The year ahead looks set to be a big one in the fintech world with news yet another challenger bank has been granted its banking licence.
ClearBank – the new venture of Worldpay founder Nick Ogden – will focus on fintech and intelligent accounts, and joins a host of mobile-based digital banks such as Tandem Bank, Starling, and Monzo, which are preparing for launch following last year’s successful introduction of Atom.
So, in addition to a host of fintech-based digital banks, what else does 2017 hold in store for this burgeoning sector? Here are five of the key trends to look out for:
Focus on the customer will be renewed
A report by Starling Bank indicates the fintech sector may have lost some of its initial focus on putting the customer before the product, possibly due to increased collaboration with established financial institutions. The coming year must see a renewed focus on better serving the customer with flexible products that really meet their needs. In order to be sustainable, fintech start-ups and challenger banks must be willing to listen to the customer – actioning a concept that is often a mere slogan – and provide services that have a positive impact on consumer lives. The report suggests fintech can materially improve the financial health of UK consumers in 2017, but only if it puts its efforts into solving the right problems.
Blockchain will reach a tipping point
The use of blockchain technology to increase efficiency and reduce costs in high volume, small value transactions continues to grow and will reach a tipping point this year. At the end of 2016 BNP Paribas announced it had made its first real-time blockchain payments, and in January the Depositary Trust and Clearing Corporation (DTCC), which acts as the central bookkeeper for Wall Street’s securities trades, selected IBM, Axoni, and R3 to develop its blockchain solution, validating the longevity of this emerging technology.
Transactional communications will be automated
As enterprise adoption of cloud-based technologies grows, business processes that span two companies, such as ordering and invoicing, can become far more streamlined, and automated. Quotes can be provided, orders placed and accepted, contracts drawn up, and invoices issued all via system-to-system updates, making these processes simpler, more efficient, and less prone to human error. Smart Communications, the market leader in cloud-enabled enterprise customer and business communications management, calls this the ‘secret cloud dividend’ – an unexpected benefit of cloud-based technology that improves inter-company workflows and increases efficiency.
Mobile payment security will increase
As mobile banking and payments become the norm – with adoption of mobile payments increasing at a particularly high rate in the UK – security measures will be enhanced. They will leverage existing mobile technologies to use fingerprints, facial recognition, and iris scanning, combined with passwords to make hacking financial information far more difficult. Mobile payments will also become increasingly integrated with consumer loyalty and rewards programmes over the coming year.
Insurtech will take off as part of European fintech
A report by Bell Pottinger predicts the 10 hottest fintech trends for this year and places the emergence of tech in the insurance industry at number one, calling 2017 “the year of insurtech.” As a sector known for poor customer experiences and a lack of innovation, insurance is prime for disruption. Insurtech start-up businesses are looking to streamline the application and claims processes, as well as introducing alternative pricing models, making insurance more attractive and accessible to the modern consumer. Germany already has established insurtech businesses such as Berlin-based Friendsurance, and the market is also set to grow in the UK with AXA recently partnering with Trov to offer ‘on demand’ insurance.
The outlook for 2017 is broadly positive as the fintech industry continues to gain momentum, leveraging the latest technologies and innovative business models to challenge the established products and processes of traditional banks and financial services.
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