2022 was simply not a good year for the banking and payments world – at least in my opinion. A year in review of the five issues that got me particularly excited and what happened to you.
The payment and banking scene is undeniably never boring. Not a month goes by without new products, banks, fintechs and payment solutions hitting the market. But who actually needs all this and do you have to find it all good? In his monthly column “Nils nörgelt”, our author Nils Wischmeyer highlights a product, topic or the “latest hot shit”. After all, there is (almost) always something to complain about.
Dear readers, when it gets cold outside, the first snowflakes fall and the area managers dance to Last Christmas on the tables, you certainly get into the Christmas spirit. Maybe you have the heavenly smell of cookies in your nose and Santa Claus with his fat belly in front of your eyes.
You see, that’s what separates the positive people, as I’m sure you are, from me, the whiner, who turns your head to all the problems in 2022, to the flops, the abuses, and the lapses in the payments and banking industry. In short, I’m the Grinch and look at five topics that particularly annoyed me. I wonder what has become of you?
1. BNPL had to make a U-turn
It were glorious times, when all the stores were so fond of advertising: go ahead, buy it now, pay for it later. Buy now, pay later (BNPL) was the hype par excellence and Klarna the new star in the sky. But what I found it annoying and low! Because in principle BNPL does not solve a problem for the customer, but only one for the retailer. He sees higher shopping carts and is happy if the customer wants to pay ten percent APR for them. Does he really want to? Pah, that’s just his damn bad luck.
I have warned about the risks of the business model before. In my February column, I wrote about BNPL at retailers, “Possibly increases profit, but absolutely no use to me as a consumer.” Perhaps, I noted, I was just a little old-fashioned to see it that way. But apparently, barely five months later, not-so-old-fashioned investors saw it that way, too, and turned a $46 billion valuation into a $6 billion valuation at Klarna. Since then, the BNPL scene has suddenly become not about debt, but about saving and somehow about Financial Health. Well, sometimes such a crisis also has a few good sides.
2. rounding up was more of a bust idea
Barely back from the Easter vacations, there was the next excitement that had crept into my inbox: rounding up for retirement. A start-up that was relatively present at the time tried to convince me that I, born in 1995, could actually close my pension gap if I just rounded up a few cents every time I went shopping and invested it. It was a glorious promise, which I acknowledged at the time by saying, “Let’s face it, guys and gals, saving money is all well and good: but the whole thing can’t be anything more than a marketing stunt.”
More than one nasty (digital) letter I got after that. I had gone a bit overboard, the article was too nasty, and anyway, you can’t beat up on a start-up like that. Even on the phone, one or the other complained that this was anti-innovation and that we should hold up start-ups with good ideas. And sure, I am of this conviction and that it ended a few months later with Vantik is a pity and certainly not my intention. But perhaps it also shows a little bit that the nagging was not so unjustified.
3. debit cards will soon end up in the trash
Then at the end of the year, there’s another issue that has caused a massive stir: Cutting up my debit card because I think it’s garbage. It is not a girocard and therefore useless in retail and it is not a credit card and therefore useless abroad and partly on the Internet. My conclusion in November: I don’t need this thing.
As soon as the article was online, there was a hail of comments, most of which sounded like this: Can not understand your observation, absolute garbage, complete nonsense, a problem of the dealer and: I have had other experiences. Perhaps that’s why, in conclusion for this year, here’s an explanation of why I sit down and grumble once a month anyway, as if I were a pensioner at a ground-floor window: I report from my everyday life what happens to me and get upset about it.
This column does not claim to be complete, nor differentiated down to the last fiber. Because it gives an opinion of N=1 – and this N(ils), that is me.
4. crowdinvestment is still underground
Alright, let’s make it short and sweet at this point, because if you’re honest, you’d much rather read what’s about to come on the subject of Bitcoin. So, here’s my short rant on crowdinvestments: they are highly speculative from an investor’s point of view and should therefore be regulated much more strictly. Any third-rate derivative has more safety warnings than a subordinated loan in South American forest with 100 percent risk of loss. In addition, they are a revelation for the fintech itself.
After all, they do not bring a banking or payment company any interest rate advantage over a bank loan, which in plain language means: If you pump up the crowd, you have no other options left, and fintechs should at least have this effect on the outside world in mind – investors anyway. And then there are conditions for crowdinvesting in, say, funds or other markets that are supposedly otherwise closed to retail customers. Most of them are so complex, risky and – to put it bluntly – subterranean that even Bafin is now saying, “Not like that, dear fintech friends. And I can only agree with that.
5. it goes Brrr in Kryptoland
And then down to business. The promise of cryptocurrencies is, as of Dec. 19, still dead as a doornail. Not a single currency has delivered what so many optimists promised. Since we can’t fill an entire column here, let me elaborate in three points:
First, cryptocurrencies like Bitcoin have still not been a good inflation hedge, as they have plummeted in rows since inflation has been rampant in Europe. Bitcoin, for example, is worth 60 percent less today than it was a year ago – and don’t get me started on all the other smaller currencies.
Second, cryptocurrencies are highly dependent on how large the money supply is in the states where they exist. Because as soon as interest rates rise, cryptocurrencies fall, no worse and no better than any highly speculative security of the time. Because most people have realized: There are now returns elsewhere (theoretically), then I don’t need this here anymore.
Third, no cryptocurrency is fit to actually be a currency; in most cases, even the word “money” would be too lofty. So far, no one has provided a counterexample, and if you come to me with El Salvador, I can refer you to this link from the Tagesschau: El Salvador’s Bitcoin Bubble Burst.
And in all of this, I haven’t even talked about FTX yet.
Short conclusion: cryptocurrencies remain a fringe phenomenon with a loud minority on social networks, where many, many people have recently lost a lot of money. So what’s needed is tough regulation from governments – up to and including bans. But we can discuss that in the new year.
And with that, dear readers, I bid you farewell for the Christmas vacations. Stay happy and cheerful – then I don’t have to be.