What are the Top Fintech Trends in 2018?
A decade after the global financial crisis, the banking industry has regained its health and is looking more optimistic than ever. In 2108, 85% of banks have made it a priority to implement a digital transformation program and invest in technology in order to drive efficiency.
This comes in conjunction with the fintech sector, which is innovating at an accelerating pace as its technology disrupts capital markets. These innovations have led consumers to increasingly embrace on-demand banking and manage their finances online by services from non-traditional players.
Beyond mobile banking, we’re witnessing other major technological advancements, such as artificial intelligence and blockchain. These have been fueled thanks to venture investments, which reached $12.85 billion in 2017, and are only growing.
Below is a more detailed account of this year’s trends in the Fintech industry.
Mobile Banking and Payments are on the Rise
The increased adoption in mobile banking is among this year’s major trends. So great, in fact, that 2019 will see mobile banking and payments rise to a monumental $92 billion.
With the financial sector investing more on customer experience, an ever-increasing number of people are turning to mobile banking to make P2P payments, split bills or check their balance.
FinTech is Growing in the Asian Market
According to Frost & Sullivan, the fintech industry in the APAC region is expected to reach $72 billion by 2020. This major growth in the Asian fintech industry can be attributed to massive innovation in the sphere of digital and cashless payments by SMBs. Moreover, there is increased interest in P2P payment solutions and blockchain crowdfunding opportunities, which is sure to further contribute to the region’s financial growth.
One example is the major Singaporean Bank UOB. By implementing PayKey’s Social Banking Solution, UOB can provide all its banking services directly from the smartphone keyboard. For more information, take a look at the bank’s promotional video.
The Ascent of Challenger Banks
Banking is no longer restricted to financial institutions. Orange, the major European mobile telecoms giant, launched Orange Bank, which offers all the basic banking services within the context of a unique digital experience. Similar examples include Virgin Money, Revolut, Tandem and Tesco Bank.
Banks Increase Investment in Cybersecurity
According to Accenture, as banks are moving towards better digital product origination, a new kind of threat is arising: synthetic identity fraud. New identities are created using a combination of real and fabricated information – and at times even entirely fictitious information. Whereas in the past, identity theft was limited to the credit card market, online banking now allows fraudsters to create accounts which circumvent the usual security checks.
A Capgemini report shows that in 2016, card fraud led to losses of over $24 million, whereas cyber attacks will cost banks and businesses over $2 trillion by 2019.
This year, banks will need to improve their ability in sniffing out the bad guys without undermining the benefits of a great digital customer experience.
Blockchain Grows in Size & Scope
When Bitcoin was launched in 2009, few imagined that it would reach the scale that it has. Digital currencies like Blockchain, Ripple, Eretheum, and a host of others have gained immense momentum, which has led competition to rise – especially among banks, financial institutions and startups. This has led major credit card companies, such as MasterCard, Visa and American Express, to develop a blockchain technology payment system in order to stay up to speed as massive innovations take place within the financial ecosystem.
Blockchain Inspires New Regulations
With the blockchain revolution disrupting capital markets, new regulations will eventually be enacted. However, many of these regulators are taking more of a “wait-and-see” approach as they seek to find the perfect middle ground between innovation, risks and controls. Once regulations are put in place, the fintech industry will become more powerful and secure, which will in turn boost consumer confidence.
Many companies developing blockchain-based products have been turning to the cryptocurrency community to crowdsource the purchase and usage of their token in an ICO (Initial Coin Offering). These companies have raised over $3.7 billion in ICOs to date.
According to a survey conducted by Ernst & Young, 59% of global bank executives expect their budget to rise by 10% in 2018, as they invest in the latest technologies and beef up cybersecurity. Only 19% of respondents see themselves as either digitally maturing or a digital leader, and 62% intend on becoming one of the two by 2020. Of those, nearly half plan to purchase technology from a third party, while only 17% intend on making technology acquisitions.
We believe that banks must act quickly in order to prepare for a future led by innovation and technology, and develop scalable, digitally enabled business models that will help them retain their position as the preferred trusted financial service provider.