Fintech is opening floodgates of opportunity for ambitious startups that previously had no hopes of overcoming barriers to entry in the finance field. With the desire to innovate and succeed, however, gutsy startups are now promoting financial literacy and reaching previously underserved groups with brand-new retail banking and investment services.
The underdogs have enjoyed so much success, that leading financial institutions are starting to take notice. Resultantly, many changes will emerge in 2019. The following are five fintech trends that you should watch, and why you should watch them.
Trend 1: Fintech Is Positioned to Reshape FinanceAccording to a study developed by Maryville University, 82-percent of surveyed executives in the finance industry view fintech as a serious competitive threat. In the banking sector, fintech innovations such as mobile and virtual banking are leveling the playing field, and in the insurance industry, a new online insurance infrastructure is emerging.Why you should follow this trend:Now, consumers are more empowered than ever to shop for the best value. Also, fintech startups are wooing speculators with a flurry of innovative personal finance and investing applications, and consumers are enjoying the benefits of advancements such as mobile and online payments as well as virtual wallets. Finance leaders should stay on top of current demands by understanding how consumers use technology to manage their money.
Trend 2: Consumers Increasingly Crave TechnologyA 2017 Ernst & Young expose reveals that consumers are hungry for emerging fintech products. This desire is especially so among previously underserved populations such as China and India.The business consultancy powerhouse reports that there is an abundance of fintech enterprises entering the market using novel business models and delivering fresh consumer offerings.
Furthermore, says E&Y, the emerging fintech revolution is driving information sharing and the development of open-source Application Program Interfaces (APIs) as well as recent technological breakthroughs in artificial intelligence (AI) and biometrics.Around the world, lawmakers are following the example of Europe by promoting open access Application Programming Interfaces (APIs). By doing so, legislators desire to enhance consumer choice by increasing competition between banks and fintech enterprises.For new fintech firms, open-source APIs streamline the launch of new products and services and decrease costs customarily used for research and development.New fintech banks that build their organization around a digital business model represent the fastest growing segment of startups nurtured by this movement.
Additionally, many of these innovative financial institutions are taking advantage of this opportunity to expand globally.Why you should follow this trend:The launch of fintech enterprises, as well as venture capital investment in the sector, is rising at an increasingly rapid pace. Also, consumer fintech adoption has doubled to more than 32-percent in just two short years.Driven by these developments, fintech products will soon become a societal norm. As fintech firms gain widespread traction, their offerings are becoming more integrated into consumers’ lives.Resultantly, the distinction between financial products and lifestyle applications is diminishing.
This blurring of mediums is, in part, do to emerging fintech firms’ intense focus on consumer-centric offerings along with their agility and willingness to introduce new ways of doing business. Finance executives need to stay on top of the latest technical resources as well as the political climate in various regions regarding fintech to understand the best ways to take advantage of emerging opportunities.
Trend 3: Major Finance Players Are Moving in on FintechMajor companies such as J.P. Morgan Chase and Goldman Sachs have chosen to go with the fintech tide. They’re investing heavily in fintech to retain their long-held market positions.Finance powerhouse Goldman Sachs is one of several major international players betting on fintech. Initially, bold fintech firms disrupted operations of this and other major actors. Now, the global consulting firm has joined in league with peers such as J.P. Morgan Chase in investing in the fintech industry.Thought-leaders in this sphere agree that Silicon Valley is now highly interested in finance. Forecasts J.P. Morgan representatives, fintech entrants could soon capture more than $4.7 trillion in revenue from traditional financial enterprises.Because of this disruption, traditional service providers such as asset managers, banks, and payment firms are turning to technology to fight back against an onslaught of technological innovation.
As this occurs, analysts expect to see several critical mergers and acquisitions and partnerships emerge as traditional providers band together to face competition from fintech enterprises.Why you should follow this trend:Goldman Sachs has speculated in fintech for the last half decade, spreading their influence across a range of industries. Big data is one such field that the organization has invested in heavily due to its intersection with finance. As an example, it partnered with Dataminr, which raised $700 million in its latest fund-raising round. The finance firm has also partnered with newcomer Kensho Technologies – a financial data engineering enterprise – and data analytics firm Context Relevant.
The global finance leader also invested a significant portion of a $56 million fund-raising round into Antuit, another data analytics enterprise. With the emergence of fintech, Goldman Sachs and other major firms believe that such data analysis firms may soon transform into well-paying gold mines.Whether you’re a startup looking to disrupt the market or an investor looking to cash in, you need to understand the players. Investors must understand investment essentials and how mergers and acquisitions might contribute to profit outcomes. Likewise, executives need to prepare to react to potential threats.
Trend 4: FinTech Is Disrupting the Status QuoA recent survey reveals that 41-percent of asset and wealth management professionals work with fintech enterprises. 60-percent of respondents in the same poll expressed that they are likely to migrate their workflow to fintech providers. Because of this, many professionals in this field are experimenting with solutions to optimize efficiency and information analysis.In banking, there’s a similar sentiment among leading executives. 80-percent believe that the fintech field will disrupt their industry over the next half decade, and 63-percent view fintech as an opportunity to improve the traditional finance industry.
Why you should follow this trend:Ultimately, fintech is changing the way that people work toward long-term financial sustenance. Many executives believe that new fintech innovations will affect personal loans and finance products the most. As this change takes place, surveyed executives recognize that information will shift power to consumers. As fintech offerings emerge, products become more consumer-centric and consumers demand – and receive – 24-hour access to services, financial leaders need to understand how to meet consumer demands.
Trend 5: Fintech Is Creating Big Career OpportunitiesOverall, 40-percent of surveyed executives expressed that a shortage of available talent hinders their current tech initiatives. The talent gap presents ample opportunity for experienced professionals who are considering a career change or want more corporate responsibility. The fintech industry is positioned to change not only the economy but quite possibly the entire finance vertical.Why you should follow this trend:Already, there’s a severe shortage of skilled information professionals in the United States. Among data professionals employed by United States enterprises, only one-third of them are native to the country.
As the fintech sector grows increasingly influential, the demand for skilled data scientists will only increase.The need for data scientists is so marked that 60-percent of enterprises train internal staff members to fill the role. Some of these individuals lack training in the field or even a college degree. Finance executives must monitor their talent pool to ensure that there are enough employees to manage the demands of operating in a fintech-powered marketplace.
Seizing Opportunities in FintechFor finance executives, upskilling employees makes sense, as the ability to successfully staff data scientists has proven to directly correlate to the ability of organizations to achieve their objectives. For now, the experience that these professionals possess in their industry in combination with the talent shortage makes them the most qualified individuals for the job. As the fintech industry continues to unfold, consumers will reap the rewards of a more efficient market, the vertical will create new professional opportunities and the face of finance will change forever.