Top 7 Fintech predictions for 2020 and beyond

Fintech is evolving so fast and the Global investments in FinTech more than tripled in 2014, reaching more than $12 billion. It is a revolution which is changing consumer behaviour. Fintech industry is experiencing digital transformation, and we’ll soon see it different from what we have now.

Competitive environment of today’s market pushes financial organizations to look for ways to improve their operations. New business models appear, the use of new technologies and a fight against legacy are the dynamics to changes and it’s essential to keep both eyes open. Firms should stay on top of fintech trends to know when it is time to act on a new opportunity.

Here is insight consultants list of top 7 fintech trends to watch out for 2020

  • Weightage to customer-centricity
  • Deal sizes expected to grow 
  • Security fintech trends
  • Digital becomes mainstream
  • More focus on Regtech
  • Advances in AI and Robotic Process Automation
  • Machine learning will enhance finance

Let’s see each one in detail:

Weightage to customer-centricity: In 2020, firms will follow a customer-centric approach by addressing the specific needs of the customers. More focus will be given in building technology capabilities to get more intelligent about your customers’ needs. Companies will offer a seamless omnichannel experience, through a smart balance of human and machines.

Deal sizes expected to grow: Deal sizes are expected to continue to grow in 2019, as investors focus on later stage fintechs with a proven track-record in an effort to reduce risk.

Security fintech trends: Cyber security will be one of the top risks financial firms will be facing in 2020. If customers don’t trust the fintech organization, they look for another one. So, firms must find out top-notch software solutions to protect the data and guarantee the safety of each operation is both the trend and the requirement for fintech sphere. Firms can implement biometric technology or facial recognition for more security.

Digital becomes mainstream:  Digitalization continued to be the cause of large-scale and sweeping transformations across multiple aspects of business, providing unparalleled opportunities for value creation and capture. Digital is changing entire industry value chains as it transforms the nature of business. Today, digital agenda extends from customer experience and operational efficiency to big data and analytics.

More focus on Regtech:  Investments in regulatory technology will accelerate in 2019, as startups focus on helping incumbent financial institutions reduce costs associated with complying with increasingly stringent regulations.

Advances in AI and Robotic Process Automation:  Adoption of AI and process automation have doubled within Fintech programs worldwide. AI will make a great influence on financial planning fraud detection and automation of the core processes. We expect to see the use of AI machines to solve about 10-25% of all financial activities in the nearest few years. Robotic process automation will orchestrate workflows. To reduce the amount of used human resources, financial institutions can apply RPA to their business management solutions. RPA uses robotics to complete the task via GUI (Graphical User Interface). The work ranges from simple actions (selecting items, sending emails) to complex procedures (creating a report, organizing a database)

Machine learning will enhance finance:  Machine learning will become more advanced and sophisticated in the coming year. It will help financial services to create deep personalization profiles and anticipate customer needs. Based on the data, transactional bots can be used to offer the users products and services in real time. Such service will increases user engagement and also improve the overall user experience with financial products in a much more interactive way.

So, by 2020, firms need to build technology capabilities to get more intelligent about customer needs and prepare the architecture to connect to anything, anywhere. Above all these, make sure that you have necessary tech talents to execute all these.

Fintech – Making banking intimate

New entrants to the market, new business models, changing customer expectations and fragmentation of traditional services, all contributing to put traditional banks under pressure. Cash is no longer king; mobile payments are increasing in popularity and no longer is the current account the only thing one uses to manage money.  So, does it mean a death knell to banks?

No, rather a storm is sweeping today’s banking world with traditional bank branching services moving online. Apart from merely increasing customer base and market shares, banks are leveraging the tech innovation of startup partners to improve their operations and reducing costs.  Fintech, the financial technology, is powering the major changes in the current banking sector.  It is mostly start-up technology and financial expertise firms, providing domain specific products and services that are already provided by various traditional financial institutions such as banks, asset management companies, and insurance companies.

The technology boom has slowly moved the banking domain from internet banking to mobile banking and now moving towards digital banking. Mobile gadgets, telecom, and data services at affordable rates, regulated e-commerce platforms assuring security with growing customer awareness and expectations have conquered the market. With this technology boom, competition in the banking sector became extensive and included non-banks who provided products/services in the niche areas of banking. Many banks have now started feeling the pinch of growing customer acceptance of non-banks or start-ups, threatening them with their competitive high-technology and low-cost products to raise the bar of expectation.

Fintech has created competition — real competition, not the pseudo variety between different banks all offering the same thing at the same price. No longer is it a choice between Bank A and Bank B, where there is little to no differentiation between the product or service that they offer. Fintech firms mainly focus on identifying, specializing, and excelling in a niche product/ service area, providing customer-centric operations, innovation, and cost-effectiveness, and reducing delivery turnaround time. FinTech can offer solutions that are efficient and effective at lower scale which will benefit small businesses and provide them with increased access to more diverse funding options. Innovative FinTech products can be better tailored to the needs of small businesses. These include marketplace (peer‑to‑peer) lending, e‑commerce finance, invoice finance, online supply chain finance and online trade finance. It can also help all businesses through improved payments systems, customer relationship management and invoicing and collections.

Thus, banks that once found themselves in a race against each other are just as much running a race against time. And investors will want to pay close attention as financial technology braces to take off like never.