Key Trends to Watch for in 2019 For FinTech Startups
The trends! Now? Its long past the mid-year, but does that really even matter? Trends are constantly changing, or rather fascinatingly developing even as you read this post. FinTech has been a growing sector ever since the digital wave hit the financial industries. Right from automation to application of artificial intelligence and blockchain, FinTech startups have not shied away from investing in what is current and undoubtedly the most popular trends. Keeping a trend watch hence, no matter what time of the year definitely makes sense.
So, without further ado here are some of the key trends to watch for in 2019 for FinTech Startups.
Customers today need control and on top of that look for services that are adjusted to their requirements, a trend that has diffused to FinTech industry too amongst others. The level of personalization however, takes a greater leap in terms of clustering the customer base in order to apply a human-centric, design-centric approach clubbed with CRM tools to help banks and credit unions meet the appropriate needs with exclusive real-time solutions. Accenture terms this a ‘Niche Banking’, wherein, “Traditional customer segmentation criteria are being refined, with banks moving towards the concept of lifestyle and mindset segmentation, letting them identify new, underserved micro-niches and shape dedicated propositions”
#2: Open Banking
Open banking is all about providing access to data, specifically, a consumer’s existing data through secure APIs. With the introduction of the second Payment Services Directory (PSD2), there is a greater consensus towards acceptance of open banking to give customers the ownership to their data. Moreover Banking-as-a-Service too isn’t losing its popularity and gaining greater traction and can hence be the means to deliver better customer experiences. According to a Mastercard report, “Startups like TrueLayer, Token and Tink are using a B2B2C model. TrueLayer creates an access point for developers to build applications on top of the data and is authorized by the FCA for both access to data (AISP) and access to payments (PISP).”
#3: Digital is the Norm
Traditional banks are now no longer the standalone structures that operate from fixed locations, it has now expanded into a global digital version that can operate independently. As this trend grows, FinTech startups are all prepped to lead the way towards digital-only banks for collection, lending, investing and offering special services. Digital is now hence, becoming a norm and that isn’t just about mobile apps.
#4: Automatic Savings and Pay Down Apps
An extension of Mobile applications utilized by FinTech companies; apps are now turning into the new investment caretakers more so for the growing demographic that faces issues in terms of financial management. Qapital, Digit, Blast and USAA are apps that allow millennials to tuck away small amounts of money into savings accounts based on their day-to-day decisions. ChangeEd and Fifth Third’s Momentum are examples of good Pay Down Apps.
#5: AI and Robotics
Yes, we are talking about Robotic process automation (RPA), that is allowing FinTech startups to work faster, more accurately and reduce the pressure on the workforce. The applications of AI are widespread, right from chatbots, to underwriting processes, to fraud detection, predictive trading and even risk mitigation, AI dons’ different hats and the role just keeps growing day in and day out. Quoting from the Mastercard Report, “Argos Risk, along with Start Path portfolio company James, are two examples of startups using AI to mitigate risk.”
The global blockchain market is expected to grow to over $60 billion by 2024, showing no signs of slowing down. The largest cloud services are the largest drivers of Blockchain as a Service (BaaS), according to Forbes. There has been a growth in the BaaS startups too, that are smaller, more agile and can push new offerings almost every month. For startups blockchain offers a good reduction in overhead costs. According to a report by Accenture, the applications of blockchain aren’t limited to cryptocurrencies and automated contractual agreements, but extend to Finance reporting, Compliance, Centralized operations and Business operations all with great cost reduction. As per a report by Zion Market Research, “the global FinTech blockchain market was valued at USD 204 million in 2017 and is expected to reach around USD 8,311 million by 2024, growing at a CAGR of around 69.72% between 2018 and 2024.”
In July 2019, FinTech startups across the world raised $3.98 billion worth of VC/PE investments from 205 deals. This indicates just a partially the pace in which FinTech startups are growing and spearheading global economic changes. FinTech startups are driving the course towards more customer-driven peer-to-peer transactions, automated services and seamless experiences.
Keep Watching out this space for trends, predictions and more.