OUR FINTECH OUTLOOK
Fintech companies will start benefiting with scale by integrating within the banks and building models that apply their innovative strengths with the strengths of the banks scale offerings. Rather than compete, banks are now looking to plug up gaps by working with fintech firms.
We expect the trend of collaboration between young fintech companies and traditional financial services and banking incumbents to continue to be a key theme in 2017. As recent industry partnership announcements indicate, banking incumbents are finding smart ways to align with technology partners to remain competitive and to meet the needs of millennials through referral and licensing partnerships.
We will see an increased consumerization of financial services, especially, consumer credit. As of today, there are still millions of responsible people around the world who are denied access to credit, simply because our credit systems haven’t evolved with technology. However, advanced data science and machine-learning have made it possible to harness tens of thousands of data points to more accurately identify responsible borrowers. This will ease financial inclusion and access to finance.
The biggest trend will be that alternative finance products will continue to go mainstream. Public awareness of alternative finance options like peer-to-peer (P2P) lending and equity crowdfunding will continue increasing, and governments will have more tendancy of updating regulations to allow more investors to participate in these types of markets.
Rise of Alternative Products And The Sharing Economy
The biggest trend in fintech this year will be the democratization of investing that disintermediates entrenched financial institutions. These fintechs will attack the financial industry by harnessing technology to undercut fee structures.
The sharing economy is going to hit the financial world with full force in 2017. Peer-to-peer lenders are getting credibility and the whole concept of the sharing economy will really come into force in the financial services industry in 2017. The sharing economy has largely focused on lending, but we’ll see also investing and other areas coming into their own.
Mobile is now a key channel core to any digital banking strategy with a growing number of services becoming mobile enabled
Mobile money services are also on the increase as services increasingly expand beyond basic remittance and payments. There are a number of options for banks seeking to engage customers through the mobile channel. A growing number of banks are starting to evaluate the potential opportunity that MVNO brings, whilst also considering alternative approaches to MVNO. Banks in under developed countries started launching mobile services via MVNO model, Banks in developed countries are entering the MVNO space leveraging existing distribution channels, integrating mobile money propositions, strengthening customer relationships, as well as generating new revenue streams. MVNO is also being considered as a potential enabler of branchless banking, key to the expansion plans of a growing number of banks.
With all the recent data breaches, security within financial services is one of the most talked about trends recently. It’s one of the things that has the power to affect us the most. With mobile banking and payment technologies growing at record-breaking speeds, security management is growing at equivalent paces to keep up with these innovative products that need security technology to perform the way they should. We expect KYC (Know Your Client) Tools, Fraud Management and Chargeback Tools will benefit if they will propose unique and easier solutions.