This is a guest post on the Hydrogen publication from Dogtown Media, courtesy of its CEO & Co-Founder, Marc Fischer. Dogtown Media is a mobile app development company, developing iPad, Android, and iPhone apps to solve everyday problems & simplify frustrating activities. Please give Marc a warm welcome!
Top 4 FinTech Trends to Watch in 2019 and Beyond
Do you know what the near future holds for FinTech? In this innovative and fast-moving field, yesterday’s trends become today’s realities. Change is the name of the game. And if you strive to only keep up, you’ll fall behind fast.
Fortunately, to get a good glimpse of tomorrow, look no further than this article — we’ve done the due diligence and investigated what’s in store for FinTech development down the road. Here are the top trends that are transforming the industry for the better.
Traditional Firms Are Investing in FinTech Innovation
If you can’t beat them, innovate with them. In a recent study, multinational consulting firm PricewaterhouseCoopers (PwC) found that 88% of global financial service companies believe they could lose substantial business to innovators. In response to this competitive pressure, 56% of those surveyed have incorporated disruption into their core strategy. They’re either investing in or collaborating with Fintech innovators, with 82% expecting to increase their partnerships even more in the next three to five years.
“A large number of our clients are taking aggressive action to determine how they can use these technologies within their ecosystems,” notes Dilip Krishna, the Chief Technology Officer at Deloitte Risk and Financial Advisory. “They’re acting as venture capitalists and investing in their internal projects to see what specific problems these technologies can solve… There’s been a tremendous response within the industry.”
Collaboration can yield unprecedented advantages for all parties involved. MasterCard’s Start Path is a prime example. In this program, MasterCard works with a later-stage startup for six months to refine their services and gain win-win profits. It’s proven to be a resounding success for one of the program’s first members, Mobeewave, a contactless payment solution for your smartphone.
Banking Is Going Mobile
Mobile app development has been a game-changer for managing finances. But its disruption shows no signs of slowing down. Paying a visit to your local bank branch is becoming a thing of the past; in fact, by 2022, it’s expected to drop by 36%. In the same amount of time, mobile transactions are projected to grow by 121%, eventually composing 88% of all banking transactions.
Due to its streamlined use and easy accessibility, more customers than ever before are warming up to the idea of making their banking mobile. And because mobile apps facilitate cheaper transactions and more cost savings when compared to their physical counterparts, banks benefit too. As a result, expect to see a sharp rise in digital banks, institutions that have no physical branches and primarily provide financial services through mobile apps.
AI Adoption Is Accelerating
Artificial intelligence (AI) development is having profound impacts on our society and economy. PwC considers AI to be “the biggest commercial opportunity in today’s fast-changing economy” and estimates the technology to represent 14% of GDP growth by 2030. That equates to an astronomical value of $15.7 trillion, more than the current GDP output of China and India combined.
So it should come as no surprise that both FinTech developers and traditional institutions are racing to leverage AI’s unparalleled abilities. Per a report from Econsultancy and Adobe, 20% of financial organizations are already utilizing AI in their operations, with 41% planning to implement it in some way within the next year.
According to McKinsey, machines will perform 10 to 25% of all banking work in the next few years. But we don’t have to wait that long to see AI’s potential in action. JPMorgan Chase is utilizing a Contract Intelligence (COIN) machine learning program to automate the review of legal documentation. And it’s already trimmed down the typical amount of time lawyers spend on this task by 360,000 hours each year.
Brace for Blockchain’s Impact
Perhaps no other technology on this list poses more of a threat to traditional banking than blockchain. In order to get ahead of the disruption, the financial services industry has embraced it; the sector currently spends $1.7 billion each year on the technology. Expect this number to experience rapid growth in the next few years. 90% of major European and North American banks are exploring blockchain’s uses.
With unmatched security and transparency, it’s easy to see why. Immutable audit trails mean customers can have peace of mind about any account activity. But this doesn’t even touch upon another advantage of blockchain: efficiency. Due to numerous intermediary steps, transactions and settlements traditionally take a few days. But blockchain can compress this process into a few minutes or seconds.
Because of the many benefits it brings, blockchain is being adopted across many industries like manufacturing and healthcare. Government agencies are also starting to explore its ability to securely hold large amounts of data while keeping it accessible. Combining blockchain with other disruptive technologies like AI and the Internet of Things will unlock unprecedented opportunities for virtually every sector.
Still, the finance industry remains at the helm of this innovation in terms of effort and funding. Per PwC, 77% of financial organizations plan to integrate blockchain into their operations by 2020.
To match this rapid growth, the demand for blockchain experts is skyrocketing. Enterprises and institutions all over the world are seeking experienced developers to help them get started in applying blockchain to their unique situations. And this market demand shows no signs of slowing down in the near future.
The Bottom Line
FinTech may be at the forefront of reinventing how we handle our money, but it’s still very much an untouched frontier. Many of the technologies and paradigms we’ve discussed here are still in their developmental stages.
The financial landscape is undoubtedly shifting more toward mobile and digital. And to keep pace, institutions and startups alike will have to embrace technologies like AI and blockchain to not only streamline processes but make them more secure. It’s prudent to remember that innovation is a marathon, not a sprint. It’s imperative that we focus on implementing new solutions correctly, not first.
With that being said, are you ready for a bigger and brighter future for finance? Because it’s right around the corner.