Industry trends update: the future of payments infrastructure

Fintech has dominated the headlines for some years now, but potentially faces an uncertain future according to Forrester's 'The Future of Fintech' report¹. Forrester anticipates a future for fintech that won't result in full market upheaval, but will involve major shifts that reshape relationship models, operating practices, paths to market, and more.

In particular, the research firm expects that between 2027 and 2029, many traditional financial institutions will start using fintech ecosystems as new distribution channels. The report comments: "Only firms that combine the problem-solving approaches of fintech with the discipline and business models of traditional financial institutions (FIs) will achieve sustained growth."

And what of fintech firms themselves? Forrester predicts that serving incumbents will enable many B2B fintechs to achieve profitable growth. It expects them to play roles in financial ecosystems that let traditional FIs go on doing what they've been doing for decades (or even longer).

Small and medium-sized banks that may lack the resources to rebuild infrastructure are set to benefit from a tactical shift by some core banking service providers, says Javelin Strategy & Research in its 'Coexisting in Payments' report².

The report notes that some service providers are starting to partner with financial data providers and other third-party fintechs to give their bank clients access to capabilities they can't necessarily scale on their own. Such partnerships involve using middleware solutions (software that acts as a bridge) to connect third-party systems with banks' core platforms. Doing so offers smaller banks the technological firepower they need to offer their customers more features and better experiences and compete more effectively with larger FIs.

Javelin also believes these partnerships will lay the groundwork for smaller banks to handle alternative and emerging payment methods—such as account to account (A2A) and instant payments—as they allow customers to share their data with third-party apps. Javelin suggests that meeting expectations for these and other services can help smaller banks increase customer satisfaction and boost profitability, saying:

"Leveraging the third-party connections facilitated by a bank's core provider or platform will be a force multiplier for providing the innovative technology consumers increasingly seek."

The report further indicates that partnerships can lead to more cross-selling opportunities for services such as fraud mitigation and loan decisioning. The ability to tap into services like these could help smaller banks better monetize some of their traditional business lines.

As the financial services ecosystem continues to get more complex, Visa Acceptance Solutions is here to help simplify it so merchants' payment solutions just work. We're all about facilitating connectivity and partnerships across the ecosystem: on the Visa Acceptance Platform you'll find an ever-expanding body of tech partners, ISVs, and fintechs ready to partner with banks and FIs to create innovative solutions. To see who we're already working with, take a look at our newly launched Partner Directory, which will continue to grow over time.

A single connection using Visa Platform Connect is all that's needed to tap into the partner network and the modular payment, fraud management and other services available on our platform. Visa Platform Connect takes away the cost and complexity of building and managing separate integrations and makes it quick to get connected.

As well as helping underpin partnerships, Visa Acceptance Solutions supports the industry's move towards cloud services. An IDC Survey Spotlight³ confirms that payments are a key workload for banks' cloud strategies, with 31% already using cloud for at least some of their payment processing workload, and a further 49% expecting to do so over the next 12 months. Our Visa Acceptance Platform can meet banks' needs, being securely cloud hosted with high availability for payment processing—at or above 99.999% uptime⁴.

We'd love to talk with you about these and other trends and innovations in the payments industry. Feel free to reach out and discover how Visa Acceptance Solutions and our uniquely open payments platform can help you build the future of payments.

And look out for our next Update for more news and commentary.