July 16th, 2019

The 9 Predictions for Fintech in 2019

A brief analysis of which fintech novelties we could see shining in the current year. See what the banks will be doing and why cool new features will be adopted.
Financial services are slowly creeping towards technologies. But the key word here is "slowly," as you could notice that the enthusiasm and the expansion rate have been lagging behind.
I'm pretty sure you could come across countless articles that were trying to ensure that fintech is a step away from entering the market. But in reality, plastic cards are far from being obsolete and the world is still not using cryptocurrency instead of cash.

We believe that fintech is an inevitable future that should take some time rather than appear out of nowhere and diminish other financial practices. Every change takes its time and should be done in moderation.

So, let's show a more realistic situation and which technologies will get an edge in 2019.

AI

A good thing about AI is its vast area of implementation. Even inside fintech, it can be a backbone for financial advisors, technical support, security systems, deep learning, etc. What's more, this technology can be introduced smoothly without rough market reception—you can still rely on human factor while AI will only empower users with solid advice based on data. For example, a financial advisor will only need to opt between picks suggested by AI and offer it to the client.

It should rather be viewed as a back-end technology, not a standalone feature. It should work without being exposed to the human eye, still, AI should become more pervasive on the market to cut the expenses and increase data usage effectiveness.

Steady Branch Removal

Although branching will still be present for banks, its role will steadily shrink compared to the early industrial days. The main reason is the fact that already 72% of banks operate digitally and the share is destined to grow—the direct-to-consumer service is where the whole industry is moving towards.

It's safe to say that there won't be new banks who try to tap into deposit and loan products: it's online services who will provide higher-interest rates for this matter. If anything, physical branches will gravitate towards combining different types of leisure-time activities, for instance, placing the payment terminals and getting coffee as Capital One does. Real estate is costly and there will be tons of solutions of how banks are going to benefit from that space since dozens of clerks are no longer needed.
JavaScript developers salary by company size
Photo by Christopher Gower on Unsplash

Instant Payments

Both yes and no here. On a positive note, thanks to blockchain and other emerging technologies, payments no longer rely on a human factor—they're processed automatically and take less and less time. There's no need to wait for smaller payment acceptance, they're now made in a blink of an eye; however, large sums between international companies have it harder.

The ever-present national legislation is still a factor to drag the transaction speed back, but the major banks are greatly improving in that area and real-time payments are just a few steps away. It will be up to smaller institutions whether they accept such payments or not and how fast it's done.

In 2017, Federal Reserve promised the US citizens that every bank account holder should have access to close to real-time payments by 2020. There's now 1 year left, so expect notable shifts in this area, hopefully, waiting for the weekend to receive a payment will no longer be a factor.

Fewer Data Breaches

Although it's impossible to guarantee 100% security level, it's easy to notice how few massive breaches have become. Authentication methods never stood still and we reached the point when having a mobile app pretty much secures accounts

Back in 2014, the "Forget Me" feature by Google has largely contributed to security over the world—now we are reaping the harvest of their deed—accessing private data will only become harder. What it does, is any person is eligible to remove their personal data from the Internet upon request (on the proviso that he/she is able to be verified via documents). The EU committee has also played a role in building a fence between honest users and frauds with the help of removing such info to take another step forward in the users' privacy.

Contactless World

If the plastic factor isn't going away, then banks should make it a more convenient affair. Contactless cards have been made to eliminate sliding mechanics and add more security for everyday usage. These cards have very little info about the owners and request PINs from time to time, while no info can be intercepted during use.

But the next step in this area is NFC when a device serves as a contactless card when making purchases. Although it mostly depends on hardware providers, it's almost impossible to find a retail store without an NFC reader. The same goes for mobile gadgets: you don't have to buy a flagship device to use this payment, most of the mid-range phones receive NFC as a default feature.

As a result, contactless payments will play a larger role in modern business, especially when it comes to small retail payments—carrying a single mobile device is always better than having lots plastic cards inside your wallet. As it surely poses some cost to implement, the technology will reign supreme as soon as regular cards start expiring.
JavaScript developers salary by company size
Photo by Jonas Leupe on Unsplash

Small Banks Surge

Thanks to open APIs and Cloud-based services, smaller dev teams will be able to deliver solutions that are on par with big banks. In 2019, there will be no need to pay large sums for the products from scratch—part of the development and deployment will be outside of the equation when building a digital experience.

Cost-effectiveness is tied to the time factor, therefore smaller banks will be nimble enough to get an edge when competing with unwieldy banks that are hesitant to implement new products that may battle the existing ones.

IPO Numbers Ramping Up

Take a second and think about who hasn't made an IPO yet. Not many companies neglect to enter the stock market and this trend is going to persist. It's hard to ignore the benefits of entering this area; however, smart management will become ever-so crucial when the value of a company depends on a myriad of factors, including the public image.

Of course, public access isn't for everyone, but it has proven to be a solid way to raising additional funds for companies that want to put their footing on a competitive market. Thanks to AI-based financial advisors, this practice will get extra potency and control when adjusting companies' net worth on stock.

Fintech into Finances

A crazy amount of assets open the path to all sorts of activities. The example of Google is a great display of benefits from this fusion: Google Pay has become a huge payment system thanks to a vast backpack of resources that the company has. Alibaba is also making steps in the finance sector with Ant Financial, while Amazon is rumored to be on the same path.

Most likely, these companies won't develop products from scratch, we should rather expect smaller companies with ready MVP to be consumed or partnered to release a holistic service later on.

Conclusion

As you can see, some of the candidates were still a thing in previous years—and rightfully so; there's no revolution on the horizon, but the time is a hefty factor.AI is now a legit thing: financial advisors and AI-based support have finally come into force and are now adopted by numerous banks. Another positive note deals with the number of breaches: it's great to see a massive decrease in the number of banks being compromised. Hopefully, it's not because hackers are now obsessed with private photos from celebrities' Instagram accounts.

Whether your think branch removal is a good thing or not (clerks won't be happy about it)—this is destined to cut banks' expenses but the proximity of instant payments should make you glad. Can't say if we ever reach zero seconds delay (latency will always be a thing), at least waiting throughout the weekend to receive a payment won't bother humanity anymore, not to mention contactless payments via the addition of gadgets.

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