By
Chimamanda U. Martha
April 12th, 2024
With the significant growth of the FinTech space in 2019, the next year is expected to strengthen the bond between technology and financial services. Experts predict major changes in the banking space.
Financial Technology (FinTech) has been the talk of the town this year and will continue to remain the next year as well! Big Tech companies like Google, Apple, Facebook, etc. have already pulled up their socks to grab a considerable share in the evolving financial space.
Furthermore, 2019 has been a good year witnessing significant growth in awareness and exposure for FinTech startups and companies. Besides, the industry has also managed to attract massive funding for the development of next-generation banking systems.
The FinTech revolution in the next decade can completely overhaul the traditional banking sector. Experts predict that 2020 will see a stronger bond between the two worlds of technology and financial services. This will further result in increased adoption of FinTech services and better services for customers.
Needless to say that the entry of Big Tech has also forced traditional banking institutions to think beyond and use next-generation technologies like AI, blockchain, etc, to deliver better customer service. Besides, they are likely to bring more opportunities in the market with higher demand for FinTech jobs.
However, one area which is still under the watch is FinTech regulations. With this wave of technology transformation, regulators are working different ways to deal with risks. Moreover, as FinTech brings further decentralization in the banking space, regulators are a bit hesitant towards it.
Companies like Facebook have already started experimenting with using digital assets like Libra. However, it has been struggling to convince the regulators on its ability to lead such a huge project.
FinTech Startup Landscape and Expert Views
According to CB Insights, nearly 60 FinTech startups have grown above $1 billion valuations in recent years. Companies like Chime, Plaid, and Stripe happen to be at the top of the list. Moreover, as per the Experian data, FinTech is playing a key role in transforming the personal loans industry.
The Bloomberg report suggests that the incumbent players in the financial services or technology space are having a tough fight with startups and new companies. Also, the FinTech space has seen several mergers and acquisitions with the big fishes acquiring the small ones. Lindsay Davis, senior intelligence analyst, CB Insights, noted:
“Wealth management will likely see more consolidation from incumbents, who are under pressure to compete for next-gen customers and an army of virally growing fintech apps who have abstracted the client relationship away from the old guard. Charles Schwab buying TD Ameritrade is just the beginning of more strategic consolidation to come.”
One thing is sure that going forward consumers are likely to prefer more digital banks over the physical ones. However, this industry shift can take a substantial amount of time. Mitch Siegel, principal, KPMG said:
“I do believe 2020 is an arms race: You’re going to see a lot of people launching digital banking initiatives. Personalization is what’s changed that game.”
“While these neo-banks can’t yet match the complete suite of banking products that a traditional branch-based bank can, this doesn’t matter to the typical consumer because they rarely, if ever, use any of the hundreds of products that are in a bank’s arsenal. So we’ll be talking about challenger banks in 2020 and in 2021 and in 2022 and eventually the ‘challenger’ title will be dropped because they’ll be major players in the ecosystem”, shared Frank Rotman, founding partner, QED Investors.