In this episode of Disruption Insights, Alvin Cho, Vice President of Product and Engineering, Digital Innovation & Transformation at Fiserv, helps dive deeper into certain aspects of the financial industry.
He shares his views on technologies trending in the sector, bets about the future of fintech, the challenges and opportunities ahead of new players and incumbents, and the role of sustainability in finance.
Alvin’s main goal is to change businesses, lives, and the world around him for the better. Currently, he does that at Fiserv, a leading tech provider of services like payments processing, customer and channel management, and business processes optimization.
His experience covers creating enterprise products from inception to market, which means engaging in every phase of the product life cycle. Before joining Fiserv, Alvin spent 15 years at IBM, where his work ranged from AIOps to open banking to developer experiences, which makes him a fintech technology expert.
What technologies or solutions are really trending in fintech? Can we expect exponential growth in any fintech areas (like regtech or insurtech)? What role will regulators play in the expansion of financial startups? In the Disruption Insights series, we gather insights and opinions from industry experts to answer the most pressing questions and foresee the future fintech landscape.
💡 Trends in Fintech
Most impactful technologies in fintech
No-code and low-code
As developers look for faster ways to build and introduce digital solutions to the market, companies need to make their services easily consumable. No-code and low-code technologies make all of that possible by easily customizing and dropping in widgets or chaining together multiple services to offer an entirely new product or experience. Orchestration of services using a no-code and low-code interface will allow for more embedding of financial services along with other services like identity management, internet of things, voice interface, or similar solutions.
Containerization and serverless solutions
While containerization and Kubernetes has been an incredible shift in how we create and manage cloud apps, serverless is the next wave. It’s a great way to build and deploy a simple program without the heaviness of Kubernetes. Additionally, when used in a hybrid manner to fire up serverless microservices, it can cut down on resource consumption and cost.
It also changes how people look at solving problems. Instead of engaging solely in writing lots of code, engineers and product managers can now focus on introducing valuable features, prototyping and deploying them rapidly, and then moving to the production phase at lower costs.
Edge and mobile computing
Edge and mobile computing is becoming increasingly important. I started noticing the surge in contactless experiences from payments, ordering, voice assistants, with examples like Apple’s “Tap to Pay,” pay-by-link type of solutions, or widely-used Alexa and Siri. With more efficient processors and Field Programmable Gate Arrays (FPGAs), we’ll be able to do more at the edge for our customers: from on-device fraud detection, analytics, and hyper-personalization, followed by enhanced reward and recommendation features. There are also smart contracts tied to IoT devices for supply chains – the invisible improvements offered to customers, aimed to simply enhance their experiences.
Solutions disrupting the industry right now
Apps that offer more ways to pay or manage financial assets and insurance will ultimately provide more value and convenience to their users by reducing or entirely eliminating barriers in the purchase process. For example, now I review my insurance policy and add upgrades, then perform a checkout with one click. Before, I had to be redirected to log in or input my credit card details.
Buy now, pay later
As we see the economy slowing down, buy now, pay later solutions will have a major impact on the markets. Even Apple tapped into this trend by announcing Apple Pay Later. This is a great time for this feature to be embedded into ecommerce sites, as it gives users more purchasing flexibility directly in an app or on a website.
With embedded finance trending, banks will need to be more open and compatible, enabling engineers to easily integrate their services to third-party apps or websites. This flexibility will be especially needed in emerging markets in Asia (Indonesia, Singapore, Vietnam, etc.), where customers expect mobile-first solutions.
With the way things are turning out for the economy, users will want to focus on protecting and growing their wealth for an uncertain future. Being able to easily manage, get advice, and then automate all financial operations will be key. Financial health is still something that not many people actively do or even think about, so building trust in robo-advisors and the like will support wider adoption.
COVID has proven that digital acceleration in many areas of the financial services is extremely necessary. To put it shortly: pay faster and more securely. We’ve already seen Mastercard release “Smile to pay” as a new, attractive way to pay. Apple’s “Tap to Pay” and other fintechs like Clover, Toast, and Square are advancing this space with “Scan to pay,” “Pay by link,” use of Apples App Clips, etc. Combining this with other aspects like personalization, advanced analytics, or big data will improve the checkout experience even more.
🌍 Current state of affairs
The impact of war in Ukraine
The war in Ukraine forced companies operating in the finance industry to follow new ideas or implement refinements. These arise from the need to streamline payments, improve peer-to-peer lending, or cross-border funds transfers. This, in turn, enables users to share money with loved ones to provide for them from abroad.
Looking at how the war has affected the global economy, you’ll see that wealthtech and energy innovations will be crucial, too.
VC investment in fintech
VC will rise, especially in the hot technology areas I mentioned earlier. If startups can create simple and effective solutions that will garner lots of interest from customers and, in turn, from VCs, this will prove their potential. We already see VCs backing blockchain-based startups, NFT-based, or financial automation companies.
💸 Fintech now and then
Corporate innovation in fintech
Corporations haven’t gotten it down to a science yet, but they are now taking it more seriously by following through on the ideas teams or individuals come up with. Biggest players tend to spin up new, separate companies to minimize risk and steer away from doing just quick hackathons or continuing a patent frenzy that doesn’t lead to a breakout product.
Incumbents start to back the winning teams either with funding, time, people and compensation continuously, as innovation isn’t a short-term game but a longer one. In addition, though the cloud has made it easier for teams to create digital solutions and innovate, there are still barriers in corporations. Allowing innovation to foster requires removing the barriers and building in a safe space, an innovation lab. The lab runs teams through workshops and cross-team or cross-discipline collaborations. Once projects are ready to get out of the sandbox, compliance and legal aspects get into the picture.
Another way corporations are jump-starting innovation in-house is getting help from the outside. It’s about working with outside vendors to host initial training or workshops, bring in other industry experts as well as introducing potential partners.
One additional item that has started to help corporations is getting teams to education on design thinking. This gets the teams to build a better understanding and empathy for the customer which leads to new ways of improving innovative experiences for the customer.
🌱 Sustainable fintech
Definition of sustainability in fintech
Sustainability, if aimed to have a positive impact, should be at the core of every financial project, as the full gamut, for they are related. Providing a sustainable solution means it must be running in green data centers. It must have been created by a diverse team, who put those best sustainability practices into use, who will then go out and better the world with what they’ve learned during the process. Then, finally, using those technologies to build and reinforce healthy, sustainable communities.
All of which will later come back and drive innovation in sustainability and sustainable innovation. It’s worth noting that, with the constant changes in the economy, investing in sustainable innovation may slow down, as it is an additional cost that may not bring a clear return, long or short term.
Way to more sustainable financial services
Fintechs and incumbents should partner with their local governmental institutions to drive policy. Not one organization needs to do it alone; companies can work together – share their resources, knowledge, and funding to support their efforts in promoting sustainability in the financial sector.
Want to be a part of the Disruption Insights: Fintech? Shoot me an email at: firstname.lastname@example.org
Discover ideas from other inspiring innovation leaders:
- "Innovation Is Incomplete Without Thinking About the Customer" with Rohit Kumar from SGeBIZ
- "Decentralized and Integrated Finance is the Future" with Richard Scioli from Alloy
- "Organizations Need to Be More Conscious of the World They Operate In" with John Avery from FIS