Fintech five by five

L

ast year, Tribe Payments asked what fintech was going to look like in a decade, inviting fellow fintech leaders and experts to contribute their thoughts.

The project was a great success, offering insight into how businesses should be preparing for the future. But what about now? What about the road that’s just ahead rather than what lies on the horizon?

Tribe wanted to find out more about the changes that are happening right now – the changes that don’t need to be baked into future plans but need to be on todays to do list.

So, Tribe brought together five leading proponents of some of the most exciting technologies that are transforming technology right now: Blockchain, artificial intelligence, edge computing, low-code, and APIs.

Each of these is in the process of shaking up fintech, those who are not integrating them run the risk of being left behind. But, of course, it’s foolhardy to implement technologies simply because they are in fashion—it’s vital to understand their potential and where they fit in fintech.

Their contributions here are vital insight to anyone who wants to know how fintech is changing now. Tribe also surveyed over 80 executives in the European fintech sector, to gather insights into these technologies—which are the most important right now? How will they shape the market?

Artificial Intelligence, APIs, blockchain, low-code and edge computing are all very different technologies. Tribe chose them for what they have in common – each looks set to change fintech in fundamental ways, either right now or in the very near future. But none of them are rival technologies. Each has its own place and can coexist.

It asked respondents to rate the impact of five different technologies over the next year, and over the longer term, putting them in order. This was the average rating:

APIs are seen as having the most immediate impact. This is unsurprising as APIs are in use today, and their effect is increasingly obvious in Open Banking – and soon in Open Finance. But they remain important over the long term. Integration of services will continue.

Potentially more surprising is AI. According to the respondents, its time is here, and it’s only going to be more important long term. As before, this perennial future tech is now seen as very much here in the present. Potentially surprising is blockchain seen as having more impact over the long term.

Many recent news stories on blockchain technologies have been negative, from the NFT bubble to crypto instability. But blockchain is increasingly seen as its own thing, and the negative press hasn’t dampened enthusiasm for the underlying technology.

Low-code and edge computing are languishing at the bottom of the table. Reddish believes that these technologies will have as much of an impact as the others, but just don’t have the same “buzz” right now – they are underlying, technical solutions rather than breakout superstars. But those technologies that automate, reduce costs and boosts efficiencies will get their time in the sun.

Asking respondents where these technologies would have the most impact revealed a similar pattern, though some answers stood out:

AI was seen to have the biggest impact on Insurtech, Wealth Management, Trading, Lending and Retail Banking, where better and faster decisions would make a real difference.

Blockchain will, unsurprisingly, make a big impact on crypto, but trading isn’t far behind, suggesting that smart contracts have a big future

APIs are predictably big in many areas, but not seen as a big part of crypto – will it remain a financial technology outsider or be better integrated in the future?

Edge Computing is most popular in trading where speed is vital.

Low-code will have the biggest impact in payments, where there is an appetite for integration for embedding into other services.

Reddish says that people complain about hype, but it’s often incredibly useful.

“Often a 'buzz' around something is a good way to find the best film, the best restaurants, or even the best fintech technologies.

“What we’re really annoyed about is overhype, when the movie or meal turns out to be way blander than expected, or even just unavailable. Technologies are a little like the tentpole superhero blockbusters that set out their release schedules years in advance.

“Are we really supposed to get excited now for something that will be released in four years? But there’s also under hype – if we’re stretching the cinema metaphor, this is the Sundance winner that never really gets the box office attention it deserves.

“It could have a profound impact… but it doesn’t as no one really pays it much attention. We’re often warned about the dangers of hype, but the five technologies we identified that will change fintech over the next five years all have a unique story to tell about how different the popular narrative is from their reality.”

APIs are here now but will continue to change the fintech sector through embedding services and integrations. AI is seen as a future technology but is part of many fintechs right now. Blockchain has found its place in many businesses, yet has a reputation as being a solution without a problem.

Reddish cautions against underestimating low-code. He says it does not yet have the hype it deserves.

“And Edge Computing is perhaps too technical to have cut through, but its advantages will become better understood in time.”