2015 was arguably the year of Financial Technology and 2016 has
certainly started off with a bang with more than 5,000 FinTech startups in the
world; undoubtedly making FinTech a hot topic. While 2015 was probably the best
year for venture investment, 2016 will be a crucial year for the future of
FinTech, which will create new solutions that might change the financial
services industry forever. In a sign of just how significant FinTech has
become, global funding of FinTech companies tripled to an estimated value of
more than $ 30 billion. According to CBI insights it is forecasted to reach $
45 billion by the year 2020. FinTech
companies are no longer mere startups; some like Lending Club have popularized
FinTech as an attractive industry. Others giants such as Paytm, MobiKwik
and BankBazaar have become household names.
In fields such as online lending, money transfer, and credit
ratings, FinTech companies are breaking the control of financial services’
largest players in novel ways. Financial Technology startups have become
attractive, for numerous reasons. Some FinTech companies are developing
next-generation robo-advisors that better define savings solutions on the basis
of goals and risk appetite whereas another innovator has engineered a new technique
for capturing and sifting data to spot fraud and monitor trading activity. As
we head deeper into 2016, here are a few emerging FinTech Trends to keep on
your radar:
·
Collaboration in Technology
2016 will be the year of mass market adoption and
consolidation. Surveying 10,131 digitally active consumers in Australia,
Canada, Hong Kong, Singapore, the UK as well as the US, a study confirmed that 15.5%
have used at least two FinTech services. The result also suggested that the FinTech
adopters include young and higher-income customers. Respondents between the
ages of 25 and 34 years old used at least two FinTech products (25.2%),
followed by those aged 35 to 44 (21.3%), and those aged 18 to 24 (17.7%). Early
FinTech adoption is being led by a high-income populace, but is set to develop
across all demographic groups.
·
Artificial Intelligence and Wearable
Technology
2015 has been a year of many exciting technology innovations,
and there isn’t any slowdown in the year 2016 with underlying technology setting
off. With the ever-shrinking attention span of the millennial, 2016 could be
the year where, commercial applications through
machine learning start to surface in the financial services industry. The year is expected to see a greater attempt by
FinTech companies to augment their services with the help of wearable tech. 82%
of financial professionals believe that smart watches will facilitate financial
transactions in the future while 72 percent of these professionals have
wearable applications on their three-year road map. With the demand for greater
computerized monitoring, it’s clear that machine learning is here to stay. People
will gradually embrace wealth management solutions like robo-advisors and simultaneously
companies will influence technology to make the processes even easier and handier.
·
Security Management
The biggest issues for the year 2016 are transparency and
security. Security within financial services is one of the most talked
about trends and holds the power to affect us adversely. Several innovative
technologies are being introduced that enhance protection with new integrated
machine learning techniques. With mobile banking and payment technologies
growing at record-breaking speeds, security management is growing at corresponding
paces to keep up with such innovative products. Today’s mobile-first customers
expect immediacy, convenience as well as security to be integral to financial
services. Security and privacy are vital to galvanize support for emerging
forms of digital transactions, and are critical components in creating an
atmosphere of trust for new payment paradigms.
·
Blockchain Technology
2015 was the year when banks started to discover blockchain and the
upcoming years are predicted to see its institutional adoption by the banks. Blockchain
technology has the potential to change the way our world works. While it is
impossible to predict how the tech will evolve in future, the potential of
the blockchain lies in tasks like remittances and currency alteration, cloud
bank processing, as well as insurance. Blockchain technology will be able
to provide public accountability and help expand trust and secure easy adoption
in the financial services’ sector.
·
Change in Traditional Banking
The trend of
collaboration between young FinTech companies and traditional finance services
are expected to be the key theme of the future. Rather than competing, banks
are now looking to plug up gaps by working along with FinTech firms. As recent collaboration
announcements indicate, the banking incumbents are finding smart ways to align
with financial technology partners in order to meet the needs of millennials
through referral as well as licensing partnerships. Banks want to better serve their customers, and reach new customers
simultaneously because online lenders benefit from banks bringing customers and
capital to their platforms.
With innumerable
opportunities comes along few challenges. To overcome such issues efficiently,
regulatory bodies are coming up with several rules and regulations for the
FinTech Companies.
Watch out for the experts discussing ‘Regulations
that make it conducive for fin-tech’ at Mint FinTech presented by Capital First on 30th June, 2016
in Bangalore. Catch us Live at www.livemint.com
