Financial institutions are being challenged by and collaborating with Fintech organisations in equal measures. As their focus on customers increase, they will collaborate and partner with these disruptors. Fintech is also getting attention from governments in both emerging and mature countries as a means to achieve their financial inclusion and digital economy goals. Fintech investments will continue to surge through 2020 across the solution areas.
The Top 5 Fintech Trends For 2020
The Top 5 Fintech Trends are based on the latest data from the global Ecosystm AI and Cybersecurity studies and is also based on qualitative research by Ecosystm CEO Amit Gupta and Principal Advisor Paul Gestro.
One for All and All for One
Fintech will have a much greater impact than we realise, and we will continue to see it drive the induction of the unbanked into the mainstream economy. The growth in mobile phone penetration, however, continues to grow at a faster pace than banking accessibility across emerging economies. We will continue to see Fintech play a significant role in driving greater inclusion, especially to bring in the underserved in the emerging economies and reducing the gender gap when it comes to adoption of financial services – creating greater inclusion overall.
The democratisation and accessibility of financial services will also result in far greater uptake of the sharing economy and we will continue to see non-traditional companies enter the payments and financial services markets. Fintechs that have environmental and social impact, beyond financial impact, will also find it easier to secure funds from Impact Investors.
The Year of the Banks
2020 is the year banks will need to embrace Fintech – fully. They know full well that customers are at the centre of their entire operation – and Fintech services can and will provide them with the solutions they need. They have been skeptical about adopting Fintech but as they begin their transformation journeys and face increasingly stringent regulations, they might no longer have the option of ignoring Fintechs.
Banks are already adopting, evaluating and developing strategies for AI, RPA, and Cybersecurity adoption – but they will feel the need for more innovation and speed in 2020.
Asia Becomes Middle Earth
Asia has fast become the centre for both innovation and investment. Asia’s fast pace of urbanisation and the increasing prosperity of the middle class is attracting investments. Venture capital-backed Fintech companies raised more than USD 40B in 2018 – with the bulk coming out of China. Investments in Asia is expected to grow, and will benefit later stage Fintech startups.
These investments, a lack of strict policies (yet!) and the large number of unbanked and underbanked are also fuelling innovation in Asia. Several large financial institutions in Asia have already made public announcements of the Fintech investments and this will cause a ripple effect.
Nothing Artificial About AI
AI sits at the heart of most Fintech solutions. And AI has slowly made its way in decision-making and process automation. The first step to AI is automation and robotic process automation (RPA) will transform customer experience and will allow integration of legacy systems in financial institutions. As IoT and Blockchain mature they will be increasingly integrated within AI solutions.
Another area which will see AI adoption in financial institutions is Cybersecurity – machine learning can predict the patterns of criminals (or rogue/irresponsible employees) to stop events before they start. Fintech solutions such as Regtech and Suptech has a definite play in this space.
Regtech Will Take Centre Stage
In 2020, Regtech will take the centre stage as the emerging Fintech solution. Together with AI, a better ability to use data and predict trends, Regtech will be used to fight financial crime and reduce costly compliance-related mistakes.
The old way of just employing more people to run the compliance tasks is not sustainable. routine tasks such as KYC, AML and compliance verification are ripe for automation. Moreover, Regtech ROI is relatively easier to set and measure.
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