As fintech industry continues to generate buzz, experts predict it’s growth is just gaining momentum and will continue to expand rapidly in the coming year. More specifically, the development and uptake of particular technologies may become quicker to reach the market and more efficient for both users and businesses.
FinTech is predicted to have an annual growth rate of 24.8% over the next few years, and is becoming an increasingly competitive market space for both investors and companies in this field. Below are four of the most relevant technology trends of fintech to follow in 2020.
The prominence of RegTech
RegTech (Regulatory Technology), as suggested by its name, is the way to utilize IT in order to make regulatory processes within financial services more convenient. As for 2020, it will be worth tracking the collaboration of innovative companies in finance and government entities on digital technology innovations. Such partnerships are beneficial for several aspects in fintech development, claims Anton Zujev, the Head of Business Development at Fininbox, a Banking Software as a Service (SaaS) provider for electronic money and other financial institutions.
“It is important to lead governments towards more digital and innovative approaches in finance. For now, there is a lot of skepticism, but improving the legal framework of fintech should help. Additionally, fintech businesses used to be skeptical and annoyed regarding any regulations – however, it is subject to change. Even though both AML (Anti-Money Laundering) and KYC (Know Your Customer) have always been compulsory during the boom of fintech, the complexity of regulation should not be a limiting factor for fintech growth. Therefore, innovative RegTech solutions and legal frameworks which simplify reporting and compliance requirements for fintech should be welcomed,” says Zujev.
Emerging technologies continue to expand
AI (artificial intelligence), machine learning and blockchain are common buzzwords in fintech circles for quite a while. Over the past few years, the development of these technologies contributed to many customer services and operational advancements in fintech businesses, such as more immersive customer service or user recognition. Zujev spots the continuity of this direction yet puts importance on potential innovations in this field.
“For sure, AI will be crucial for more convenient customer service and operation tracking,” claims the expert. “Blockchain is becoming relevant because of its wide appliance in various fintech areas, such as data protection, cybersecurity, trade finance and so on. These include such advancements as the private data model, strengthening confidentiality or the potentially upcoming integration of blockchain in resource distribution.”
Customer service and open banking
User experience remains one of the key factors in fintech development. Innovative solutions allow both businesses and individuals to use digital banking services across multiple online platforms and thus make all processes quicker, more convenient, and more user-oriented.
Zujev is quite keen on this idea, claiming that traditional banks will also take advantage of open banking. Related services would ensure that the client relationship of these players could have even higher quality. And this is surely important while competing with startups which are still more advanced in emerging tech.
Variety in payment options
The development of fintech has already allowed improving everyday payments. While contactless cards and mobile payments have become quite popular in Europe, the overall system is still advancing.
“Emerging technologies should expand towards instant digital payments. There is no doubt they will make the user experience much more immersive in the near future,” adds Zujev. “Some of the most prominent examples would include the increase of SEPA Instant Payments limit to 100,000 EUR in Europe along with 24/7 service for nearly all instant payments which could take up to a few seconds. Also, in 2020 we may see the intense competition regarding the adoption of PSD2 and Payment Initiation Service – it will be interesting to see which financial bodies will be leading there.”
2020 is set to be the year of both change and continuity for growing fintech companies. Many improvements in fintech are highly related to various upgrades in the IT sector. As a result, 2020 may bring some unexpected changes to disruptive businesses and their development.