As Fintech integrates with financial services and takes over most sectors, you may be wondering what awaits us in the future. Well, as we enter the new decade, we are assured that there will be more investment in this technology, and it will impact various processes in different ways.
Before we pre-empt everything, let’s look at 7 Fintech Trends to Watch in 2020 and beyond.
1. Sustained Robotics Process Automation (RPA)
Traditionally, Fintech automation has been applied where there are routine processes to reduce organizational costs and free up workers’ time. Today’s robots don’t necessarily require explicit programming to perform tasks. They can simply learn what humans do and then initiate improvements to processes.
RPA stands out as one of the latest Fintech trends that are aggressively gaining traction in the banking industry. According to Jupiter Research predictions, revenues from this technology emanating from the banking and financial services industry will hit $1.2B by 2023.
In 2020, we expect to see more bots maintaining records, responding to queries, and performing calculations. Also, they will perform processes, such as security checks, compliance routines, risk assessments, verifications, customer onboarding, and other repetitive clerical duties.
If you run a small company, implementing RPA is a prerequisite because it will significantly streamline your processes and enhance productivity. Moreover, it will substantially help you to improve on compliance requirements of your industry.
2. Unbundling of the Traditional Paycheck
Previously, we were captive to the traditional paycheck, which came at the end of the month. Today, with the changing job market dynamics and the financial struggles we face, there’s a surge in predatory payday loans. However, things have changed and will continue to improve in 2020 and beyond.
Fintech startups such as Earnin and PayActiv have disrupted the traditional paycheck by offering us affordable advances on our payroll. Moreover, apps such as Even have been instrumental in providing financial planning advice to borrowers. All these innovations have partnered with leading retailers and have reduced our overreliance on expensive lenders.
Fintech app developers will continue to give us more financial power by making their apps more convenient and flexible. Importantly, if you are an employer you should opt into this Fintech service through collaborations. Banks must also start offering similar innovations to their paycheck-deposit customers. Otherwise, they may be edged out entirely.
3. More Fintech Products Targeting Millennials
Millennials constitute the largest population in the US workforce, and despite this, they aren’t purchasing homes as the earlier generations did. Increasingly, Fintech startups have devised ways of helping them achieve this dream.
Realizing the importance millennials attach to apps, Fintech startup Flyhomes has created a platform that enables them to scroll through several homes when making a buying decision. Moreover, the Seattle-based company has simplified the mortgage acquisition process with its most popular service – the cash offer.
Once you get a pre-underwriting from a mortgage lender, Flyhomes buys the home with cash, and then you can buy it from them by using their mortgage at the same price. The company only takes a commission of 2-3%. Divvy is another app that allows you to let a property to own it.
Fintech startups will continue to take on banks, especially in the mortgage sector. In 2020 and beyond, we are likely to see banks innovating to meet the need for millennials.
4. More Adoption of Blockchain
Indisputably, blockchain technology has not only disrupted the financial industry, but has also increased efficiency in various processes. Since billions of dollars are lost through fraud and identity theft, the technology will help the financial industry to minimize the losses. By the year 2023, blockchain in Fintech market is projected to total $6,700 million in the United States.
In 2020 and beyond, the use of blockchain technology in facilitating smart contracts, identity management, payment settlement, and trading shares will be more pronounced. It will bring radical changes to several industries, forcing banks to adopt is on a broader scale.
5. Increased Use of Artificial Intelligence (AI)
In 2019, we witnessed one of the most transformative events in AI, Conversational banking. Leading Banking giants, including Bank of America, JPMorgan, Morgan Stanley, and HSBC, adopted conversational banking using chatbots.
Generally, banks use AI technology to prevent fraud, promote financial literacy, improve customer service, and optimize back-office processes. In 2025, projections show that the smart virtual assistant market will reach $19 billion.
Concerning Fintech trends to watch in 2020, conversational banking will undoubtedly mature, translating in low operational expenses. Moreover, Fintech developing companies with a focus on AI will have a lot of opportunities arising from the demand for chatbots and other AI-enabled technologies.
Due to the disruptive effect of Artificial Intelligence, as a human resource practitioner, you must start teaching employees how to work collaboratively with AI assistants. Also, it’s high time you began recruiting in-house specialists to handle AI-related complications.
6. Robust Cloud Adoption
Although most financial institutions are using Software-as-a-Service (SaaS) cloud services for their CRM, human resource management, and data storage platforms, a paltry 22 percent of all Fintech apps run on the cloud. However, in 2020 and beyond, the trend is likely to change.
Already, most Fintech startups are increasingly choosing to power their apps from the cloud. The trend has enabled them to benefit from agility and scalability, as they don’t have to manage data centers and infrastructure. Moreover, the collaboration between IBM and Bank of America will give Fintech companies a public cloud for their use.
Bank executives must start bracing themselves for competition with Fintech companies as the latter increasingly migrate to the cloud. To remain relevant, banks will have to extend their use of cloud service to include billings, payments, and loan management.
Clearly, the migration to the cloud is inevitable. As a bank executive, you should find Fintech development engineers who’ll provide viable solutions to make your business relevant in the future.
7. Fintech to Target the Unbanked
According to a 2017 World Bank Report, 1.7 billion people are not part of the formal financial system. In another study, only 2% of India’s population has some form of insurance. These two findings are significant for Fintech companies seeking to bring these people into the formal financial system.
While the unreached population presents a lot of opportunities for Fintech, the gig economy and its implications is a trend to watch in 2020 and beyond. Currently, a staggering 40 percent of Americans derive 40% of their income through freelance gigs, which may be inconsistent, presenting them with financial challenges.
In the future, if you want your business to prosper, ensure that your workers can receive and send their money to underdeveloped areas with ease. Uber has already launched its Fintech division, Uber money. It seeks to enable drivers and other freelancers to earn, transfer, and spend wisely. We are likely to see this trend in the future as more Fintech players seek a pie of this lucrative market segment.
Conclusively, these are 7 Fintech trends to watch in 2020. The industries concerned have experienced significant advancements in the last decade, so it’s safe to assume that the future holds more.