Has fintech peaked?

Before joining WSO2 in 2020, I spent about ten years in chief architect roles in major divisions of Credit Suisse and Citi. This was a difficult time, since I started in 2009, right after the crash. Fintechs and digital businesses had begun delivering banking products and services through smart mobile devices and highly interactive web applications, using modern cloud native technologies and techniques.

Competition from fintechs was challenging. Most traditional financial services companies had automated their systems early on, before the advent of the web, smart mobile devices and modern cloud native computing. The new fintechs could leapfrog these expensive, traditional banking systems by, for example, moving straight to the cloud for agility, speed, scale, large data sets and sophisticated AI.

Banks had to move quickly to catch up, and many of the strategic projects I participated in were focused on cost-cutting and modernising legacy systems to help us better compete. We introduced API-first and event-driven architectures, microservices, big data, AI, cloud native development, and continuous integration and continuous delivery (CI/CD) automation, to name a few. On the consumer banking side at Citi, “mobile-first” became the rallying cry for introducing new capabilities and features.

Survey results show that my former colleagues continue to make progress in responding to digital disruptors. If the survey findings are correct, the fintech revolution appears to have peaked, or perhaps, as I overheard at Finovate 2022 in London, it has entered a midlife crisis. For example, a majority of survey respondents said they have the necessary tools, are culturally ready, and have the talent needed to create new digital products and services. Based on my experience, this was not the case ten years ago.

At the same time, fewer bank executives surveyed see fintechs as competitors, and nearly half of their organisations have already partnered with fintech startups.

Banks are also recognising the challenges of delivering great customer experiences, the importance of a cloud strategy and the need to upskill developers (and perhaps even onshore them). Changes of this magnitude are not easy to undertake, but it really seems as if the challenges are being understood and increasingly met.

Overall, it looks like established financial institutions are rising to the challenge—by adopting new skills, technologies and approaches to developing digital products. And the trust in traditional financial institutions to preserve security and conform to regulations remains a strong factor in their favour.

Has the fintech revolution truly reached its zenith? The survey results are not entirely conclusive,but the signs are pointing in that direction.

Eric Newcomer
CTO, WSO2