Automation and technology aimed at improving financial services—fintech—has garnered a lot of attention lately. From crowdfunding to mobile payments and money transfer services, fintech has the potential to revolutionize how consumers and businesses handle financial transactions.
As with any technology, fintech developments happen quickly, and smart business owners will want to keep up. Below, 14 members of Forbes Finance Council take a look at the trends in fintech that could rise to prominence over the next year.
Members of Forbes Finance Council share the trends they believe will dominate fintech over the next year.
PHOTOS COURTESY OF THE INDIVIDUAL MEMBERS.
1. Regulation Technology
Regulation is everywhere in the financial services industry and it’s one of the largest business overhead expenses. Many regulation compliance tasks are still completed manually or with human oversight. Expect more regulation technology solutions to come to market with a goal of streamlining processes and reducing costs. - Jeffrey Burg, Dobrusin Burg
2. The Rise Of Decentralized Finance
Before the introduction of blockchain solutions, the term “fintech” was widely applied to companies that provided modern-looking interfaces while still depending on legacy financial technologies used by banks (ACH, SWIFT). Newer implementations avoid these systems and the fees and time delays associated with them. Look for solutions that utilize decentralized finance (DeFi) to cut down on fees. - Christian Kameir, Sustany Capital
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3. Institutional Adoption Of Cryptocurrency
We’ll see a spike in cryptocurrency adoption by institutional investors. With crypto-native companies unveiling enhancements to their institutional-grade custody solutions, these investors finally have solutions that meet the complex, high-stakes requirements of modern financial institutions. Meanwhile, the newly formed Virtual Commodities Association advances on the regulatory front. - Sarah Olsen, Gemini
4. Crypto-To-Cash Conversions
With the growing interest in cryptocurrencies and blockchain management, be on the lookout for emerging technology and product offerings. While there are still laws and regulations surrounding this arena, rest assured that where there is confusion, there is opportunity. I’m personally excited over what technologies will emerge and improve conversions from crypto to cash and crypto to e-wallets. - Anthony Holder, C&H Financial Services, Inc.
5. Large ‘A’ Rated Life Insurance Carriers
A big fintech trend will be the large “A” rated life insurance carriers. The new life insurance trend is to use technology to simplify the writing and underwriting of a new life insurance policy. A couple of fintech startups have successfully implemented up to $1 million of term coverage with no medical exam. They check your prescription history against your medical questionnaire to accomplish approvals. - Shane McGonnell, Abacus Life
6. High-Interest Cash Accounts
Keep an eye on high-interest cash accounts. There’s a wave of fintech companies like Ally and Wealthfront that are offering cash accounts with 2%-plus interest. While this is significantly better than the traditional checking accounts at big banks, there’s FDIC insurance, company risk and market trends that could affect what banks can offer positively or negatively. - Zack Cook, Rigor
7. More Co-Development And Joint Ventures
Fintechs are becoming more acceptable as a replacement for many proprietary legacy systems. Expect more co-development and joint ventures to pop up in multiple sectors and industries where there are some historical inefficiencies and expenses. Fintechs are lowering the cost of sale in back-office solutions and ancillary services to nontraditional financial services participants. - Brian Slipka, Business Broker Investment Corporation
8. More Partnerships Among Fintechs
One trend to watch for in 2020 is more partnerships among fintechs. Smaller companies are realizing the power of joining together. Direct-to-consumer fintechs have historically been hyperfocused on one piece of the market, but by working together, these companies can offer more of the consumer life cycle with relevant products and services. - Kathleen Craig, HT Mobile Apps
9. Unique Mergers And Acquisitions
As fintech companies mature and expand, industry leaders will continue to acquire crucial proprietary tech companies, blurring industry lines and cutting their costs in the process. Be prepared to see competitors in your space start to purchase and/or merge with marketing, big data and other non-fintech software companies to drive customer acquisition and retention. - Joe Camberato, National Business Capital & Services
10. Non-Fintech Players Entering The Space
Large non-fintech companies are entering the space in order to monetize and grow their customer base. Large players already in fintech are also expanding into other areas of the industry, such as lending. Of course, there are inherent risks involved with entering financial services, and large companies aren’t immune to competition, brand erosion and data protection issues, among others. - Ben Gold, QuickBridge Funding
11. Financial Health For The Win
Several fintechs are making financial health a priority. LendingClub, for example, has a “chief financial health officer.” As the market matures, the industry is evolving beyond products that mostly deliver returns to investors in the near term to more holistic offerings that invest in the long-term success of their customers, building trusting, long-lasting and multi-pronged relationships. - Luz Urrutia, Opportunity Fund
12. Use Of Fintech For Protection
Fintech is protecting vulnerable consumers, such as senior citizens who are targeted for financial fraud or young teens learning how to manage finances. New technology is on the rise for prepaid Visa cards that block certain merchant purchases that are suspicious. This enables financial independence to continue while placing protection on their assets. - Jared Weitz, United Capital Source Inc.
13. Consolidation And Simplification Of Fintech Products
A trend I see developing is the general consolidation and simplification of fintech products. If I had to choose one area where a new trend would apply, then it would be retail establishments having turnkey mobile payment and processing systems. - David Miller, PeachCap Inc.
14. Robotic Process Automation
Robotic process automation (RPA) stands out as the most helpful tool out there. The bot can maintain records and transactions, make calculations and perform tasks that include queries. Almost anything can be automated. Even in situations where RPA does not completely automate the process it frees up time and allows you to concentrate on providing higher-value support for clients. - Snezana Obradovic, Outsource Insurance Professionals