It was Nobel Prize laureate Niels Bohr who once said that making predictions is hard, especially about the future.
While prophecy is not our role at FIS Impact Ventures, we are working to anticipate the needs of tomorrow’s financial services ecosystem. As we look out on the seven years until the turn of the next decade, it is possible to identify megatrends that will upend how financial services are delivered and the role FIS will play by 2030.
Two worlds collide
While fintech might seem like a relatively new concept, it has been around for almost 30 years. The first generation of fintech occurred in parallel to the dot-com boom of the late 90s, where new technology created a path for traditional institutions to offer unique digital experiences to their customers. Before the rapid rise of the neobanks over this past decade, digital-only banking had been ushered in by Wells Fargo in the US back in 1995 and ING in Europe in 1997.
Fast forward to 2010, and the next chapter of fintech led by a new generation of innovators unencumbered by existing technology. Those digital natives forced an unbundling of financial services with solutions designed to solve a specific pain point. As a result, competition increased between traditional providers and these new players offered solutions with more flexible pricing, greater configurability and simpler deployment.
Today, we are entering a new chapter of fintech – one where legacy technology co-exists with digital alternatives, and where providers like FIS will be the bridge between those two worlds. New ways to integrate will come to the fore, ushering in a collaborative ecosystem that enables businesses to harness the power of fintech and build it into their propositions.
Era of simplification
Financial services have become ever more complicated. Banks, merchants and investment firms all face the unenviable task of connecting to an ever-growing number of funding flows, identity types, asset types, privacy requirements and points of engagement.
The cloud-native and API-led era that arrived with the second chapter of fintech will be replaced by a world without any code at all. The new normal will be developer-less integration where any company can connect into banking, payment, wealth or lending services without dedicated developers or technical resources. Fintechs, including FIS, will play the role of removing complexity. The emergence of ‘low-code-no-code’ providers will remove barriers to entry for companies across our industry, enabling the focus of innovation to shift from technology to commercial propositions.
Innovation is driving a sea change across the financial services ecosystem as the borders expand well beyond just banking, lending or investment. Financial flows are becoming embedded into different industries at the point of need, from travel to healthcare to insurance and many others. This will unlock new market share for fintechs and for digitally agile banks who are able to integrate technology into whatever environment or use case is most valuable to the customer.
Each industry will need to build a future in which those services are personalized to meet the unique needs of their specific vertical, and success will be grounded on providing contextual experiences. Fintechs will shape that future by building technology and capabilities that can be easily integrated into the environments where customers are already engaged. Banking, payments and lending will become embedded experiences, not services.
What will that mean in 2030? For example, innovative travel providers will deliver a full suite of banking and lending services to their property hosts entirely within their platforms. Electric car manufacturers may want to allow their customers to finance vehicle purchases with digital assets in addition to traditional forms of funding. And digital health providers will need to securely tokenize a broad range of data captured through new tele-health services. All those services will need to be delivered without leaving the customer’s ecosystem – and will be made possible through a single connection with fintechs.
De-risking the future
In a world of almost infinite possibilities leading to an equally endless number of potential scenarios, the best way to plan for the future is to first understand it. We have recently created a Future Exploration team within our Venture Investment organization that has the mandate to translate for FIS and our customers the disruptive trends that could impact financial services and commerce for the remainder of the decade.
In turn, that declarative view of the future directly informs the investment levers we use. This can be through direct investments we make in seed to series C startups that have unique technologies and proven product/market fit. Or investments in venture capital firms with funds dedicated to transformational themes where FIS may have limited existing footprint or visibility. Or through the investments we are making with leading venture studios to launch entirely new entities using an inorganic business-building model.
It is too soon to try and pick winners. Instead, we are creating portfolios of inorganic investments that are complementary to our core business and where we can deliver tangible value. With a future that has yet to be written, it is best to have options.