Building fintech products for a bull market

A growing group of market indicators suggests that the Fed’s efforts to create a “soft landing”—that is, curbing inflation without causing a recession—may be paying off. Investor and market-intelligence confidence is starting to return, which should encourage fintechs to cautiously prepare for more favorable market conditions.

Product teams may see their medium-term roadmaps adjust for this anticipated environment, building out more versatile products in the process.

Lowering interest rates

If the Fed has successfully lowered prices through its series of interest rate hikes, then we may expect the central bank to eventually lower interest rates from their current highs. This may have a series of cascading effects. From startups’ perspective, it may lower the cost of fundraising, helping set off another entrepreneurial boom; SMB-focused fintechs may therefore see an increase in demand for their products, especially from companies at the earliest stages of growth. 

An interest-rate decrease could also catalyze a wave of refinancing. Refi solutions may see a surge in demand—which is only the tip of the iceberg. High-yield savings accounts may also start to see their total deposits shrink, while lending solutions may see surging interest, including mortgages, bringing momentum back to the housing market. 

Ballooning savings

At present, savings are the lowest they’ve been in decades, hovering around 4.6%, rather than the standard 8%. Inflation has been a major force behind this worrying trend. If prices stabilize and the labor market sees a second wind, then we may expect savings to begin creeping back to their decadeslong standard. 

This may help more boilerplate lending and payments products, including credit cards, which have seen historically high rejection levels. Having more consumers eligible for credit cards may also turn consumer interest away from newer (and less regulated) lending products like BNPL. 

Restored optimism

Though not a material indicator, restored optimism in the market may have more cascading effects than more quantifiable macroeconomic trends. Public markets may see greater activity, especially if investors agree to riskier and/or larger bets.

Such a shift may buoy demand for investment-related platforms—from institutional and retail investors alike. But, at the same time, it may encourage more speculative behavior, which may encourage fintechs to keep an eye on compliance and help avoid speculative crazes like those seen between 2020 and 2022.