Across an ever-widening, highly funded global field of fintechs, several major themes are emerging in the latest innovations of banking and financial services.

Business analytics and market intelligence firm CB Insights whittled down a pool of more than 17,000 companies to produce its fourth annual Fintech 250 list of “most promising” private fintechs. They were selected based on a mix of data and scores from Mosaic, CB Insights’ algorithmic growth potential evaluator.

The 250 fintechs were grouped into 19 categories, and several overarching business trends stood out, including three in banking and financial services: payment processing and networks; cryptocurrency; and core banking and infrastructure.

1. Payment processing

“The COVID era has proven to be a seminal moment for payment digitization,” Oliver Yu, an analyst at CB Insights, said in a webinar last week. Customers shifted from cash to card payments during the pandemic, while e-commerce grew, he pointed out.

However, “massive opportunities” in payment innovation remain, Yu said, pointing out that 64% of mid-market business-to-business (B2B) payments in the U.S. are initiated using checks.

“It’s really expensive, it’s manual and it’s fraud-prone,” said Yu. “A lot of B2B global commerce still relies on manual and opaque processes.” Payment challenges range from global remittances and checkout solutions to bill payment and invoicing.

Highlighted fintech: Balance

Balance, a newcomer to CB Insights’ list, provides consumer-type checkout experiences for business marketplaces, allowing suppliers to offer buyers payment methods like credit cards, ACH transfers, wires or checks.

“Balance takes care of the manual aspects of the checks, so from a supplier perspective, they don’t have to worry about the reconciliation,” Yu said. He noted that B2B payments are traditionally “very manual, very piecemeal” and that Balance has pre-built integrations for its technology with e-commerce platforms like BigCommerce and Magento, as well as customer relationship management software like Salesforce.

2. Cryptocurrency

Fintechs are also focusing on cryptocurrency. “Crypto is definitely making its way into the mainstream,” Yu said. One thing that’s been “really striking,” he noted, is corporate discussions about custody of digital assets and crypto, as well as institutional interest in digital assets.

“Companies like Goldman Sachs are even mentioning these things,” Yu said. “This crypto boom has really kicked off a new wave of startups serving as a bridge to Web 3.0,” he added, which is next-generation, decentralized internet technology that employs artificial intelligence and machine learning in data interactions.

“Beyond retail crypto exchanges, we’re also seeing enterprise-focus custody and security solutions, tax tools, crypto investment data – and even further out down the innovation pipeline are DApps [decentralized applications] and NFT [non-fungible token] marketplaces,” Yu said. DApps are programs operated on a blockchain system such as the underpinning technology of Bitcoin or Ethereum.

Highlighted fintech: Fireblocks

CB Insights called out Fireblocks, the provider of a platform that allows institutions to store, issue and tokenize digital assets that ” even offers insurance,” Yu said. “This company is building infrastructure to de-risk cryptos — move [them] to the mainstream — and allows companies to safely and securely engage with this new asset class.”

Fireblocks claims 500 customers, including some 70 banks such as Bank of New York Mellon. “This traditionally risk-averse group is able to participate because of the compliance and safety that [Fireblocks’] infrastructure allows,” Yu said. He added that Fireblocks has now facilitated the transfer of $700 billion in digital assets, “which is no small feat.”

3. Core banking and infrastructure

The limitations of legacy core banking systems are no surprise to those in the banking space, said CB Insights analyst Niall Williams. “It’s hard for these systems to communicate with each other – the data is often siloed and hard to access, and this leads to a ton of inefficiencies and manual work on the back end” and limits the customer experience, he noted.

Consumers want to access their banking info and other banking data, as well as apps and digital platforms they use for making payments and other banking needs.

“We see a lot of companies aiming to digitize, modernize – really open up the banking core infrastructure to not only automate and improve internal processes within the bank, but also to create better digital experiences for the customers,” Williams said, adding that opportunities in this area “are almost endless.”

Highlighted fintech: Alloy

CB Insights spotlighted identity-decisioning platform Alloy, which allows banks and non-bank fintechs to automate identity and risk decisions through an application programming interface (API).

“It’s most used for anti-money laundering [AML], know your customer [KYC] and other compliance needs that all banks undergo,” Williams said. Deficiencies in these operations can mean regulatory fines as well as damage to reputation, he noted, and AML/KYC operations traditionally are “very difficult and highly manual.”

Alloy is “trying to improve this process by using API technology to tap into multiple data sources,” Williams said. Alloy claims to work with 120 identity providers to help automate AML/KYC operations, which can reduce costs and make risk decisions more accurate.

Highlighted fintech: Treasury Prime

A final fintech CB Insights highlighted was Treasury Prime, another API-based platform that enables banking-as-a-service functions from account opening to payments.

“Think of a new fintech or even a non-financial services digital brand that can spin up a banking product for its customers using Treasury Prime’s API platform,” Williams said.

“Now, any digital brand wants to give their customer, say, an online checking account, you can easily add this product by leveraging Treasury Prime’s technology, and on the back end, they’ll handle all the necessary integrations and banking necessities to create a legitimate product,” he explained.

With core banking and infrastructure innovation, Williams noted, the goals are to increase efficiency, drive down costs and “almost more interestingly, [to create and offer] new use cases within the banking ecosystem.”