In view of the heavy sanctions imposed on Russia as the result of its aggression in Ukraine, the voice of AML/compliance has got more power and priority.
To be honest, there is nothing new in fintech, just a trend that we have witnessed for decades.Bryan Clagett
CRO/CSO at Moven.com, International Fintech and Financial Services Advisor, public speaker, a strategic leader helping fintech and finserv win marketshare.
Devie Mohan
Co-founder and CEO of Burnmark, an influential writer, speaker and commentator on fintech, listed as a top 10 global fintech influencer by several groups.
I never once imagined I will write about war and fintech in the same article, but here we are. War in Europe has impacted major fintech hubs – not just in Ukraine – but also in countries bordering Ukraine in a way fintech has never seen before.Cloud BI for Neobanks and Payment Providers
Duena Blomstrom
Frank Schwab
A strategic advisor and co-founder of FinTech Forum Frankfurt, member of the Board of Directors at Gulf International Bank, Bahrain, member of the Risk Advisory Committee at PayU, Amsterdam, member of the Supervisory Board at Addiko Bank, Vienna, member of the Supervisory Board at Bitcoin Technologies AG & Advisory Board Member at My Football Space.Michael J. Casey
Chief Content Officer at CoinDesk, non-executive chairman and cofounder of Streambed Media, the author of CoinDesk’s Money Reimagined newsletter, a co-host of the podcast of the same name.Corporate bank software platform
Nigel Verdon
Co-founder at Railsbank, a successful fintech entrepreneur, previously founded Evolution (now part of FTSE 100 company BAE Systems), Currency Cloud (exited to Visa in 2021).Philippe Gelis
CEO and co-founder of Kantox. Recognised as a global fintech thought leader and influencer, Philippe began his career as a strategy and management consultant, spending several years with Deloitte. Bottom line
