Published: 24 February 2020
Author: FINTECH Circle & KAE
Financial infrastructure plays a critical role in a countries economic development and stability. Over recent years, we have seen the emergence of various fintechs as infrastructure providers selling services to financial institutions to improve the end user experience or to add additional capabilities. If you were to map the financial infrastructure landscape you would see a myriad of fintechs across a breadth of fields offering infrastructure capabilities such as Banking as a service/ platform, connectivity, FX, Trading, Security and authentication, compliance, scoring, data and analytics and business tools such as financial software. These services and back-end functionalities are becoming increasingly vital for more traditional providers. But their existence is also allowing other fintechs to be set up and scale at speed by outsourcing complex process, therefore reducing barriers to entry and accelerating time to market.
Fintech infrastructure could evolve in two ways. It could become saturated with specialised providers or become consolidated so only a few providers offer everything. Currently, we have a relatively splintered sector with many niche providers. However, acquisitions made by larger financial institutions contribute to the consolidation of infrastructure providers under larger umbrellas. Should these acquisitions continue, we could see many fintechs providing end-user experience while relying on the same back-end infrastructure or perhaps a handful of mega providers. The future most likely lies in the middle of these two options.
What do you think? Where are we heading in 2020?
Read KAE’s full blog post on this topic.
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