THE STATE OF INNOVATION IN FINTECH
Fintech firms live and breathe innovation. Amidst the looming threat of recession and today’s funding and growth challenges, the importance of the right technology has never been greater.
©2023 FIS
FIS and the FIS logo are trademarks or registered trademarks of FIS or its subsidiaries in the U.S. and/or other countries. Other parties’ marks are the property of their respective owners. 2197034
linkedin.com/company/fis
twitter.com/fisglobal
www.fisglobal.com
getinfo@fisglobal.com
NOTES FOR DESIGNERS:
*On the Mobile Layout:
There is a drop down menu with section titles. These titles should be edited accordingly to the content.
of executives struggle with data management
About FIS
FIS is a leading provider of technology solutions for merchants, banks and capital markets firms globally. Our more than 55,000 people are dedicated to advancing the way the world pays, banks and invests by applying our scale, deep expertise and data-driven insights. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a Fortune 500® company and is a member of Standard & Poor’s 500® Index.
4 Innovation Trends to Watch from the Global Innovation Report 2023
Finding the best route
of executives struggle with data management
Let’s talk
Q: What impact do you expect the following trends to have on your organization over the next 12 months?
In the next three years?
Metaverse
Cryptocurrency
Embedded finance
BNPL
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
23%
14%
9%
22%
23%
25%
25%
12%
9%
12%
13%
23%
11%
29%
27%
12%
15%
15%
31%
17%
14%
12%
30%
17%
30%
17%
14%
19%
11%
27%
18%
24%
Change sales and/or distribution models
Reduce risk
Increase operating costs
Strengthen customer relationships
Drive revenue
Increase risk
Increase competition
Decrease operating costs
Tokenized versions of assets that can be traded on a blockchain, non-fungible tokens (NFTs) are increasingly being used for everything from audio recordings to pieces of art. They’re also playing a part in reshaping the fintech landscape.
1. NFT
How will innovation impact your business?
How are early adopters responding?
What’s holding firms back from embracing these innovations?
Which strategies can you deploy to turn innovation to your advantage?
Read on for the four key trends fintechs will harness in the next three years.
12 months
3 years
The Metaverse Cryptocurrencies Embedded Finance Buy Now Pay Later (BNPL)
84%
77%
83%
84%
81%
74%
84%
86%
Fintech firms believe that NFTs will become more important to their business over the coming years. A key outcome for fintechs is the strengthening of customer relationships but additionally, NFTs will help to open different sales and/or distribution models as well as reduce operating costs.
NFTs are here to stay
Tokenized versions of assets that can be traded on a blockchain, non-fungible tokens (NFTs) are increasingly being used for everything from audio recordings to pieces of art. They’re also playing a part in reshaping the fintech landscape.
Coming to grips with NFTs
1. NFT
Stay nimble. This space continues to change rapidly and fintech firms will need to be able to react quickly to both market and customer demands.
Tip for success
To capitalize on the explosive growth of the NFT universe, fintechs have begun taking actions to gain expertise and technology. 62% are already addressing the skills and knowledge gaps through hiring and, more importantly, partnerships. Fintechs should partner with an expert that has the technology and expertise to navigate the entire ecosystem and gain inroads quickly and efficiently.
Getting onboard
Click on each key trend
to learn more
1. NFTs
2. Embedded finance
3. RegTech
4. The Metaverse
%
0
92
%
said RegTech will impact their organization within 3 years
%
0
92
%
said RegTech is currently impacting their organization
Of firms predicting major or moderate impact...
%
0
50
%
of fintechs will significantly invest in developing embedded finance products in the next 12 months
%
0
64
%
of fintechs are offering or developing embedded finance services
An overwhelming majority of fintech firms are embracing embedded finance as they seek to increase and preserve their competitiveness – 84% of fintech firms expect embedded finance to continue to impact their business for the next few years,
with 64% already on their journey to offer embedded finance services.
Sharpen competitive edge
Customers are looking for new, frictionless experiences and fintechs are increasingly harnessing embedded finance solutions to offer new experiences via a primary access point. The result: better customer experience, a broader customer base and the ability to create new revenue streams.
Be there at the point of need
2. Embedded finance
Fintech firms see significant revenue impact from embedded finance and want to take immediate action to equip their organization with the skills, technologies and leadership required to harness this innovation.
41% of respondents plan to increase their technology or R&D budget in response, while some respondents are concerned about the shortage of internal development skills and plan to address the gap by bringing in new skills through hires or partners.
Top actions fintechs are taking today
Access to as-a-service capabilities. These can then be integrated into customer user journeys and form the basis of the embedded experiences.
Open fintech. This creates the platform to provide a broader range of third-party, best-in-class, pre-integrated financial services, products and self-service tools that position fintechs to deliver more value and capabilities to customers.
Specialized digital solutions, especially for areas like lending. These allow fintechs to smoothly integrate their services with the digital customer journeys.
A flexible and open data and analytics platform. This enables better risk decisioning and onboarding as well as a more seamless and personalized experience.
Key strategies for turning the impacts of the Metaverse to your advantage will be boosting skill sets, finding a partner with the expertise to help build a foundation in the space and investing in new technology.
Capitalizing on the Metaverse
Seek out a partner that will deliver:
Tip for success
Of firms predicting major or moderate impact...
Fintechs primarily expect that the growing focus on regulatory technology requirements will lead to higher operating costs. But some firms also see RegTech as a means of driving revenue and changing their sales and/or distribution models, with 44% of fintechs globally believing that regulation will lead to greater opportunity.
The impact is only set to grow as regulatory oversight increases to protect investors and consumers. This increasing importance spurs the need for immediate action.
Regulation will drive opportunity
With regulatory compliance in sight, many fintechs are currently increasing their tech budgets and building – or buying – new technology. Almost 70% of fintech firms are currently involved in building and buying new technology to respond to regulatory requirements.
Keeping on top of regulation
3. RegTech
60%
50%
40%
30%
20%
10%
43%
53%
Enterprise tech firms that say that embedded finance will have major impact on their organization
Seeking partners and hiring in order to round out their expertise are the top actions currently underway, according to tech firms that expected a major impact from embedded finance. Over the next few years, investing in new technology will become a priority.
Top actions tech firms are taking
Head of Corporates and International Banking, FIS
Andrew Bateman
“As fintechs get bigger, they become a more systemic part of the financial services environment – so the focus on responsibility and regulation will become
much more important.”
Leave regulation to the experts – fintechs can leverage a partner to manage the higher regulatory burden that invariably
comes with growth.
Tip for Success
As they grow, fintechs will need to embrace RegTech as they work to secure their businesses and propositions. Regulations will continue to change, making it essential for fintech firms to find a knowledgeable partner with flexible, modular solutions on modernized platforms that will allow firms to adapt to growing regulatory and compliance burdens.
Reduce risk
84% of fintech executives predict a sustained impact from the Metaverse in the next several years. While the main driver is to improve brand, image or reputation, fintechs also cite the opportunity to increase or preserve competitive advantage and to retain customers or strengthen relationships.
Why the Metaverse matters
Alternative realities, a 3D virtual environment, new digital experiences – the Metaverse is opening the door to new sales and distribution models. And fintechs are paying attention.
Creating new realities
4. The Metaverse
The top concern for fintech executives regarding Metaverse adoption was insufficient users on Metaverse-related platforms. However, the Metaverse trend is expected to gain momentum and when that happens, it will bring immense opportunities for convenient, secure, integrated financial services. Fintech firms need to be ready for that tipping point.
Possible barriers for greater adoption
* All data is based on a survey of 351 worldwide retail firms. The survey was conducted by Longitude Partners on FIS’ behalf between July and September 2022.
Fintechs exist to innovate – but in today’s economic environment, they also need resilience to weather the challenges that lie ahead.
As well as solving problems for customers, organizations need to control their costs, build strong relationships and open up new revenue streams. More than ever, you need to partner with experts that can help you navigate today’s challenges – freeing you to focus on what you do best.
As the world’s largest fintech, FIS has both scale and a track record of delivering innovative solutions – from helping firms embed payments to launching the FIS metastore at our FIS Emerald client event.
We can provide the tools you need to build the future, with the resources and staying power to support you at every stage of your growth.
Let’s innovate together
Q: You indicated that the following trends would have a major impact on your organization over the next 12 months.
What activities is your organization currently involved with to respond to these trends?
Let’s talk
Connect with us
©2023 FIS FIS and the FIS logo are trademarks or registered trademarks of FIS or its subsidiaries in the U.S. and/or other countries. Other parties’ marks are the property of their respective owners. 2271988
linkedin.com/company/fis
twitter.com/fisglobal
www.fisglobal.com
poweringfintechs@fisglobal.com
FIS is a leading provider of technology solutions for merchants, banks and capital markets firms globally. Our more than 55,000 people are dedicated to advancing the way the world pays, banks and invests by applying our scale, deep expertise and data-driven insights. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a Fortune 500® company and is a member of Standard & Poor’s 500® Index.
*All data is based on a survey of 135 executives from APAC (Australia, Hong Kong, Singapore), 43 from Europe (Germany, U.K.), 41 from North America (Canada, U.S.) and 11 from Latin America (Brazil). The survey was conducted by Longitude Partners on FIS’ behalf between July and September 2022.
About FIS
Which trends should you adopt to turn innovation opportunities into real-world advantages?
The FIS® 2023 Global Innovation Report reveals insights into some of today’s most important innovations based on a survey of 135 fintech senior executives. Survey questions included:
**Global Innovation Report 2023, FIS
NFTs will have some impact*
Fintech respondents that predicted major
or moderate impact
NFTs will have major impact*
of fintech firms are currently launching new NFT products and services
of fintech firms will invest in new technologies over the next 3 years
of fintech firms will hire or partner for expertise in NFTs in the next 12 months
Embracing NFTs – How fintechs are responding
20
%
45
%
62
%
SVP, Strategic Innovation Executive, B2B Payments, Fintech and Embedded Finance, FIS
Taira Hall
“Many firms are choosing to partner for expertise and a quicker time to market.
The right provider will offer critical capabilities for fintech firms to ignite embedded finance capabilities for their customers at their point of need – for a stronger customer relationship and expanded value creation.”
RegTech will have major impact*
of fintechs have or are developing products/services
of fintechs are actively researching potential opportunities in the Metaverse
of fintechs are hiring to develop or launch services
67
%
47
%
67
%
SVP and head of Strategy and New Initiatives, FIS
Himal Makwana
“The Metaverse is still early in the innovation cycle, but it’s evolving quickly. 67% of fintechs are actively researching potential opportunities in the Metaverse. It’s clear the industry understands the enormous opportunities that the Metaverse represents.”
Key strategies for turning the impacts of the Metaverse to your advantage will be boosting skill sets, finding a partner with the expertise to help build a foundation in the space and investing in new technology.
Capitalizing on the Metaverse
Execute internal proofs of concept to quickly understand both the technology and the capabilities of the Metaverse.
Listen to the customers, then align and prioritize the initial Metaverse use cases to what customers need.
Engage directly with the Web3 Metaverse ecosystem.
Moving from interest to action is possible with three straightforward steps.
Tip for success
Top priorities for fintech firms to establish their foothold in the Metaverse will be boosting skill sets and investing in new technology. But as with all other technology transformations, the Metaverse presents both risks and challenges, and fintechs will do well to seek partnerships or collaboration offering the right talents, resources and technology to move forward successfully.
Getting ahead of the curve
Head of Strategy – Banking & Payments, FIS
Melissa Cullen
“In a decade that is defined by profound disruption, the role of financial services providers – and especially fintechs – continues to morph. Capitalizing on disruption and unleashing new growth potential requires more than just agility.”
90%
80%
70%
60%
50%
40%
30%
20%
10%
87%
87%
90%
80%
70%
60%
50%
40%
30%
20%
10%
48%
54%
Next 12 months
Next 3 years
The percentage of respondents expecting NFTs to impact them in some way within 12 months and in the next three years stayed high at 87%, while the percentage of respondents predicting major impact to their business within 12 months and in the next three years
grew significantly from
%
0
%
0
to
SVP, Strategic Innovation Executive, B2B Payments, Fintech and Embedded Finance, FIS
Taira Hall
“The next wave of value creation will be around providing
a single pane of financial services.”
SVP, Strategic Innovation Executive, B2B Payments, Fintech and Embedded Finance, FIS
Taira Hall
“We live in an increasingly hyperconnected digital world where both competitors and innovative technologies are disrupting traditional business models. To succeed, you need to create greater value for your customers and markets in a new, highly differentiated and contextualized way.”
%
0
44
%
of fintechs across the globe think regulation will drive opportunity
Source: Strength in Numbers,
Barclays Corporate Banking, March 2022
0
%
of fintechs across the globe think regulation will drive opportunity
%
0
of fintechs predict major impact
in the next 12 months
%
0
of fintechs expect a major impact in the next three years
Source: Strength in Numbers,
Barclays Corporate Banking, March 2022
Next 12 months
Next 3 years
Contact us today to learn more about the Global Innovation Report insights for fintechs or explore the full findings
to assess your strategy.
The Metaverse
RegTech
Decentralized Finance (DeFi)
NFT
Tokenized Assets
Embedded Finance
Click on each key trend
to learn more
Four
key trends
Four
key trends
Four
key trends
Four
key trends
Which trends should you adopt to turn innovation opportunities into real-world advantages?
The FIS® 2023 Global Innovation Report reveals insights into some of today’s most important innovations based on a survey of 135 fintech senior executives. Survey questions included:
How will innovation impact your business?
How are early adopters responding?
What’s holding firms back from embracing these innovations?
Which strategies can you deploy to turn innovation to your advantage?
The Metaverse
RegTech
Decentralized Finance (DeFi)
NFT
Tokenized Assets
Embedded Finance
Click on each key trend
to learn more
Read on for the four key trends fintechs will harness in the next three years.
Coming to grips with NFTs
Fintech firms believe that NFTs will become more important to their business over the coming years. A key outcome for fintechs is the strengthening of customer relationships but additionally, NFTs will help to open different sales and/or distribution models as well as reduce operating costs.
NFTs are here to stay
Next 12 months
Next 3 years
90%
80%
70%
60%
50%
40%
30%
20%
10%
87%
87%
90%
80%
70%
60%
50%
40%
30%
20%
10%
48%
54%
Fintech respondents that predicted major
or moderate impact
NFTs will have major impact*
to
%
0
%
0
The percentage of respondents expecting NFTs to impact them in some way within 12 months and in the next three years stayed high at 87%, while the percentage of respondents predicting major impact to their business within 12 months and in the next three years grew significantly from
To capitalize on the explosive growth of the NFT universe, fintechs have begun taking actions to gain expertise and technology. 62% are already addressing the skills and knowledge gaps through hiring and, more importantly, partnerships. Fintechs should partner with an expert that has the technology and expertise to navigate the entire ecosystem and gain inroads quickly and efficiently.
Getting onboard
Stay nimble. This space continues to change rapidly and fintech firms will need to be able to react quickly to both market and customer demands.
Tip for success
Embracing NFTs – How fintechs are responding
of fintech firms are currently launching new NFT products and services
20
%
of fintech firms will invest in new technologies over the next 3 years
45
%
of fintech firms will hire or partner for expertise in NFTs in the next 12 months
62
%
Customers are looking for new, frictionless experiences and fintechs are increasingly harnessing embedded finance solutions to offer new experiences via a primary access point. The result: better customer experience, a broader customer base and the ability to create new revenue streams.
Be there at the point of need
2. Embedded finance
SVP, Strategic Innovation Executive, B2B Payments, Fintech and Embedded Finance, FIS
Taira Hall
“The next wave of value creation will be around providing
a single pane of financial services.”
An overwhelming majority of fintech firms are embracing embedded finance as they seek to increase and preserve their competitiveness – 84% of fintech firms expect embedded finance to continue to impact their business for the next few years, with 64% already on their journey to offer embedded finance services.
Sharpen competitive edge
%
0
50
%
of fintechs will significantly invest in developing embedded finance products in the next 12 months
%
0
64
%
of fintechs are offering or developing embedded finance services
Fintech firms see significant revenue impact from embedded finance and want to take immediate action to equip their organization with the skills, technologies and leadership required to harness this innovation.
41% of respondents plan to increase their technology or R&D budget in response, while some respondents are concerned about the shortage of internal development skills and plan to address the gap by bringing in new skills through hires or partners.
Top actions fintechs are taking today
SVP, Strategic Innovation Executive, B2B Payments, Fintech and Embedded Finance, FIS
Taira Hall
“Many firms are choosing to partner for expertise and a quicker time to market.
The right provider will offer critical capabilities for fintech firms to ignite embedded finance capabilities for their customers at their point of need – for a stronger customer relationship and expanded value creation.”
Seek out a partner that will deliver:
Tip for success
Access to as-a-service capabilities. These can then be integrated into customer user journeys and form the basis of the embedded experiences.
Open fintech. This creates the platform to provide a broader range of third-party, best-in-class, pre-integrated financial services, products and self-service tools that position fintechs to deliver more value and capabilities to customers.
Specialized digital solutions, especially for areas like lending. These allow fintechs to smoothly integrate their services with the digital customer journeys.
A flexible and open data and analytics platform. This enables better risk decisioning and onboarding as well as a more seamless and personalized experience.
SVP, Strategic Innovation Executive, B2B Payments, Fintech and Embedded Finance, FIS
Taira Hall
“We live in an increasingly hyperconnected digital world where both competitors and innovative technologies are disrupting traditional business models. To succeed, you need to create greater value for your customers and markets in a new, highly differentiated and contextualized way.”
With regulatory compliance in sight, many fintechs are currently increasing their tech budgets and building – or buying – new technology. Almost 70% of fintech firms are currently involved in building and buying new technology to respond to regulatory requirements.
Keeping on top of regulation
3. REGTECH
Fintechs primarily expect that the growing focus on regulatory technology requirements will lead to higher operating costs. But some firms also see RegTech as a means of driving revenue and changing their sales and/or distribution models, with 44% of fintechs globally believing that regulation will lead to greater opportunity.
Regulation will drive opportunity
The impact is only set to grow as regulatory oversight increases to protect investors and consumers. This increasing importance spurs the need for immediate action.
Source: Strength in Numbers,
Barclays Corporate Banking, March 2022
of fintechs across the globe think regulation will drive opportunity
%
0
of fintechs predict major impact
in the next 12 months
%
0
of fintechs expect a major impact in the next three years
%
0
NFTs will have major impact*
Next 12 months
Next 3 years
60%
50%
40%
30%
20%
10%
43%
53%
As they grow, fintechs will need to embrace RegTech as they work to secure their businesses and propositions. Regulations will continue to change, making it essential for fintech firms to find a knowledgeable partner with flexible, modular solutions on modernized platforms that will allow firms to adapt to growing regulatory and compliance burdens.
Reduce risk
Head of Corporates and International Banking, FIS
Andrew Bateman
“As fintechs get bigger, they become a more systemic part of the financial services environment – so the focus on responsibility and regulation will become
much more important.”
Leave regulation to the experts – fintechs can leverage a partner to manage the higher regulatory burden that invariably
comes with growth.
Tip for Success
Alternative realities, a 3D virtual environment, new digital experiences – the Metaverse is opening the door to new sales and distribution models. And fintechs are paying attention.
Creating new realities
84% of fintech executives predict a sustained impact from the Metaverse in the next several years. While the main driver is to improve brand, image or reputation, fintechs also cite the opportunity to increase or preserve competitive advantage and to retain customers or strengthen relationships.
Why the Metaverse matters
4. THE METAVERSE
of fintechs are hiring to develop or launch services
47
%
of fintechs are actively researching potential opportunities in the Metaverse
67
%
of fintechs have or are developing products/services
67
%
The top concern for fintech executives regarding Metaverse adoption was insufficient users on Metaverse-related platforms. However, the Metaverse trend is expected to gain momentum and when that happens, it will bring immense opportunities for convenient, secure, integrated financial services. Fintech firms need to be ready for that tipping point.
“The Metaverse is still early in the innovation cycle, but it’s evolving quickly. 67% of fintechs are actively researching potential opportunities in the Metaverse. It’s clear the industry understands the enormous opportunities that the Metaverse represents.”
Possible barriers for greater adoption
SVP and head of Strategy and New Initiatives, FIS
Himal Makwana
Top priorities for fintech firms to establish their foothold in the Metaverse will be boosting skill sets and investing in new technology. But as with all other technology transformations, the Metaverse presents both risks and challenges, and fintechs will do well to seek partnerships or collaboration offering the right talents, resources and technology to move forward successfully.
Getting ahead of the curve
Moving from interest to action is possible with three straightforward steps.
Tip for success
Execute internal proofs of concept to quickly understand both the technology and the capabilities of the Metaverse.
Listen to the customers, then align and prioritize the initial Metaverse use cases to what customers need.
Engage directly with the Web3 Metaverse ecosystem.
LET’S INNOVATE TOGETHER
Fintechs exist to innovate – but in today’s economic environment, they also need resilience to weather the challenges that lie ahead.
As well as solving problems for customers, organizations need to control their costs, build strong relationships and open up new revenue streams. More than ever, you need to partner with experts that can help you navigate today’s challenges – freeing you to focus on what you do best.
As the world’s largest fintech, FIS has both scale and a track record of delivering innovative solutions – from helping firms embed payments to launching the FIS metastore at our FIS Emerald client event.
We can provide the tools you need to build the future, with the resources and staying power to support you at every stage of your growth.
Contact us today to learn more about the Global Innovation Report insights for fintechs or explore the full findings to assess your strategy.
CONNECT WITH US
Let’s talk
*All data is based on a survey of 135 executives from APAC (Australia, Hong Kong, Singapore), 43 from Europe (Germany, U.K.), 41 from North America (Canada, U.S.) and 11 from Latin America (Brazil). The survey was conducted by Longitude Partners on FIS’ behalf between July and September 2022.
**Global Innovation Report 2023, FIS
2271988
Four
key trends
Four
key trends
Four
key trends
Four
key trends