Will 2017 Show Great Promise for Fintech?

Last year was disruptive for FinTech? That seems a bit of an understatement now, but who knows whether 2017 will see even greater innovation.

“Without a doubt, 2016 was the year ‘disruption’ became tangible,” writes David Horton on AmericanBanker.com. “Events like Brexit and the U.S. election brought home the reality we are living in a fast-changing global society where a sense of anti-establishment and rebellion is accelerating change. This shows no sign of stopping in 2017.”

Some directions savvy FinTechs are expected to take this year:

  • Artificial intelligence will spread. Advanced machine learning, chatbots and smartbots will quickly analyze data in order to respond faster (and in more personalized ways) to customers needing credit decisions, basic investment advice, etc., leaving only complex matters to human beings. A 2016 PwC study last year reports service robots are still facing technological hurdles, but rapid advancement is projected within four years. “Artificial intelligence has reached a critical tipping point and will be at the heart of a convergence of technologies like data science, Internet of things, optical character recognition, natural language programming and blockchain — all of which will drive structural change in financial services,” advises Horton.
  • Low-cost mobile payments will become the norm. Apps such as Venmo are making them cheaper, and a recent study notes the infrastructure is less expensive and easier for small- to medium-sized banks to install. In 2015 alone, U.S. individuals transferred about $200 billion to each other via mobile phone or computer. “Now is the time to reimagine the payments relationships between banks, retailers and FinTech,” advises Paul Thomalla of ACI Worldwide on BankingTech.com. “Rather than seeing the regulators and the new FinTech players as a threat, banks should embrace the opportunities the new payments landscape will bring.”
  • Open-API platforms will grow in number. In a bid to deliver new products and services, boost channel efficiency and control operating costs, more FinTechs will adopt the open-API modules that welcome additions by third-party developers. “Over the past 12 months, there has been a consistent uptick in such platform solutions from leading organizations like Citigroup and BBVA,” Horton notes.
  • Mobile payment security will improve. Biometric identification technology will ensure access to private consumer information only with the correct voice, iris, retina or fingerprint pattern. That’s crucial, since Statistica predicts global mobile payments will hit $780 billion this year. “Unless hackers have the James Bond technology to recreate your fingerprint on their own finger, it will be almost impossible for them to hack into your financial information,” advises Inspyrus in the Huffington Post.

While FinTechs that embrace those trends will likely become more competitive, others may fall by the wayside this year, according to some analysts.

“We can expect the fall of what were hoped to be future FinTech unicorns, as several significant FinTech startups will have received more than three to four years of funding,” Horton advises. “If the market is not conducive to a healthy IPO, or results are not showing the massive potential once envisaged, the funding taps are likely to get turned off. Ultimately, expect 2017 to be a year of more disruption, more change, and likely, a few FinTech casualties.”

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