Spend management stack; Three customer segments to stay relevant in the competitive fintech landscape; The potential of AI in banking and payments;
This edition of Fintech Wrap Up covers key insights on product diversification for SMBs, the rise of open-source financial services, progressive core banking modernization, AI’s potential and evolving customer segments.
Insights & Reports:
2️⃣ Where to find open source in financial services
3️⃣ The API-based progressive modernization approach to the Core Banking System
4️⃣ The potential of AI in banking and payments
5️⃣ Three customer segments to stay relevant in ever-changing competitive fintech landscape
6️⃣ Trends in Regional Payments
Curated News:
1️⃣ Apple Pay is getting a new Tap to Cash feature
2️⃣ Aramco’s Venture Arm, Mubadala Back Dubai-Based Real Estate Fintech Stake Raises $14 million
3️⃣ Synapse bankruptcy trustee says $85 million of customer savings is missing in fintech meltdown
TL;DR:
Hello Fintech Enthusiasts, welcome to this edition of Fintech Wrap Up! Let’s dive into the latest developments in fintech, payments, and banking.
Firstly, product diversification is proving essential in the spend management stack. With SMBs aiming to streamline operations, there’s a huge opportunity for providers to offer integrated financial solutions, like employee expense cards that handle both expenses and bill payments. This not only simplifies financial management but also opens new revenue streams through fixed fees for larger transactions, as demonstrated by Ramp’s successful introduction of Bill Pay.
Next, open source is gaining traction in financial services, much like the computing stack in the 1990s. Companies like Ballerine and Hyperswitch are leading the charge, emphasizing open-source solutions in infrastructure areas like risk engines and payment orchestration, making the fintech stack more modular and developer-led.
Capgemini’s report highlights a progressive modernization approach to core banking, combining cloud-based solutions with an API network to drive collaboration and innovation. This gradual transition from legacy systems ensures agility and cost efficiency without major disruptions.
AI continues to revolutionize banking and payments, with its potential to boost revenues and cut costs significantly. By offering personalized solutions and streamlining operations, AI enhances both customer engagement and operational efficiency.
Understanding evolving customer segments is crucial. From fintech pioneers and reward-seeking digitalists to tech-inclined pragmatists, each segment offers unique insights into consumer behavior, guiding the development of tailored financial products and services.
In regional payment trends, North America is witnessing a transformation with open banking, driven by consumer demand for secure data exchange and faster payments. Despite challenges, initiatives like FedNow and ISO 20022 are expected to modernize payment systems significantly.
In the news, Apple Pay is introducing a new Tap to Cash feature, enhancing its payment capabilities. Dubai-based real estate fintech Stake raised $14 million from investors, including Aramco’s venture arm, highlighting growing interest in digital real estate investment platforms. Meanwhile, Synapse’s bankruptcy has revealed an $85 million shortfall in customer savings, a stark reminder of the risks in fintech.
Insights & Reports
Spend Management Stack
Let’s learn how to win with product diversification with examples.
Address SMBs’ financial challenges and market changes
The market is shifting rapidly, and SMBs are increasingly seeking to streamline their operations by consolidating their vendor relationships, especially when it comes to technology. According to recent research, 84% of IT professionals said they would like to use fewer vendors to meet their companies’ technology needs.
Clearly, there’s a significant opportunity here that providers can capitalize on through product diversification, particularly with the intent of solving multiple problems for SMBs.
The solution? If you’re a provider, consider introducing employee expense cards that handle both expense payments and bill payments (payables) to offer a more integrated financial solution. This way, you could:
Simplify financial management for your business customers by giving them the ability to pull bills and pay them via their card;
This will open the door to introducing new payment methods, such as Automated Clearing House (ACH), wire transfers, or Bacs Direct Credit (BAC), across a wide range of transaction sizes.
Where to find open source in financial services
✅ Open source vs. Closed source
The closed-source model is more typical in software. It means the company’s source code is proprietary and not shared publicly. It’s often monetized directly through licenses or subscriptions.
The open-source model takes the opposite approach: the source code is publicly available. Anyone can see, fork, modify, and run it on their own. There may be some limits on how the code can be used, but generally, anyone is free to do what they want with it.
✅ The financial services stack
The financial services stack is not that dissimilar from the computing stack. It’s an imperfect analogy, but financial services also have things analogous to applications, platforms, and infrastructure. You can think of applications as individual financial products and their user-facing components (e.g., P2P payments, checking accounts, budgeting tools), platforms as the foundation on which applications are built ( banking-as-a-service providers, payment networks, account aggregators), and infrastructure as the more generalizable resources that enable the platforms.
