Artificial intelligence (AI) technology will have the biggest impact on fintech development over the next five years, according to a survey of 80 fintechs by Tribe Payments, which analysed the use of five emerging technologies: application programming interfaces (APIs), AI, blockchain, low code and edge computing.
Alex Reddish, chief commercial officer at the firm, said the report offers insight into the technologies from those closest fintechs and suggests next steps for those that don’t want to be left behind.
The survey found that 67% of fintechs believe AI will be the emerging technology that has the biggest impact on the sector over the next five years.
Daragh Morrissey, director of AI at Microsoft Worldwide Financial Services, said fintechs have the potential to keep leading on AI. “Some incumbents have admitted to being scared by the potential of fintechs, and they should be,” he said. “Smaller companies have the advantage when it comes building sophisticated AI. Without legacy technology to deal with, fintechs simply don’t have to revolutionise how they work to start implementing AI.”
The survey also revealed that APIs will have the biggest impact over the next year, with 90% of fintechs currently using them.
Marie Steinthaler, vice-president of data products at open banking specialist TrueLayer, said this year is seeing significant growth in the use of APIs, particularly for instant bank transfers, powered by open banking. “This isn’t just apparent in fintech, as there is a shift to embedded finance driving change across many verticals, but fintech has a chance to lead and show how it can be successfully done,” she said.
The report said blockchain, a buzzword for a couple of years now, will be used more and more in smart contracts and for privacy and confidentiality.
Richard G Brown, chief technology officer at blockchain supplier R3, said the convergence of blockchain and confidential computing will emerge this year.
“It will be the table stakes for anyone processing other people’s data in a few years’ time, but those who master it in 2021 will enjoy an amazing period of competitive advantage as the only ones in their industry who can make data security promises to their customers that their competitors could only dream of,” he said.
The survey found that the influence of low code will depend on the attitude of fintechs towards development.
“We see low code being adopted across financial services and beyond,” said Teodor Blidăruș, CEO at FintechOS. “Developers are irreplaceable, and low code means they can tackle the challenges only they can solve. Low code is undoubtedly the future of development within businesses, enabling them to keep pace with the market.”
Meanwhile, edge computing, which pushes computer processing to the edge of the network and means that decision-making based on IoT and data can be made in real time, is still mainly understood by those closest to the technology.
“Edge computing should be part of the toolset, as fintechs evolve to use the best solutions to underpin what they are doing,” said Blidăruș.
“Crucially for 2021, the fintechs that start thinking about this now will remain two steps ahead of incumbents, especially those who are only now getting to grips with cloud – and one step ahead of rivals who see the cloud as their final destination.”