Watch these 12 trends in FinTech in 2020

Posted by Stephanie Organ on 19-Dec-2019 09:44:39

In AI use case, FinTech

As the decade turns to 2020, you may be wondering what’s in store for the FinTech industry. Although threats from cybersecurity have seen a sharp rise in recent times, this will act as a driving force in the industry not a downfall. FinTech and AI will continue to go hand in hand as the industry powers a stream of new services and AI applications. Global FinTech investment has been steadily increasing, with the only lulls in investment matching the overall trends of the investment economy.

While FinTech has been a disruptive force in the financial world, the response from many banks against these potential competitors has been to invest in and collaborate with them. Banks need to keep themselves at the forefront of tech, so keeping their potential enemies close reduces the risk of those competitive forces in the market from FinTech companies.

FinTech2020_4

A big goal of the FinTech industry is to increase accessibility and convenience, creating customer centric services, often focusing in on one specific service that a company can deliver to a high standard. FinTechs have taken off by creating such specific services that appeal to certain markets, including those that could not previously access financial services. The industry continues to power along these lines, turning to alternative forms of data to tailor new products that reflect the financial lives of customers not previously targeted, and serve a segment not previously represented, despite the perceived risk.

As FinTech continues to make a splash into 2020, here are some of the trends that we can expect to see in the coming years.

1. Regulation Technology

RegTech has seen significant growth in the last few years, establishing a position of importance in the FinTech world, which will only grow stronger with the ever increasing demands that appear in the financial world. With so many regulatory processes still occurring manually, the industry has plenty of room to grow. As regulation is one of the largest overhead expenses for businesses, who wouldn’t jump on the chance to streamline this process, saving time and money?

2. The Rise Of Decentralised Finance

Decentralised Finance (DeFi) is a big deal when it comes to accessibility as new monetary systems get built on public blockchains, rather than around centralised institutions, removing traditional barriers, costs and delays. DeFi is becoming increasing significant as the proportion of the world’s population that don’t have access to financial services slowly shrinks as the percentage of the world’s population who have access to the internet grows. This previously unserved sector now has a greater chance of representation as things like cheaper smart phones give way to financial accessibility. There are huge opportunities in this space to help level the global playing field.

FinTech2020_1

3. Institutional Adoption Of Cryptocurrency

With lack of regulation around cryptocurrencies, adoption by institutions has been slow, however interests are rising. With some professional traders beginning to enter the space, we can expect many more to follow suit in 2020, particularly as regulations catch up in this area. Demand continues to push more advanced institutional-grade custody solutions produced by crypto-native currencies.

4. Crypto-To-Cash Conversions

As general and institutional interest in cryptocurrencies rises, so does interest in how to cash out on them. We can expect to see new products emerge to assist accessing and exchanging the currencies, particularly before the regulations in this area toughen up.

5. Large ‘A’ Rated Life Insurance Carriers

FinTech has had a huge impact on many industries, but when it comes to insurance, it’s just getting started. FinTech has the potential to improve efficiency, speed up and simplify underwriting and writing of new policies, reduce costs, and improve the customer experience, along with greater inclusivity in 2020 and beyond.

6. Increased Co-Development And Joint Ventures

As FinTechs become more widely accepted as a replacement for proprietary legacy systems, we can expect to see more co-development and joint ventures appearing, which empower sectors and industries previously restricted by inefficiencies and expenses. Banks are also tuning into FinTech driven joint ventures to keep up with technological advances.

FinTech2020_2

7. More Partnerships Among FinTechs

While other parties see the value of partnerships with FinTechs, FinTechs are also seeing the value of pairing up among themselves. Financial technology companies often focus on delivering one service to a high standard, part of what lends them to partnerships, but by partnering with each other they can remain competitive and offer a broader range of services. These partnerships may pose more of a threat to banks in coming years.

8. Non-FinTech Players Entering The Space

Unsurprisingly, other players such as retailers and tech platforms are eyeing up the success of FinTechs in recent years, and want to cash in, too. For them, FinTech poses an opportunity to satisfy more customers and grow their customer base. There’s plenty of room for all in this industry, as large FinTech players branch out into other areas of finance such as lending to cover more ground.

FinTech2020_3

9. Financial Health All-round

As a common goal, several FinTechs prioritise the proliferation of financial health. Financial health is a global problem spanning all ranges of income, though it tends to be more of an issue in lower pay bands where saving may not even be possible. The goal of FinTechs in this area is to offer services that allow customers to save, borrow, invest and plan in order to stabilise their financial health. There are already many players on this market, but we expect to see it grow further as the decade rolls over.

10. Use Of FinTech For Protection

Remaining on the theme of FinTech for good, solutions are arising to protect vulnerable consumers, whether financially inexperienced youth or out of touch senior citizens, that could be at risk from financial fraud. New technology is on the rise for prepaid cards that can identify and block suspicious actions.

11. Simplified FinTech Products

Many FinTech projects are focused on simplifying processes, however there is further room for simplification and consolidation of FinTech products in order to satisfy customers and keep ahead. A large part of this is expected to come from cross overs form the retail industry, offering services such as turnkey mobile payment and processing systems.

12. Robotic Process Automation

Robotic process automation (RPA) demonstrate undeniable gains in finance in particular. The use of bots can assist record and transaction maintenance, calculations, accounts receivable automation and query based tasks, but they have the potential to assist in so much more. Since almost anything can be automated, there are huge gains to be had in this area, freeing up agents to focus on more tasks that require more skill or attention, such as client support.

The FinTech industry doesn’t show signs of slowing down, and banks and other players will have to keep a close eye on these trends in 2020 to avoid being loosing market share to innovative FinTech creatives.