The fintech infrastructure stack as it exists in early 2024 is the product of a decade of parallel development driven by regulatory change, investor capital, and the specific failure modes of legacy financial institution technology. Each layer was built to address a specific gap: Open Banking aggregators for bank connectivity, payment initiation providers for account-to-account payments, e-money programme managers for card issuance, Banking-as-a-Service platforms for current account infrastructure, KYC and AML point solutions for compliance automation. The result is that a fintech company or an enterprise SaaS platform building a financial product in 2024 integrates with somewhere between five and twelve separate infrastructure providers — each with its own API, its own contract, its own reliability characteristics, and its own commercial relationship to manage.
This fragmentation was rational during the build-out phase: each layer needed specialisation to develop. But the switching costs that once protected point solution providers are eroding as the infrastructure matures. The Open Banking connectivity problem is now largely solved — multiple well-capitalised aggregators provide reliable connectivity across the major UK and European banks, and the APIs they sit on top of have reached a standard of consistency that makes switching between aggregators a meaningful option. At this stage of market development, the platform that can consolidate multiple infrastructure layers behind a single API becomes compelling to a buyer that is managing — and paying for — five separate vendor relationships. The consolidation thesis is not about making infrastructure simpler to build; it is about reducing the operational overhead of managing a fragmented supply chain.
The segments most exposed to consolidation pressure are the ones where point solutions have achieved product-market fit but not deep integration into their customers' core architecture. Identity verification is a clear example: the market has several well-developed providers with overlapping capabilities, and the enterprise buyer who currently uses one provider for document verification, a second for biometric authentication, and a third for ongoing AML screening has a straightforward cost and complexity argument for consolidating to a single orchestration platform. The consolidated platform earns a lower margin per check than any of the individual point solutions, but it earns revenue across the full verification workflow and captures the relationship durability that comes from being embedded in a core compliance process.
We are cautious about one version of the consolidation thesis: the "super platform" narrative that suggests a small number of Banking-as-a-Service providers will eventually host all financial infrastructure capability behind a single integration point. This is architecturally attractive but commercially risky for the customers who depend on it. A financial services business that has moved its entire technology stack into a single BaaS provider has also concentrated its operational and regulatory risk into a single counterparty. If that provider faces FCA scrutiny, a platform outage, or a commercial failure, the impact on the customer is existential. The consolidation that we expect to see will be partial and layer-specific — consolidation within the identity verification layer, within the reconciliation layer, within the compliance reporting layer — rather than full-stack consolidation into a single platform that owns all financial infrastructure.
The investment thesis this generates is focused on the orchestration and consolidation layer within specific infrastructure segments rather than on a general-purpose BaaS play. The companies that can aggregate the outputs of multiple point solutions — reconciling data across payment providers, normalising identity signals from multiple verification services, aggregating compliance reporting data from multiple product lines — and present a coherent view to the enterprise buyer above them will capture consolidation value without requiring the customer to move away from the underlying specialist providers they depend on. This is the model we have backed in several portfolio companies, and it is the model we expect to see more of as the consolidation wave moves through specific infrastructure segments over the next few years.