The future of finance: 10

FinTech trends for 2019

you need to know

Olga Okhrimenko, Marketing ManagerDecember 10, 2018 11 minutes

I use my banking app every day and wish I could transfer funds
between my accounts with my mind one day.
While this seems like some a distant future, we already have
the technology that spares us from carrying a wallet with all of
our cards every time we go shopping.

3
Share




What you will learn in this post:

 Current trends in FinTech: a short overview
 Disruptive innovations in payments
 Platforms as a service
 Blockchain movement
 Digital assistants
 Total automation
 FinTech incubators
 Digital-only banking
 Business alliances
 Advanced credit models
 Cyber-security

Current trends in FinTech: a short overview

We did research on future trends in the financial industry and hopefully a year from now these

trends will stay and inspire more improvements in how we deal with money.

But first, let’s recollect the innovations that have emerged in the FinTech industry during the

past 12 months.

Blockchain. This disruptive innovation has become a mainstream delivering greater

transparency and decreasing the duration of financial transactions.

Source – statista.com

Next-gen banks. 2018 marked the appearance of digital-only financial intermediaries.

Mobile apps. FinTech has conquered the mobile realm by bringing user-oriented financial

apps.

Cybersecurity. A strong trend towards developing sophisticated security systems for

preventing cyber attacks and data breaches.

Chatbots. Banks and other legal financial institutions have taken notice and integrated virtual

assistant into their apps.

Source – mastercard.com

Asian FinTech market. New financial giants based in Asia have appeared this year delivering

groundbreaking solutions for the financial technology industry.

Big Data. A strong collaboration between traditional banks and FinTech companies has led to

new forms of Big Data usage such as personalised finance and advanced analytics.
ICOs. A significant trend presented by a multitude of startups willing to enter the financial

industry through the blockchain-based fundraising.

Source – icodashboard.io
10 FinTech trends to expect in 2019

Some of the above tendencies have demonstrated the massive growth in 2018 and proved to be

here for a couple of years to come. Now let’s take a look at the hottest technology trends in

financial services that may change your FinTech business in the new year.

Disruptive innovations in payments

Paper money has been giving way to innovative payment solutions whereas digital wallets and

contactless payment tools have become the order of the day.

2019 is expected to transform our vision of digital transactions due to the rapid growth of

cryptocurrency, the main driver of changes in the payment systems.

Changes have been affecting all the aspects of financial transactions:

 sending and receiving payments;

 enhancements in the infrastructure;

 advanced payment services;

 unconventional user experiences;

 brand-new forms of collaborations in the FinTech industry.

Source – mobilepaymentstoday.com

The greatest merit of using cryptocurrencies and tokens in payments is moving away from

traditional banking and its inherent regulations. Individuals and companies prefer a more
democratic way of managing funds, which has become a reality thanks to disruptive

innovations in payments.

Moreover, the trend has gained support from the EU government. The EU Payment services

Directive adopted in 2015 allows companies to use outside payment service providers as an

alternative to bank institutions.

Platforms as a service

One of the FinTech predictions 2019 is the boost of PaaS (Platform as a Service) solutions that

go beyond the cloud.

Old and good PaaS based on cloud computing technologies lets companies extend
the ready-made solutions and add custom developments to satisfy their business
needs.

Conventional PaaS worked great for the FinTech industry as providers took the job on

configuring and maintaining applications freeing up developers’ time on coding tasks.

Today, PaaS vendors take even more responsibility offering solutions for team collaboration,

tools for streamlining deployment, services on configuration and resource management.

With these core areas handed over to PaaS providers, other business processes in the financial

sector like budget planning, credit risk management, payments processing, billings, client

service are going to be delegated as well.

Source – statista.com

The major benefits of using PaaS in the FinTech:

  quick product launch;

 post-paid service;

 environment’s adaptability;

 agile approach;

 standardised middleware and database management.

This year we at JustCoded released an alpha version of a PaaS for real estate crowdfunding

called LenderKit. We described it in our previous articles and have a plan for developing it

further in 2019 to offer startups and investment organisations faster and more reliable

solutions.

If you'd like to learn more about LenderKit, our team will be glad to show you a demo
and discuss how it can help your crowdfunding project.

Get in touch

Blockchain movement

The blockchain technology continues turning the financial world for the better. With a growing

number of Asian companies focused on cryptocurrencies, the potential of blockchain is

increasing on a daily basis. Due to the legal constraints, a lot of innovations in this field have

to wait in the wings.

The millennials like the idea of virtual currencies and represent a large percentage of

cryptocurrency owners as you can see in the graph below. It proves the willingness of young

people to support forward-looking startups and ICOs.

Source – statista.com
A great number of banks and other financial middlemen consider implementing crypto

technologies in their ecosystems for facilitating payments, money transfers, loan payoffs,

investments, etc.

READ FURTHER Cryptocurrency and crowdfunding: a match made in heaven?

The crypto market is skyrocketing, and it’s likely to change the shape of the FinTech industry

in the nearest future.

Digital assistants

Advanced AI technologies for voice have taken robotics to a new level.

Virtual assistants have already replaced humans in bank call centres responding to clients’

queries on getting loans, calculating future income from savings accounts, providing info on

fees, assisting in non-traditional bank operations, etc.

And you must have heard of Google Assitant, right? The technology is evolving further and

becomes more sophisticated.

Integrating chatbots into the customer service systems are to increase clients’ loyalty, reduce

the processing time, and cut administrative costs. Bank of America already nailed it with their

Erica assistant that helps find transactions, send and receive money, lock and unlock your debit

card and much more.

Source – bankofamerica.com
Besides, robots can be used in AML/KYC checks to define clients’ identities and prevent

frauds.

READ FURTHER What is the difference between KYC and AML?

The best practices of using virtual assistants in financial services demonstrate that smart

features can fulfil more complex tasks such as credit scoring, planning budget, personal funds

management, investment advice, etc.

Bots play a significant role in controversial banking that is becoming more and more popular

among tech-savvy clients.

Total automation

One of the latest trends in the FinTech industry is the complete automation of key financial

processes.

According to the Capgemini report, “intelligent automation” is a combo of continuous

innovations in AI, robotics (RPA) and financial business processes automation.

Source – capgemini.com

The company’s survey shows that the implementation of automated elements into the financial

ecosystem brings a plethora of benefits:

 high returns;

 enhanced cross-selling;

 faster product and service delivery;

 higher customer satisfaction;

  stronger financial health in the short- and long-run.

Despite the obvious advantages of the automation, few FinTech companies have been

deploying automated aspects in their activity. The limiting factors are:

 difficulties in developing a comprehensive business case;

 the top management expressing the reluctance to automate the financial system;

 the lack of knowledgeable specialists and resources to deploy the automation;

 the sufficient amount of data needed for AI and ML operations.

 Hence, not so many companies are ready to transfer their activity to the automated base,

which discourages plenty of enterprises from following this trend.

FinTech incubators

Startup incubators and accelerators hold pride of place in the list of top FinTech trends for

2019.

With the establishment of such networks and programmes as Startupbootcamp, Barclays

Accelerator, FinLab, and other similar projects, enthusiasts, and creators all over the globe

have received a chance to set in motion their business ideas.

Source –startupbootcamp.org

The greatest thing about hubs and accelerators is that they provide early-stage companies with

everything needed for a quick launch: seed capital, premises, and utilities, mentoring, expert

advice, etc.
In general, judges in the FinTech evaluate business propositions and select startups that meet

all the criteria to take part in programs. Creators and startup founders get a chance to expand

their network, get feedback from focus groups, run pre-launch tests, take part in exhibitions,

conferences, and related events during the participation in programs.

FinTech incubators cover a wide range of business fields:

 mobile technologies;

 IoT (Internet of Things);

 Big Data;

 cloud computing;

 advanced analytics;

 AR and VR;

 blockchain and cryptocurrency.

Digital-only banking

The new generation of virtual bank institutions has made a significant difference in the

financial sector over the past few years.

Unlike high-street institutions, conversational banks exclusively operate in the digital realm

and have no brick-and-mortar outlets.

Companies providing digital-only banking:

 Starling Bank – a mobile app for managing funds on current accounts, monitoring

spending habits, keeping track on savings, etc.

  Curve – a tool for combining all cards into one single Curve Mastercard aimed at better

money management.

curve.app
 Loot – a combo of a digital current account and a card with a set of features to set

financial goals, plan budgets, carry out financial transactions abroad, make money

transactions;

 Revolut – a personalised bank account with embedded tools used for budgeting,

monitoring savings, and control spendings.

revolut.com
Why are digital-only banks attracting more and more clients?

They give more freedom, use a personalised approach, and deliver products and services at fast

speeds.

Business alliances

A new wave in finance technology trends is about smart collaborations.

Competing for clients in the past, traditional banks and Fintech startups are now establishing a

partnership.

A Start Path by Mastercard is a global project for Fintech startups from various parts of the

world that helps innovators kickstart their projects.

startpath.com

Mastercard provides startups with access to their ecosystem and network. The program

consists of two parts: half a year of online partnership and 2 weeks working in different

locations.

Start Path is open for bright ideas in banking, biometrics, wearables, AI, security, and logistics.
Another case study is ATB Financial, a Canadian bank, that two years ago used the blockchain

technology in collaboration with Ripple and ReiseBank AG to make a large international

payment. As a result, the transaction that earlier would take several business days was fulfilled

in a few seconds.

New forms of relationships between incumbents and FinTech companies bring amazing results

regarding creating a unified cultural business society, delivering optimal customer experience,

overcoming challenges, and enhancing security.

Advanced credit models

Incumbents used to apply basic social-demographic data for defining the credit rating of

potential borrowers. Consequently, test results came with a high probability of error, which

influenced the credit risk of the whole loan portfolio.

As PWC states, with the growth of alternative credit decisioning models (ACD) used by

Fintech companies, the efficiency of credit risk assessment has exponentially increased.

ACD models are based on the use for additional resources of information such as:

 social media data for creating a clearer portrait of a customer and determining their

behavioural patterns;

 location and transaction records that help to define customers’ buying habits;

 personal files access providing more info on clients’ preferences and wishes;

 ML used for improving existing credit models.

Machine Learning coupled with advanced data is to make credit models more intricate, and

relevant, expand access to the credit market, and mitigate loan default risks.
Cyber-security

The last tendency in the set of financial services trends is the concern of cyber-

security. Although FinTech provides the financial players with more opportunities, it also

makes them more vulnerable to cyber attacks.

The major security-related issues are:

 data tampering;

 the loss and theft of financial records;

 hacking into personal accounts and profiles;

 malware intrusion;

 inadequate CDD and AML checks;

 the misuse of the cloud environment.

Source – statista.com

Biometric technologies are believed to address some of these security and privacy issues with

greater efficiency.
On the one hand, the development of biometrics contributes significantly to preventing frauds

and money laundering. On the other hand, users find instant authentication based on the iris

and fingertips scanning more beneficial as it eliminates the need for memorizing complicated

credentials.

The blockchain technology is also a great troubleshooter when it comes to cyber-security.

How can FinTech companies benefit from using blockchain?

The blockchain is a decentralized system with myriads of transactions recorded in a distributed

database.

The data stored in blockchain can’t be altered due to the structure and nature of the

system. Every single block has the description of the previous element presented in the form of

a hash value. Since all the blocks are compiled into a chain, the attributes of transactions can’t

be forged.

Implementing urgent measures and utilising the latest technologies in data protection such as

biometrics and blockchain will help Fintech companies to achieve higher results in cyber-

security.

Conclusion

Now you’re aware of the fintech trends 2019 that are going to change the shape of the industry

soon. If you’re contemplating how to adjust your corporate strategy to new moves, focus on

the following:
  consider altering your business pattern to meet the constant changes of the digital;

 take advantage of AI and ML to cut operational costs;

 apply robotics to manage customer requests faster;

 be client-oriented and provide omnichannel services;

 put the spotlight on cyber-security;

 make sure that the level of expertise your team have complies with today’s demands.

Share your thoughts in the comments or drop us a line for a small talk and idea sharing!

4.8 (95.45%) 22 votes

icon tooltip
Got an idea? Let's talk about it.

Get in touch
Submit request

Related Posts