A new report has predicted that embedded finance - where FinTech becomes embedded non-financial specific products and services - will dominate the industry by 2030.

Tribe Payments interviewed 125 FinTech executives, with contributions from 15 industry leaders - including 11:FS, Bain Capital, Currencycloud, eToro, iwoca, Moneyfarm, N26, Onfido, Plaid, Thought Machine, Wirex and Zego - finding that embedded finance will change market structures and business models.

Payments are already moving in that direction with taxi applications and stores without checkouts removing the act of paying, and the transaction is automated in the background.

Embedded finance will see software companies - many of them big tech firms - embed financial services within their offerings to attract and retain customers.

The report suggested that as FinTech continues to be embedded into financial and increasingly non-financial products, people will no longer categorise it as its own distinct sector, just as no one today talks about the internet as a discrete market.

An overwhelming 86 per cent of those surveyed said FinTech innovation will continue to accelerate over the next decade, with only 14 per cent saying that innovation and change has peaked or plateaued.

Three quarters of respondents stated that there will be an increase in the number of FinTech firms, while 37 per cent said that the number is likely to double by 2030.

FinTech funding is also likely to change, with 60 per cent agreeing that investors will favour profitability over ‘moonshots’.

No respondents saw the success of FinTechs leading to the end of incumbent banks though, with 51 per cent claiming banks will become platforms that curate tech services for their customers, while 43 per cent think that FinTechs and traditional providers will simply exist alongside each other as they do now.

Just over a third (38 per cent) saw banks becoming ‘dumb pipes’, like the relationship between a mobile operator and WhatsApp or Netflix.

Less than one in 10 thought that BigTech firms have a chance of dominating the market completely, while 34 per cent said that BigTech will become aggregators of banking services.

The three most important technologies today - Open Banking, data analytics and blockchain - will not be the most important in 2030, according to the research, suggesting they will be replaced by machine learning (71 per cent), the Internet of Things (49 per cent) and automation (40 per cent).

These are all technologies that will support embedded finance, where non-financial services businesses can give their customers access to financial services and payments, often in an invisible, seamless way.

Alex Reddish, chief commercial officer at Tribe Payments, said: “While every contributor has their own vision, the consensus is that FinTech will continue to evolve, with innovation accelerating, and just as we no longer think of online businesses - because every business is online - embedded finance will become so ubiquitous that FinTech as a category becomes less and less useful.”

Simon Taylor, co-founder of 11:FS, added: “The question now for FinTech is how to go from the creative teenage phase to the productive and profitable phase – do they move down to be a platform? up to niches and higher per customer revenue? or move left and right in terms of product offering?

“Regardless of the path taken it is my firm belief that FinTech is only one per cent finished, and the next decade is going to be its most exciting and challenging yet.”

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