Four Trends In Fintech And How They’re Modernizing The Consumer Experience
Forward-thinking companies like Orum are building and leveraging fintech like never before—driven by broad advances in enterprise technology and greater access to financial services and data once reserved for legacy banks.
As an investor, including in Orum, I’ve been able to help drive this progress, and I’ve seen firsthand the benefits that fintech solutions can offer when mobilized effectively.
In this article, I explore four trends that demonstrate how fintech innovations are streamlining the user experience and transforming the financial landscape.
1. Embeddable Infrastructure
Fintech was once a business model unto itself. Now, companies across industries are embedding pre-built fintech solutions into their software, delivered via modern APIs.
Embeddable fintech is a fast-growing market, expected to reach nearly $230 billion in revenue by 2025 in the U.S. alone—up from $22.5 billion in 2020.
It’s easy to see why. In our on-demand economy, consumers, small businesses, and even enterprises expect instant, seamless financial experiences. In turn, software companies are increasingly relying on fintech infrastructure to provide embeddable solutions that allow them to deliver services like payments and lending directly through their digital platforms—without building the infrastructure themselves.
Companies like Finix (a BCV investment), Tilled, and Payrix offer embeddable payment-processing tools that enable businesses to accept, manage, and monetize payments in-house, rather than refer users to a third-party provider like PayPal and lose out on the related revenue.
Another company BCV invested in, WiseTack, offers embeddable consumer financing solutions that process loan applications instantly at the point of sale. Merchants get paid right away, while customers can choose from a variety of payment plans.
Embeddable fintechs like these make it simpler and more affordable for consumers to access products and services while opening businesses up to a whole new customer base.
2. Vertical Software With Embedded Fintech
Breakthroughs in embeddable infrastructure have empowered vertical companies to apply fintech innovations to their specific industries.
One example is Passport, a SaaS provider that partners with transportation authorities to manage public parking. Passport uses Finix to create a digital wallet for each user, who can then pay for and monitor parking sessions without leaving the Passport app. Another example is Toast, a verticalized platform for restaurants that has since embedded payments and lending through its Toast Capital offering.
Not only does this reduce friction and improve user experience—boosting customer satisfaction, loyalty, and lifetime value—it allows Passport to own the financial services that drive its business and to solve industry-specific issues in-house. When users extend their parking, for instance, Finix allows Passport to group charges into a single transaction, instead of generating multiple checkouts, card authorizations, and fees.
As businesses mobilize fintech capabilities across new verticals, every company will have the potential to be an innovator in the financial sphere—making the market for fintech richer than ever.
3. Applied Machine Learning
Public-sector initiatives like open banking and private players like Plaid have enabled user-permissioned access to financial data like payroll and cash flow. Now, companies are analyzing this wealth of information through the latest machine-learning techniques to gain deeper insight into consumer behaviors and business metrics.
Predictive capabilities are a game-changer for any business, but they’re especially valuable in the high-stakes finance industry. Some studies estimate that machine learning in fintech was worth close to $8 billion in 2020 and expected to top $26 billion by 2026.
Take OnDeck, a digital platform for small business loans. OnDeck uses machine learning to holistically assess applicants’ creditworthiness—taking into account nontraditional factors like cashflow, public records, transactional reports, and social data—and predict their ability to repay a loan.
Without such tools, lenders rely on manual data collection and predicate underwriting on business owners’ personal credit scores—making lending decisions inefficient and inequitable. Studies have consistently shown how BIPOC-owned businesses are disproportionately denied loans due to underscored credit reports.
Machine learning thus has the potential to democratize access to capital while curbing risk for financial institutions.
4. Intelligent Infrastructure
Some pioneering companies are combining the above trends to address deep, structural issues. Visa made big news recently by buying Tink, a UK company focused on open banking via a data and payments rail. Also in the UK, GoCardless has been a leader for years in allowing companies and software platforms to leverage bank transfer rails to collect payments. In the US, moov is using open source libraries to allow developers to accept, store, and disburse money: think Banking as a Service without all the middlemen.
Earlier this year, Bain Capital led the Series A round for Orum, a startup that’s reimagining how most money—to the tune of almost $62 trillion a year—moves in the U.S.
Today, you can get groceries delivered to your door in minutes, but it can still take three to five days to transfer your own money between accounts. This is largely due to payment rails’ outdated infrastructure, which lacks the ability to verify account balances in real time and authorize speedy transactions.
Orum is leveraging embeddable fintech and machine learning to tackle this problem at its core.
The company’s first product, Foresight, is an embeddable API solution that uses proprietary intelligence to assess the return risk of a transaction before it occurs, allowing financial partners to make smarter, faster transfer decisions.
A second product, Momentum, does for liquidity what Amazon does for same-day package delivery. It doesn’t matter how your money gets from A to B; it just matters how fast. Momentum enables 24/7/365 money movement, optimizing for speed, cost, and risk across payments rails like ACH, RTP, and eventually crypto and FedNow.
Bringing multi-rail payments up to speed with our instant economy through Orum’s automated and data-fueled decisioning engine revolutionizes how consumers and businesses send, receive, and access money.
Given this trajectory, it’s clear that fintech will continue to become deeply embedded in almost every aspect of the digital tools we use every day, making it simpler and faster to access financial services when and where we need them.
This will only be possible with the continued development of embeddable infrastructure, adoption of machine learning, and efforts of companies like Orum that combine these forces to build a broad foundation that drives innovation and unlocks financial access for a new generation of users.