Tech platforms have been the backbone for fintech innovation, ensuring the emergence of new solutions, fintechs, business models, and moreover, new services for end customers. While many companies have been focusing on Big Data or Artificial Intelligence, new technologies such as Banking-as-a-Service or Blockchain are answering issues specific to the payment industry as a whole and fintechs in particular.
Baking-as-a-Service developed itself recently, mainly in Europe due to its very competitive market, with the goal to accelerate time-to-market and offer one-stop-shop solutions to companies looking for new state-of-the-art payment services. Well known neobanks in the B2C field such as Revolut, Lydia or N26, or in the B2B field such as Qonto, Holvi or Penta have emerged thanks to this new technological approach and already have millions of users. Treezor can testify of this booming trend, with more than 70 fintechs among its clients.
At Treezor, we consider that one of the game changers is the API approach, linked to factors such as financial stability and regulatory perspective. It all goes together, hand in hand, and that is what makes it a success for companies offering solutions, as well as their clients and their end customers. This platform-based approach helped to drive strong growth in investment in Fintech, from almost €14B in 2016 to €50B in 2019, based on KPMG Pulse of Fintech report in H2’19.
A new banking world
While the framework is evolving, with the arrival of the Electronic Money Institutions on a regulatory perspective and the emergence of new technologies, the banking industry has been evolving and had to adapt. Technological platforms – would they be dedicated to automatization, payment processing… – are changing the rules and reducing costs for fintechs entering the competition, as well as improving drastically the user experience for end customers. Nowadays, it takes less than a few months or weeks to launch a neobank, while for some of the first players that emerged during the mid-2010s it took years of development and millions in investment.
Tech platforms – such as Treezor did with Societe Generale group – are now partnering or integrating with banks. It is a new step to improve financial stability, as well as the regulatory framework for fintechs. Indeed, recent events in the fintech industry showed that lack of regulatory compliance and financial backing bring backlash for the whole industry. Moreover, Fintechs have been growing at an exceptional rate but will have to prove their profitability to become sustainable in the long term – or to accept partnerships and move toward market consolidation.
The future for tech platforms
Tech platforms and solutions disrupted the legacy that was hanging over the payment and financial industry for decades. They brought prices down, they increased time to market, they revolutionized the customer experience, they forced giants to reconsider their approach and allowed new players to take over segments of the banking and financial market through by energizing the fintech companies.
Nowadays, while many try to accelerate and develop in all the traditional banking areas, the real goal stays the same: innovation instead of replication. Innovation will sustain when it lays on strong foundations, building trust and serenity to clients and end customers. In our API-based world, the future is in the hand of the ones which are building new solutions and new interoperability where no one considered to create one before. Tech platforms and solutions will continue to thrive and to help to achieve this, for a better banking system and payment industry: a more tech-savvy one.