Fintech in 2020 — Top trends set to do a massive makeover
There’s an enormous buzz about digitization taking over finance processes, replacing physical entities all together while building a democratic, p2p and safer ecosystem for transactional exchanges. In my experience of working with financial institutions, I can advocate for the sector’s unbeatable ability to foresee trends and act swiftly upon them. They sense the customer behaviour like no one else, and that’s exactly why 88% of financial service providers in the world are proactively seeking innovative ideas.
And believe me, what we witnessed until now was just the iceberg’s tip. There’s a swaddle of rapid changes eagerly waiting for the newer decade. Here’s a quick run-through about the top trends in fintech to see in 2020.
Blockchain will go widespread, finally!
Blockchain is looming, and with its low processing fees, it is undoubtedly one of the key influencers in the years ahead starting with 2020. Keeping intact to their apprehensions, not many nations came out strong in supporting a decentralized ecosystem. USA & China, two of those countries that were known to have criticized the technology, actually embraced it full throttle. Since 88% of global fintech firms are looking forward to incorporating emerging technologies, Blockchain will top the list for most of them. Not to miss, more than 70% of these firms that had pushed for experiments in Blockchain aim to come out strong with some POC in 2020.
And finally, when the number of Blockchain wallet holders increase explosively to 40 million globally, ignoring smart contracting is the least you would want to do.
Blockchain propelled because there’s enough Big Data at disposal that has been put to high-grade analytics through AI. AI was always there, maturing every year and finally gaining wider adoption amongst small and big service providers. And when banks surpass the income of nations, wider adoption of automated processes will drive the sector.
Given the potential of ML-based applications in reducing operational costs of the banks by 22% in 2030, financial institutions are expecting up to 1 trillion USD in savings.
However, the shortage of professionals, just like in any other sector is the most significant concern here. With chatbots driving text interactions with customers, AI-based applications in fintech will continue to grow, even more explosively.
Innovative payment mediums on the rise
Digitization in fintech is already a rage, and mobile wallets are at the helm of it. Mobile payments accounted for close to USD 1 trillion in 2019. Furthermore, innovations in payments will impact other components as well. Starting with contactless payments that aim to surpass 700 million by the end of 2020, other mediums will have the backing of AI & ML technologies, smart speaker systems (read that right), crypto wallets and more.
So, next time, don’t be shocked to see someone instructing their smart speakers to trigger a transaction. As far as mobile wallets are concerned, they are on their path to completely replace physical wallets. Going ahead with 2.1 billion mobile wallet users in 2019, mobile wallets will get more visible in your list of apps on the phone.
New leaders on the horizon
Moving on from digital transactions only, fintech looks forward to digitizing every function within the financial services spectrum. And the mammoth of users in embracing the digital services has encouraged them this far. While 69% of users use fintech services in China, the count goes up to 52% in growing economies like India.
Amidst a swathe of collaborations and innovations, China is the flag bearer of the era called digital. However, Chinese embarking the market was anticipated earlier and shouldn’t be pulling the carpets off your feet. As a country wherein there are more internet users than the combined population of two of the world’s leading superpowers — Russia & USA, China leads the eCommerce sector with a whopping USD 740 billion value.
Given such undisputed dominance, China, and fast-paced India will collective write the narrative of the fintech sector that is thrilled to go online.
However, that doesn’t mean that building a fintech startup will be any tom’s play. Unlike previous times when investors plunged at any idea that talked about a fintech app, they have matured and have gone slower with approvals. Just like the number of fintech startups that rose funding in 2017 was almost half of the numbers in 2014, scenes could get stricter.
In 2020, venture capitalists will educate themselves about the trends; train their in house research times so that better and fairer deals could be finalized.
Ultimately, more partnerships between startups and established names will mature. While the newbies bring on board a deeper understanding of technology, established brands will hone their skills about the financial processes. Given such recognition, there’s an exciting year ahead.