When we think about the future, it can be easy to get caught up in the big fantasies: colonies on Mars, robotic butlers, flying cars. However, as exciting as those might sound, the real, life-altering advances of the future aren't going to be the wild sci-fi based inventions that are decades, if not centuries, off. But the tangible, practical innovations that'll make life simple.

Stephane Wyper:

Where I get excited about the future of financial services is, it's going to extend into entirely new industries today that may not traditionally have been served directly with financial service capabilities. So we look at industries like insurance, like healthcare, there's financial flows that sit in those environments. And I think that's where the end user, or the end customer, is looking to access those financial service needs without leaving that industry environment.

Erin Dangler:

And unlike the science fantasies, the technologies of tomorrow that'll really make a difference won't be the reserve of the rich elite. But will be tools for everyone, lifting society as a whole.

Stephane Wyper:

How do we build solutions and services that really represent the societies that we serve? As we focus on building next generation of financial capabilities, we have to think about which elements of society today may not necessarily be served appropriately with, or have access to the tools that they need, to make sure that they can continue to develop at the pace of every part of society.

Erin Dangler:

This is Financial Futures, the podcast that charts the frontiers of fintech innovation. In this series, we'll be looking to the future to find out how fintechs and financial institutions are gearing up and developing next generation innovations to meet the challenges and needs of tomorrow's world. I'm your host, Erin Dangler. And in today's episode, we'll be gaining an understanding of the products and services shaping fintech and financial services into 2030 and beyond. We'll reveal what the third generation of fintech will look like. And get an insight into how these advances will benefit customers and organizations alike. Plus, we'll hear how these developments will augment brick and mortar institutions, and help to deliver the services customers need, when and where they need them most. And joining us today, as we peer into the future, is SVP and global head of venture investment at FIS, Stephane Wyper. But before we can find out where we're going, we need to find out where we've come from. So what's changed over the last 30 years?

Stephane Wyper:

I think it's important, as we think about anticipating what we see happening in the future, is really to take a step back. And say, "Where have we come from? What's the evolution that we've seen within the industry?" I've spent the last, probably, 20 plus years in what's called fintech. I think about it, really, in a few different phases that I've seen. And it started really coming out with the first wave of the.com, where I call that generation one of fintech. Where it was really the first time that technology was being used to solve the needs of financial institutions. And how they deliver their services and products using technology in a different way.

Then we moved into 2010 and the last decade, and that's where I call this the generation two or gen two of fintech. Where we had a number of emerging players that came out that benefited from the fact that technology had become much more evolved and sophisticated. Where they could build these new experiences within a cloud environment using APIs. And focusing on just delivering great experiences in a much simpler way. So that's been the journey that we've come through is this evolution over the last 20 years of where we've seen fintech start from, and where it is today. And I get quite excited about what we think the next decade's going to look like.

Erin Dangler:

So what is that? What is that gen three? So you've talked about gen one, gen two. Is that the future, or is that where we're going in this conversation?

Stephane Wyper:

The benefit of generation three is this idea of, okay, we have these two parts. This generation one that was using technology infrastructure for banking and other financial institutions. Generation two, digital natives that emerged, creating great experiences. Where I think we're big believers that we're actually going to see this generation three as being the best of both worlds. That you'll have really scalable infrastructure that's delivered with great experiences. So really, taking the best of both parts of the last two decades and fusing them together. And I think we're increasingly seeing that as an opportunity where financial services is evolving. It's becoming much more complicated. The need for technologies to be secure, scalable, global, is critical. But also to deliver them in a way that is designed for the end user in a really simple, interactive, digital first experience.

Erin Dangler:

So how have all of these changes... It's really remarkable, when you think of all that's happened in the last 22 years. And looking further back, how long it took from a telegraph and Morse code, to send money to the first ATM in, what? 1967. And then the rapid pace of change that we're seeing now. I can only imagine where we're going to be in 2030. But how have these changes influenced the consumer? It's like feeding the consumer and then the consumer feeds the innovation.

Stephane Wyper:

I think there's this interesting dynamic of the ability to anticipate consumer readiness. I'm a big believer in you build for the end consumer first. And you build experiences and technologies that are better than what they use today. I mentioned I started my career in the early 2000s in the UK. And there were examples of banks that were online banks, so egg.com was an example of those, that didn't quite see the traction from consumer. And I think that was partially because the technology wasn't at the same scale it's at today. But, also, we as consumers probably weren't ready yet to interact with a financial institution in only a digital environment.

So I think this parallel of consumers are evolving and that's created the right time for fintech to really, truly be adopted and hit the right market. But everything has to be built for what the consumer expects. And I think you'll see that as we talk a bit about where we see the new horizons of financial services and this follow the consumer model. To wherever they're engaging, through whichever provider, their expectation is that my banking, my payment, my lending, my investment, needs to follow me into that journey. So the consumer or the end user is the most important part of the fintech puzzle. It's why we build solutions that, hopefully, are used by them.

Erin Dangler:

Well, I know that my ways have changed, especially, probably by a lot of people, during the pandemic. That's when I saw the biggest shift in my own use. But I'm sure that might have been different for different generations, for younger generations. Although, I won't say my age.

Stephane Wyper:

Yeah. Maybe to give you an example, we think about not just fintech through a lens of financial services, but also on the commerce side. So even just the impact of what we've seen through COVID, how it changed the behaviors that we had around how we shopped. The last two or three years feels like a decade. But we, almost overnight, went from an environment where most of us were shopping in a physical world environment and, suddenly, were transitioned to a model where we were interacting and purchasing digitally. That became a requirement. And you think about just those are the things that can reshape and change behavior very, very quickly, and really drive rapid adoption.

Erin Dangler:

Just to throw in a personal example here, we sold our daughter's old car two weeks ago. And the person paid in cash and we were like, "What do we do with this?" We don't go to a brick and mortar bank, at all. So it was a conundrum. But in speaking about this, so you're talking about as we move toward 2030, the next generation, you've already talked about how APIs and the cloud have played a huge role in breaking down the silos and the siloed process. And making this integration really a reality. What role will APIs and the cloud play in this move toward the future?

Stephane Wyper:

I find myself, I do this sometimes, where you fall into buzzwords and terms like cloud and API led. And at the end of the day, I try and simplify them down even further to, what does that actually mean, just in tangible everyday life terms? And it basically means the way that different companies may access the financial services that they need. And how can you do that in a way that's, again, very easy to integrate and easy to adopt? So I think that's where the benefit of building things in the "cloud environment" made things much more scalable. And, also, much more cost effective versus building them on traditional technology infrastructure. Obviously, FIS has really invested heavily around building our own cloud capabilities. The API element is really just the way that I could connect into these financial service capabilities. So I think we see a world which is going to continue to evolve, all focused on this idea of further simplifying the experience. And how do I make it very, very easy to integrate and adopt whatever banking payment lending service I might need?

One of the things that we also look at is, we live in a world where there are a finite number of developers. So we have seen this push, especially from startups emerging, saying, "We're going to solve that need." We're going to essentially say, "How do we create capabilities that can be integrated without any developer requirement?" Because there's only a certain number of bank developers. And as we see financial services expand into new areas, that can be a gating factor. So we're seeing even the concept of APIs move beyond connectivity to a world where, how do you very easily plug in capabilities you need without any developer talent whatsoever?

Erin Dangler:

So I saw this phrase, developer-less integration. Is that what you just explained? Can you explain it even more simply? To me, it sounds like a driverless car.

Think about it to the terms of, if I'm a small business and I'm looking to be able to provide banking or lending capabilities to my customers. Today, there's probably a requirement for that business to say, "I probably have to have a technical resource that I employ, that understands all the intricacies of how to integrate and connect with all these technology capabilities." That becomes a dependency for that business to grow. It means in order for them to grow and scale and offer all these wonderful financial services, they're going to have to go hire more people to understand how to do that development work. So where we've seen innovation take off is capabilities that really remove that requirement.

So in the same way that my wife has a small business, she used Squarespace to open up her own website. So she's not a developer, she's a filmmaker. But within 10 or 15 minutes, she was very easily able to create and design her own website and push it live. I think that's where we're seeing the future of banking become. That same model of simplicity should be applied to how I enable people to open a bank account or be able to access a loan. That's what we mean by developer-less, it's trying to replicate the model of the Squarespaces of the world, how easy it is to create your own website. Banking should be the same.

Erin Dangler:

The key word in the future of fintech is simplicity. Simplicity, not just for the end users, but for organizations too. The ability to deliver new products to customers will, of course, be important, but bringing those products to market at speed will be critical. And with fintechs and institutions moving more functions to the cloud, those quick, easy, developer-less GTM strategies certainly aren't a thing of science fiction. However, the groundwork paving the way for this kind of capability isn't here just yet. So what else needs to change?

Stephane Wyper:

Comes back to technology being evolved enough that you can develop and create this level of simplicity in a cost effective way. So this continued use of things like cloud capabilities. The other part is also just standardizing to create this world where you maybe remove dependencies on having developers, if everything you require is customized and everything has very specific needs. So I think the other element is being able to standardize a lot of the core financial service needs, is going to be really, really important as we continue to drive. And then, obviously, customizing becomes the exception, not necessarily the rule. So, probably, my best way to answer that question is the continued evolution of the infrastructure we see becoming just more cost effective and secure. Combined with trying to find opportunities to standardize these technologies as much as possible.

Erin Dangler:

So that's the technical piece of it, but what about culturally? How do we embrace these changes? Is it an attitude shift? Is it an awareness that we need this to happen?

Stephane Wyper:

This goes back to my earlier comment around where I get excited about the future of financial services is, it's going to extend into entirely new industries today that may not traditionally have been served directly with financial service capabilities. But, now, we're seeing a need to solve these friction points that exist around whether it's payment, or wealth, or money movement, or savings. So we look at industries like insurance, like healthcare, there's financial flows that sit in those environments. And I think that's where the end user, or the end customer, is looking to access those financial service needs without leaving that industry environment. Within whichever healthcare provider, insurance provider, a customer is interacting with, they should also be able to access their banking, their payment needs, through that same provider. And that's where it comes back to. When we see more of that demand, this new emergence of entirely new industries and customers, that will create this need to say, "How do you make it really, really simple to extend financial services into whatever channel, into whatever provider, that the end customer is interacting through?"

Erin Dangler:

So can you give me an example of a new industry that came out of this and created their own... Not their own fintech, their own financial capabilities?

Stephane Wyper:

I'll say every industry will become, essentially, an extension or an opportunity for financial services. We can fast forward to the future a little bit and talk about a world where, maybe, most of us are driving electronic cars. And where, maybe, one of the ways that we might want to pay for the power that when we're recharging our electric car, what if it's not through a traditional bank account? What if it's through cryptocurrency that I might own? So in which case, I, as a consumer, are going to have to make sure I can connect whichever wallet I use to hold my cryptocurrency into the vehicle provider that I'm leasing or bought my electric car through. So that's an example of where just the end consumer having more, an evolution of choice. And where they want to start using a more diverse set of ways to pay. That then requires a car manufacturer, like a Tesla, to think about, how do I integrate with different cryptocurrency platforms? How do I make that a mechanism that a consumer can use to pay? That's complicated today, but, again, that's where the opportunity is.

Erin Dangler:

And I'm just curious, with all of that opportunity, does it feel like some people are stepping into this world that shouldn't be? Because, to me, it is exciting but also sounds a little bit scary. It feels like everybody has the opportunity to do this. Will there be enough regulation? Does there need to be more regulation?

Stephane Wyper:

So maybe two parts there, I think. One is the question around the market readiness, will we see this takeoff at the same pace across every industry? No. It will be a sequencing and a phasing. And I think that's where... I always go back to, you want to solve for where the largest friction points are. And that's where we'll probably see adoption being driven the most. Where there's the most complexity today that we think, through new fintech or financial service capabilities, that can solve that need faster.

The other part, which is a really important part, which maybe isn't as exciting as talking about flying cars and other things, but all this innovation has to work hand in hand with security, stability, compliance. So I think you're starting to see that with governments across the world, really focus on making sure that they're keeping pace with the innovation that they see in their markets. And they're providing the regulation that protects their consumers, and that protects their businesses, in these environments. And I think that's where, again, one of the things I look at, is the benefits of FIS, is we are very secure, very scalable, extremely compliant. And I think that, for us, is one of the assets that we think is valuable, as we work across the ecosystem, is to provide that overlay of compliance and security. Especially as governments really focus on making sure that, as all this innovation happens, it's happening in a way that's controlled and secure.

Erin Dangler:

So again, putting on your soothsayer hat, what do you see happening that doesn't exist today, other than flying cars?

Stephane Wyper:

That is a great question. Talk a lot about embedded finances and other industry terms that's used in the new lexicon of innovation we're seeing happen. For me, I really like what the potential of that means, which is the ability for the end user to be served with the things that they specifically need, in whichever environment they're already in today. The old world of banking or payments or finance, you had to bring the customer to you. So you were expecting, if I'm a bank, the customer's going to come to my branch. They're going to come to my website to be able to access the services. The model's flipped. We're in a world where it's actually we have to follow the consumer or the user. We're going to where they already are today. So if they want to access their banking requirements in their flying car, banks are going to have to be able to build technology that allow them to meet that consumer in that environment. So, for me, that's that really fundamental shift of the relationship. That, I think, is something that's unique.

I think the other element that we see is this demand for context or personalization that all of us, as consumers, as businesses, have somewhat unique needs. And our expectation is that the services that we see, we receive, are designed to fit our individual requirements. And that's where we look at the evolution of technologies, like artificial intelligence and machine learning, as enabling technologies that will help create that more personalized experience. So banking services that Erin accesses are different than any of the services that Stephane has, but it's done in a way that's scalable.

Erin Dangler:

Do you see the end of brick and mortar banks, or legacy infrastructure? Or will it continue like this hybrid for a while?

Stephane Wyper:

In my former life, prior to FIS, I built and ran a global retail innovation business, another financial services company. And we spent a lot of time thinking about that same question, but as it relates to the end of physical retail. And I'm a big believer in the value of the physical experience. So my belief then, probably is similar to belief now, is it really isn't about an either/or, whether people shift from physical to digital. That we're actually seeing this convergence around it's all one experience. So whether I'm banking with a bank in a physical environment or doing it through my app, through my browser, through my Alexa home system, for me, that's just one experience. It doesn't really matter which channel.

So I think there is still value in the physical branch. I think the definition of what that experience is, is going to change. I could see a lot of the technologies that are being deployed on the retail side being equally applicable in the branch environment. So how do I make sure that my branch is available 24/7? Maybe I'm wrong, but I do believe there's still value in the physical branch. I do think there's a lot of probably refinement, consolidation, innovation, that's still possible there. And it's also just another channel that me, as a consumer, are going to be interacting through my bank with.

Erin Dangler:

Yeah, I would agree with you, that physical interaction is important. Although, I think they can go together, right?

Stephane Wyper:

That's right. It's the example you gave of somebody buying a car today still using cash. Cash is still widely used as a form of payment. We're seeing this movement towards digital payments, really, evolve at different paces, based on different countries, different regulation, different consumer patterns. But there are always still people wanting to use cash, in the same way that there are people that will still want to go into a physical bank branch. That's not going to be an overnight change. It's going to be an evolution.

Erin Dangler:

Despite the fact that customers will have better access to the products they need, no matter when or where they need them, physical locations will still play an important role. Because no matter how much fintechs develop and improve online services; embedded finance; and app-based functions, there will always be the need for a human touch. The only difference being that, in gen three, those experiences will be far more interconnected and unified. So even if the method of interaction has changed, the customer experience will remain the same. But to some extent, this omnichannel experience is already available. So what else will the third generation of fintech bring?

Stephane Wyper:

Again, it comes to life when all of us are accessing the host of banking payment needs that we have, through a multitude of channels, in a way that feels personalized, feels that it's been tailored towards my specific needs. So that's the end user experience. I think that's the across channel, consistent experience, outside of maybe not having to interact directly with my bank or my other payment provider, that I can access it through my car or other forms. That's the universe, I think, that we'll see from an experience standpoint. And then, the ability to deliver on that experience. That's where we see the change happening on how banks and other financial institutions are reshaping their technology capabilities, to be able to deliver those experiences. And simplify how I integrate and connect whatever services I have into whatever environment. And I think, frankly, that is where FIS as an ecosystem player, plays a critical role in working across the industry, to help that innovation move forward, again, efficiently but also securely.

Erin Dangler:

Well, so can you speak a little bit more about that, about what FIS is doing from a venture investment perspective, to promote this next generation?

Stephane Wyper:

I feel very fortunate to have a fairly unique window into the evolution of fintech, as we see it happening live. And I think where we've used venture investment is really as just another tool that we have as a company to be able to engage with the innovation that we see happening outside of our own four walls. We, typically, will do that through a few different ways. We'll look at where we can invest directly in certain startups that we think really have the opportunity to grow and scale, and that we can be beneficial for. We invest in venture capital funds that are in areas that, maybe, we wouldn't traditionally be able to see. But we think are important technologies that we need to stay close to, or in markets that are seeing rapid growth.

We build entirely new companies, outside of FIS, through our ventures dual relationships. And then, we also think about that future and try and translate what do we think are the implications of all these shifts that we're seeing? What does it mean for our business? What does it mean for our customers' business? So that, from a venture investment, that's the portfolio of tools that we're able to leverage as a way to make sure that we're able to help, not only accelerate our business and accelerate the innovation from really interesting startups, but also benefit our customers. And, ultimately, their customers as well.

Erin Dangler:

What are you seeing that's disrupting that along the way? What are the trends, moving into the future, moving into the next generation?

Stephane Wyper:

And I think, from an investment perspective, the last 10 years, through that generation two of fintech, there's been an infusion of capital. So investment dollars that have been made available to startups. And we've seen a lot more openness and a lot more available sources of funding. And that's really fueled the growth that we've seen in the past five or 10 years. And, by default, it's led to startups that have grown rapidly at very high valuations. We are currently in a very different scenario. We're in a period of what I call market correction, where we are really going to see a tightening of availability of funding. And that's going to require startups to think differently. Those startups that are used to having endless sources of funding for themselves to grow and focus on continuing to just drive growth, without necessarily focusing on building infrastructure and scale, and how to become profitable. That's changing overnight.

So we are seeing a discipline that's now being then placed on startups to say, you may need to think about how you use the money that you have in a much more prudent way. How you focus on building technologies that aren't just focus on how do I get as many customers as possible, regardless of whether I lose money to do that or not. And focus on building technologies that can become viable or long-term sustainable. So I think that's one thing I think is a current impact we'll see, is this period of correction. The availability of capital and investment dollars, or euros or pounds, isn't going to be as easy as it was five, 10 years ago. And I think, by default, it's just going to change the discipline that startups are going to need to have, as they try and build the next generation of fintech capabilities.

Erin Dangler:

So as we begin to wrap up this conversation, you've already shared your predictions for the future. In a perfect world, what would you like to see?

Stephane Wyper:

So I think the other element I think is important is... Well, two things. One is, how do we build solutions and services that really represent the societies that we serve? As we focus on building next generation of financial capabilities, we have to think about which elements of society today may not necessarily be served appropriately with, or have access to the tools that they need, to make sure that they can continue to develop at the pace in every part of society. So I think that, for us, is an element we look at as we think about investment in this idea of investing in technologies that really have a strong social inclusion, financial inclusion lens. So technologies that are not only built on certain segments, but really, actually, benefiting the entire society. And that we are not treating every member of society as the same, that we are actually, uniquely thinking about their specific requirements. So, for me, that's a really, really important element of strong intimates of financial inclusion and social goods.

And then, the other part is, we live in a global environment, that this idea of thinking only within our own borders has changed, and everybody is interconnected. So I think that's where I also look at the opportunity for us to stay connected into, maybe, parts of the world that we may not necessarily, traditionally, have thought would be relevant. But can now become relevant because we see this massive growth in fintech. And then understanding what makes a certain market different than maybe the US, or the UK, or France, or Germany. A lot of the markets we see in Asia-Pacific, as an example, fundamentally very different. But, equally, there's a lot of opportunity there that I think we have a role to play in helping serve.

Erin Dangler:

Stephane Wyper is SVP and global head of venture investment at FIS. That's it for today's show. Thanks for joining us. We'll see you next time for our season finale, when we'll be exploring the disruptive themes and key trends influencing future investments.