Sam Levy is a Partner specializing in fintech, digital services, and software/SaaS at Drake Star, a global tech investment bank founded in 2016. In an interview with The Financial Revolutionist, Levy outlined three major themes that defined fintech in 2022, and their effects on investor appetite and sentiment.

1. Wealth transfers and retirement apps

We’re living through the largest generational transition of wealth in history, with wealth shifting from baby boomers to their children as well as millennial descendants. “With that, you’re going into demographics that have a very different approach to wealth,” Levy said. Banks are seeing the growing popularity automated and more touchless wealth management solutions like Wealthfront—and, even if banks like UBS scrapped a wholesale acquisition of a platform like Wealthfront, they see these players as a promising gateway into the next generation of ultra-high-net-worth and high-net-worth individuals, and eventually managing their money. Such a tie-up also brings down customer acquisition costs by piggybacking on an existing fintech’s work.

Levy anticipates more of what we’ve seen this year: More investment in alternative assets and fractional ownership as forms of wealth generation and customer acquisition. Despite waning institutional investment in crypto, other alternatives represent a long-term ploy that can capture the engagement of a rising generation of wealthy clients. Levy said fintech innovations like automated wealth management are further incentivized by the prospect of a positive exit, including deep partnerships with existing financial institutions. 

2. Crypto’s frazzled centralization

Commenting on the past year’s turbulent crypto market, Levy said we’re experiencing mismatch between crypto’s consolidation among core exchanges, and the inherent decentralization that undergirds the technology. “What we’re seeing is completely the opposite of what crypto had been created for,” he said. While centralized players like FTX and Celsius have collapsed and may have catalyzed a larger sector-wide disintegration, underlying blockchain technology may have other use cases under different economic conditions. 

3. A CAC reckoning

Behind trends such as the declined investor appetite for BNPL or BaaS solutions is the substantial customer acquisition costs and limited lifetime value of these operations. “Nobody was looking at where they were going and where they would make money,” Levy said. He predicts that we will see more declining valuations for players like Green Dot and Klarna, and that investors will be less likely to invest in those kinds of ventures moving forward.