‘FIs have an opportunity to treat creators as SMBs’: Marie-Elise Droga, Visa’s new head of fintech, on the creator economy
- The creator economy has mushroomed in recent years, but creators are still lacking the tools to run their businesses and manage their financial needs.
- Tearsheet spoke with Marie-Elise Droga, head of fintech at Visa, about why FIs need to treat creators as SMBs, and what needs to be done differently to serve the creator economy when it comes to payments.
Much like the gig economy, the creator economy has snowballed in recent years. The growth is driven by the shift toward valuing job satisfaction, flexibility in employment models, and being your own boss on the other side of a cubicle.
Today’s 50 million global creators are expected to grow at a 10%-20% compound annual growth rate during the next five years. And the total addressable market of the creator economy could nearly double in size over the next five years to $480 billion by 2027 from $250 billion today, according to new Goldman Sachs research.
Image Source: Goldman Sachs Research
While brand deals and sponsored posts are still considered the primary source of income for content creators, only a handful of solutions are at their disposal to run their business operations and manage their financial needs.
I spoke with Marie-Elise Droga, head of fintech at Visa, about why financial institutions need to treat creators as SMBs, what needs to be done differently to serve the creator economy when it comes to payments and some of the trends shaping the payments industry.
Is the creator economy emerging as the digital equivalent of tomorrow’s small and mid-sized business segment? And why do FIs need to treat creators as SMBs?
Marie-Elise Droga, Visa: Creators are the fastest-growing category of SMBs in the world, and these creators additionally are driving a lot of the discovery and purchase behavior we are seeing largely on social platforms today. Social commerce, which includes the creator economy, is projected to reach north of $1.2 trillion globally by 2025.
Financial institutions have an opportunity to treat creators as SMBs, but to date, they have been broadly underserved in their financial needs. They face the same issues small businesses often struggle with, like cash flow. Creators often don’t have access to critical tools like lending to help grow their businesses because FIs treat them as individual consumers instead of small business owners.
What are some of the challenges facing the creator economy?
Marie-Elise Droga, Visa: Inconsistent cash flow and slow payouts from platforms, lack of lending options, and insufficient tools to help them better manage their business are some of the significant pain points facing the creator economy. Lack of methods to boost customer engagement and loyalty directly, business literacy, and foundational knowledge to run a business are additional challenges.
What needs to be done differently to serve the creator economy when it comes to payments – domestic and cross-border?
Marie-Elise Droga, Visa: The problem is that when it comes to their financial lives, creators are underserved. They’re running a business and have the needs of a business. Yet, for the most part, they are treated as individual consumers. Even though they are able to monetize, creators don’t have access to the adequate tools to stand up and operate a successful business.
For starters, we’re working with platforms and payment service providers toward allowing creators to be paid faster and more efficiently – such as the ability to push funds instantly to a debit card, a wallet account, or, in some cases, a bank account in 1 to 2 days. By providing more optionality and faster rails, we’re excited to help alleviate some financial pressure that may be bogging down many creators today.
What are some of the trends shaping the payments industry in the second half of 2023 and beyond?
Marie-Elise Droga, Visa: In particular, here are a few trends I’m thinking about:
Cross-border remittances go digital-first: The wave of digital transformation continues in the cross-border money movement, making the experience smoother, faster, and more affordable for both consumers and businesses. For a family member sending money home or a gig worker who can quickly receive their day’s earnings, the impact of these transactions is significant. For cross-border remittances, where some 800 million people receive remittances yearly from around $800 billion in global flows, the potential impact is enormous. Traditional players occupy some of the existing space, with a strong in-person agent network. Up to now, much of the middle of these flows has been automated, but manual at the last mile. A groundswell of fintechs and traditional banks are working to change that. While some have global plans and others are more region-specific, all are focused on bringing the digital-first experience to cross-border remittances.
Summer travel: Global travel has steadily increased through 2023, setting the summer travel season up for further gains. From January through April 2023, outbound travel from 63 of the 113 countries under the Visa International Travel Platform exceeded 2019 levels. Ninety-five other countries reached a 75 percent recovery rate or better, putting most countries near or past 2019 levels.
Asset tokenization: For much of the year, crypto headlines have revolved around market volatility. But perhaps the more interesting story is in asset tokenization. At Visa, we have largely used the language of tokenization to refer to payment credentials — namely the creation of a token that can stand in for the 16-digit number on your card and hold special functionality including being useless to a hacker. In crypto, though, tokenization refers to the representation of any asset on a blockchain — from fiat currencies and government bonds to stock certificates and securities, real estate deeds, or car titles. Each tokenized asset has a unique, digital identifier, enabling real-time tracking and monitoring. If adopted on a large scale, tokenization itself could lead to expanded forms of commerce.
From increased transparency, 24/7 automated risk management through smart contracts, dynamic portfolios, and untold efficiency gains, banks and the wider ecosystem stand to gain much from this development. And with research from the Boston Consulting Group suggesting that tokenizing global illiquid assets could become a $16 trillion industry by 2030, this is one trend certainly worth keeping a close eye on.
What strategies does Visa bring to the table for the evolution of the US fintech ecosystem at large?
Marie-Elise Droga, Visa: Fintech is a vital growth engine for Visa and a key driver in realizing our mission – to uplift everyone everywhere. Our portfolio of fintech partners is diverse and continues to grow and scale. Over the last two years, the number of fintech card programs generating $1B in payment volume annually has more than doubled. Right now, Visa is engaging with about 2,000 fintechs around the world. And spending on Visa cards issued by fintechs grew more than 200% over the last two years.
We engage the fintech ecosystem through several programs to make it easier for fintechs to partner with us and tap into our network of partners. Fintech Fast Track, our flagship program for fintechs, is designed to help launch new financial features quickly – like launching a card program or moving money in near real-time with Visa Direct. We provide streamlined onboarding, turnkey access to hundreds of ecosystem partners, and simple commercial agreements. Visa Ready is a certification program that helps technology companies build and launch payment solutions that meet Visa's global standards around security and functionality. And Fintech Partner Connect builds clear pathways between Visa’s issuing clients and best-in-class fintech providers.