Fintech at its Finest: Adding Value with Innovation
Over the past decade or so, technology-driven platforms have changed the face of financial services forever.
And what’s fascinating is that, as we enter the era of generative AI, another period of rapid transformation is well under way as finserv institutions battle to keep up with their competitors.
As we take a deep dive, FinTech Magazine asks a host of industry leaders for their insight and expertise on how the most impressive technology platforms on the market are enabling the companies behind them to achieve success.
They are:
- Nick Holt, Head of Solutions and Delivery, Europe at Marqeta
- Babs Ogundeyi, Founder and Group CEO at Kuda
- Therese Stowell, VP of Product Management at Onfido
- Rajasekar Sukumar SVP and Head of Europe at Persistent Systems
What are the best fintech platforms doing differently to stand out from the crowd?
Nick Holt
The area fintech platforms should focus on to stand out from the crowd is fostering a consistent, productive culture. This dictates an organisation's ability to innovate, boost productivity levels and, most importantly, influences the way firms engage with clients and markets.
A big part of this is attracting the most talented people with solid expertise which is specifically important for areas that are quickly emerging in fintech, such as AI where a lot of companies are looking to hire skilled professionals.
The fintech platforms that stand out from the crowd also have a solid client base, from groundbreaking startups to established businesses, as this helps demonstrate the value that the fintech’s innovative platform and solutions can provide.
Finally, early-stage startups and private companies can seek guidance from the most relevant tech investors with fintech expertise as they will know how to build and sustain a technology business. If these experts are seen to believe in the fintech platform's vision it provides increased resilience and stability, as well as the confidence to keep innovating.
Babs Ogundeyi
The best fintech platforms are constantly listening to their customers. Whether that’s through harnessing the power of AI to create an optimal user experience or continuously innovating based on customer feedback, a good fintech is creating exactly what its customers want and need.
Therese Stowell
The best fintech platforms have innovative technologies at their core and are increasingly harnessing AI and machine learning to enhance their services. But crucially, they are also designed to be intuitive for users. After all, businesses have just 10 minutes to set up digital accounts or risk losing consumer trust.
Millennials and Gen Z make up a significant part of fintech’s core market, so it’s providers who can cater to tech-savvy generations and prioritise smooth customer experiences that will differentiate themselves in an increasingly crowded market.
Biometric identification has revolutionised the way users access digital services and, in a world of instant gratification, speed is often the name of the game. To lead the fintech platform race, organisations must constantly evolve the user journey to create seamless experiences, without compromising on security and compliance.
Rajasekar Sukumar
In the bustling world of fintech, the top platforms set themselves apart by cleverly blending practices to ensure they keep growing and succeed – even when faced with challenges. These platforms develop excellent solutions, using technologies like blockchain, AI and fancy data analytics to tackle old financial problems and improve user experiences.
Successful fintech platforms are also all about the users, focusing on what they need by creating easy-to-use interfaces and offering personalised services to build a solid and loyal fanbase.
Being flexible and quick to adapt is super important, too. The leading platforms are all about embracing change, tweaking their products and staying on top of what's happening in the industry. They team up with others, too, forming partnerships that help them offer more services, reach new places and share resources.
Following the rules is a must, and the top platforms put a lot into ensuring they're doing everything right to build trust with stakeholders and customers. They're serious about managing risks, using cybersecurity measures and fraud prevention to keep everything safe.
So, in summary, the best fintech platforms combine innovation, thinking about users, being flexible, teaming up with others, following the rules, creating whole ecosystems and managing risks. This helps them ride the wave of support from investors and do well in the challenging fintech world.
Which fintech platforms, if any, have caught your eye over the past 12 months?
Nick Holt
Amid the cost-of-living crisis, there has been a huge growth in consumer demand for Buy Now, Pay Later (BNPL) and microcredit, specifically from individuals struggling to access credit through more traditional means. Recent Marqeta research found 38% of UK respondents had used BNPL services to make ends meet in the preceding 12 months, increasing to 61% among 26 to 34-year-olds.
As a result, I’ve been fascinated by fintechs that are enabling individuals to access short-term credit in a reliable, consumer-centric manner. The innovation doesn’t lie in the infrastructure and technology enabling the assignment of credit and instalment repayments. but rather in how BNPL systems seamlessly assign credit on a transaction-by-transaction basis at checkout.
The development of these fintech platforms has encouraged short-term credit options to be rapidly integrated into consumer culture and retailers' checkout processes, ultimately allowing credit to trickle down to those that need it. If the development of BNPL can be successfully paired with improved consumer financial literacy, where individuals are given guidance on how to make repayments, it can boost the economy while providing consumers with more agency.
A variety of fintech platforms are thriving in this space and have caught my eye. Credit2, for example, is providing banks in Europe with the ability to directly offer BNPL payments to cardholders, allowing them to split the payment directly in their banking app. This also incorporates smart budgeting and responsible lending by linking to the existing card limit for each cardholder.
Afterpay also announced an interesting partnership with e-commerce tech company Rokt to offer shoppers more relevant experiences, including highly relevant offers at checkout, highlighting the potential for BNPL providers to extend their capabilities beyond payment networks.
Therese Stowell
Themis has taken an interesting approach to streamlining governance and compliance needs. It’s not the shiniest problem to solve, but it’s critical to companies de-risking their regulatory positions.
I’ve also been curious to see what emerges from open banking, and Token has emerged with a compelling payment solution.
AWS has been assembling a great set of components to enable fintech providers and platforms.
Rajasekar Sukumar
The fintech landscape as a whole has been quite the spectacle over the past 12 months. We’re witnessing the emergence of the next generation of platforms.
For me, the fintechs that are harnessing generative AI to elevate the customer experience and streamline operations have been the ones to keep a close eye on.
Babs Ogundeyi
Sling. It’s like a global Venmo built on top of stablecoins. You can send money to about 30 countries and it’s all instant.
To what extent will we see the next generation of fintech platforms integrating Gen AI?
Nick Holt
AI will transform financial services in 2024.
For fintech platforms, the immediate function of AI will be to help reduce fraud, including the fraudulent creation of new accounts. By training advanced machine learning models on a comprehensive dataset, AI systems can identify anomalies in data from device information and third-party checks to determine unusual patterns, and then investigate the context by analysing sequential data to determine if fraudulent activity is taking place.
Gen AI is likely to act as a co-pilot for security professionals, automatically flagging inconsistencies and interfering to potentially stop crimes from being committed. This reduces the need for lengthy manual checks and, critically, makes fintech platforms safer.
The second application of AI for fintech platforms is likely to be challenging the way traditional legacy banks assign credit. AI can revolutionise the concept of credit underwriting by instantly analysing reams of data and determining more about an applicant's credit request than has previously been possible, simply by looking at a pre-assigned credit score linked to an individual and primarily based on historical, financial data.
This opens the door for more equitable credit scoring as data outside a set credit score can be taken into account (e.g. recurring payments, work history); credit decisions can go from being based on a particular person to being about a specific transaction.
Babs Ogundeyi
We’ll see a lot more fintechs implementing Gen AI and other applications of AI. The rapidly advancing technology has the potential to impact the majority of industries, and fintech should embrace its capabilities.
Using Gen AI can free up people’s time to focus on innovating and creating, as they would need to spend less time on tasks that could be automated. It can be particularly useful in areas such as compliance, where it can perform mundane or “boring” tasks like checking alerts or completing enhanced due diligence (EDD) checks.
The technology can also be the first port of call for customer support. As such, Gen AI can make fintechs – and the people behind them – more time and cost-efficient.
Rajasekar Sukumar
The next generation of fintech platforms will integrate Gen AI significantly, marking a transformative shift across the entire financial services sector, from strategy to execution. The hype surrounding Gen AI has caught the interest of C-suite executives across various industries, compelling IT leaders to deliver results that generate measurable ROI.
While the UK’s Office for National Statistics (ONS) recently revealed that 85% of businesses are not currently using AI, and 83% are not planning to adopt it within the next three months, this hesitancy felt like nothing more than a lack of budgets at the end of the year. The new financial year starts from most in a month’s time, so I predict an uptake in platforms when resources refresh.
Currently, Gen AI projects in the fintech sector focus on improving operational efficiencies and enhancing the overall customer experience. AI technology is employed to streamline processes and automate tasks, making financial services more efficient and customer friendly. Concurrently, the integration of IoT is playing a role in enhancing security, convenience and efficiency in banking by enabling data collection, analysis and action without human intervention.
However, amidst these innovations, traditional banks within the sector face the challenge of adaptability to remain relevant. Staying competitive in a rapidly changing landscape requires a strategic approach, incorporating Gen AI and other disruptive technologies while ensuring a seamless and customer-centric experience. The integration of Gen AI in fintech platforms represents a pivotal moment in reshaping the future of financial services, focusing on efficiency, customer experience and adaptability to evolving industry dynamics.
Therese Stowell
Gen AI is a must-have; platforms that don’t leverage it will have difficulty competing.
It may come as no surprise that fraud is reaching unprecedented levels as bad actors are leveraging Gen AI to conduct fraud. Fraudsters are using techniques such as digitally-altered documents and creating deepfakes to commit identity fraud. Forward-thinking businesses are fighting fire with fire by using Gen AI to better detect fraud and protect their end-users, partners and themselves.
What are today's financial institutions and investors looking for in the fintech platforms of tomorrow?
Rajasekar Sukumar
Today's financial institutions and investors are actively seeking fintech platforms that can help them navigate the evolving landscape and stay competitive.
For traditional banks, transforming their infrastructure is a top priority, driven by the need to reduce overhead costs. The expensive nature of town centre locations and outdated processes has significantly hindered traditional banks' performance, prompting a pressing demand for more streamlined and cost-effective solutions.
Moreover, the focus is shifting towards meeting the evolving expectations of customers, who increasingly demand a banking experience that is simple and hyper-personalised. Investing in fintech platforms to improve online presence not only reduces overheads and the need for outdated legacy tech, but it also meets customer demand for easy-to-use banking systems with personalised offerings.
The risk of losing market share to digital-first financial services is also a looming concern for banks that resist transformation. The emergence of providers like Monzo, Revolut, Wise and Pockit, with their innovative models, exemplifies the potential threat to traditional banks.
Financial institutions and investors are thus seeking fintech platforms that enable a swift and effective response to market changes. A modern and agile infrastructure is considered crucial, allowing banks to innovate rapidly and launch new services that meet the dynamic demands of the market.
Nick Holt
With investment in fintech in Q3 2023 a quarter of what it was a year prior, fintech platforms need to meet certain criteria to secure investment. Investors are likely to use critical indicators to determine whether to invest, such as referenceable customers. Essentially, fintechs have to signify that they have a smart and sustainable solution that can succeed in the face of what is expected to be a difficult upcoming financial period.
The good news is, if companies can address an existing problem that a large number of people have and solve it in the right way, there is still tremendous opportunity for innovation in fintech. Consumer demands are constantly changing, and individuals increasingly require more flexibility, real-time payments options, seamless checkout experiences and access to new, emerging technologies. Therefore, any fintech platform offering improved, agile solutions that meet changing demand with a high-standard product can gain investment, esteem and even apply pressure to other industries to be more nimble and respond to changes more quickly.
Babs Ogundeyi
Fintechs that embrace new technologies, like AI, and those that are continuing to increase their customer base to ensure sustainable growth. Gen Z (and subsequent generations) are undoubtedly more welcoming towards fintechs and neobanks than their parents and grandparents. Technology has always been a central pillar in their lives, and as such, younger people are more likely to have an account with a bank that doesn’t have a single physical branch. As fintechs of tomorrow continue to expand their offerings, we may soon see younger generations only use neobanks as they make the switch to have a digital bank as their primary account.
Therese Stowell
It’s not just about the technology; it’s about delighting both the customer and the end-user. For financial institutions, it’s solving vital problems – whether that’s fraud prevention, compliance or addressing a user need – with minimal effort and cost, and maximum results. That often correlates closely with providing an excellent user experience that is tailored to the end-user and business needs. Having a great user experience can be a key differentiator in this competitive space. Financial institutions and investors are also looking for platforms that solve end-to-end problems, not just parts of a user flow that they must patch together.
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