Fintech Trends 2018
Kamran Hedjri, CEO of Kalixa Payments Group, takes a closer look at some of the key issues shaping the fintech landscape.
This year has already been staggering in terms of the new trends, technologies and developments out in the market, driven almost entirely by the fintech ecosystem. Here are just some of the main themes that are continuing to play out in 2018:
Payments don’t always strike one as the hub of rapid innovation. Often viewed as a binary, mundane aspect of people’s financial day-to-day activity, it’s in fact at the forefront of transformation in financial technology, changing faster than ever. Given the constant flow of money and data between customers and merchants, the payments sector is well-positioned to be a testing ground for new technologies and it’s where some exciting new ideas come to fruition.
Technology can be an enabler and reach millions of new customers with products that can have a truly life-changing effect. The World Bank estimates that 2bn people don’t use formal financial services and more than 50 per cent of adults in the poorest households are unbanked. Financial inclusion is a key in boosting prosperity – and technology is making this possible.
DISTRIBUTED LEDGERS AND BLOCKCHAIN
The blockchain technology applies to a wide range of different sectors and industries. This is one area that will continue to grow around the world, and governments in particular are taking it seriously. For example, Estonia is looking to introduce its own cryptocurrency to fund its e-residency programme; the UK is testing blockchain technology for welfare distribution; and despite some hesitation, many states, be it Gibraltar, Malta, the United States or across Asia (where some governments are sceptical of cryptocurrencies, but see value in the underlying technology) are making noises about regulation.
Technology has allowed us to share information much more securely and conveniently, and when it comes to financial services and banking this means that products, services and other more nuanced offerings like financial advice can be much more easily adapted for the customer. This is all possible through the opening up of application programming interface (APIs), helping accelerate innovation. And there’s been significant shift in this recently as banks move away from treating each other and start-ups with suspicion, to embracing new developments collaboratively.
ARTIFICIAL INTELLIGENCE (AI)
Another buzzword right now, artificial intelligence is expected to explode exponentially – McKinsey & Company calculated that tech giants Baidu and Google spent as much as $20bn and $30bn on AI in 2016. It can reduce processing times, cut resourcing costs, improve security and reduce human error. Like pretty much in every industry out there, automation is inevitable. It can increase competition and drive deeper insights to businesses.
In recent years e-commerce platforms, tech start-ups and investors have been working out where they could disrupt and disintermediate the traditional banking model. However, while this is still the case, partnerships seems to be the trend that’s most in vogue. Moving forward, we expect to see more banks and Fintech companies collaborate to achieve a better functioning financial services ecosystem.
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