The Future of Fintech — Top Trends to Look Out for in 2020
Fintech has been making incredible leaps forward over the past few years, and that momentum isn’t slowing down anytime soon. In fact, 2020 is looking to be among the most impressive years yet, with all the newly introduced and upcoming technological advancements changing the way we think about the financing industry. Learn all about the future of fintech with the top trends to look out for in 2020.
While digital banking has been a possibility for years now, thanks to the biggest banks offering online solutions, new banks are starting to enter the industry without staking a claim to any physical piece of property for a location. These digital-only banks are taking advantage of an increasingly online marketplace, and they offer a variety of solutions other banks can’t match. You’ll find no paperwork, no lines, and complete account management all from home.
It’s important to consider that there are drawbacks to digital-only banking. With security measures in place, digital-only banks are no more dangerous to use than online banking with a major entity, but should you become a victim of fraud, your recourse is somewhat limited. There’s no local branch you can walk into to get service and a solution.
To solve this problem, you can expect some digital-only banks to start collaborating with more-established brick-and-mortar entities. Digital-only banks offer conveniences that traditional banks can’t match, while traditional banks offer a greater level of security. Each has something the other lacks, so the clear solution is for them to work together to offer the strengths of both and the weaknesses of neither.
Blockchain has been on the rise for years since the technology allowed for cryptocurrency, and that’s not going to be changing anytime soon. In fact, blockchain technology is currently changing how we think about financial transactions around the world. Tens of millions of people already have digital wallets, and that number is rapidly increasing. That means fintech companies can take advantage by offering cryptocurrency services that a lot of their competition is slow to match.
With the rise of new financial technology comes an increase in governmental regulation. The finance industry is already one of the most heavily regulated industries worldwide, but with new technologies emerging that leave uninformed lawmakers behind, they’re going to rush to push regulation as much as they can as fast as they can. One of the most important regulatory factors will be the ownership of data to combat and prosecute any digital financial fraud.
Keep in mind that countries only tend to regulate industries to the end of meeting national standards. No one wants a global headline about a major cybersecurity breach. Additionally, blockchain seems to be driving this regulatory innovation, as new laws have to be created to ensure that it is used correctly. Given the self-regulatory nature of blockchain, expect difficulty going forward as countries attempt to apply laws that protect both businesses and consumers.
Inclusion of Marginalized Socioeconomic Groups
It’s no secret that the financial sector mainly benefits a certain group of people in certain parts of the world. If that trend continued unchecked, marginalized socioeconomic groups would only become more marginalized over time, widening the gap between those with the latest technology and those hopelessly left behind. Fortunately, new fintech adds a capital interest in including those marginalized groups.
New fintech technologies can help marginalized people in a variety of different ways. For example, a blockchain-based ID network could help undocumented migrants, refugees, and others without proper government identification be able to use financial services. That alone could potentially help over a billion people.
It’s easy to read the headlines about the increased investment in fintech, but that doesn’t tell the whole story. In fact, saying that there’s increased investment in fintech on its own can be fundamentally misleading. Investors are increasingly more cautious about investing in fintech. If you’re trying to launch a fintech startup, for example, you’ll have a lot more trouble finding investors than you would have a few years ago.
While investors are more cautious, that doesn’t mean they’re not participating at all. In fact, they are investing more than ever before in fintech. They’re just doing it with fintech companies that have already been established. Late-stage financing has drastically increased, while financing for seed-stage companies has barely increased at all.
With these top trends regarding the future of fintech in mind, you’ll be in a much better position to take advantage of the changing fintech industry in 2020. Whether you’re looking to start a fintech company of your own or you’re just looking to utilize some of the latest technology to bolster your business, the future of fintech is looking bright.