Written by Jamie Hutton, Quantexa
FinTech is bringing widespread disruption across the financial services industry, revolutionising outdated and traditional processes. Europe and the UK in particular, are leading the way in breeding a new generation of innovators, with the UK FinTech industry experiencing a record level of investment in 2018.
Digital banks are transforming the face of banking with Monzo closing the largest round of crowdfunding in just two days. 2019 looks to continue the fast-paced innovation witnessed in 2018 but what will the top trends be?
In January 2018, open banking reforms were introduced to allow banks to open their data to third parties. The regulations require banks to permit their customers to share their transaction data with third parties through application programming interfaces (APIs).
There are new companies emerging everyday with new ideas on making money management easier, but for us to reap the benefits of these innovations, the companies need access to personal transaction data. By opening up this data it creates more competition among the banking sector, which has for too long been dominated by only a few big names.
As FinTech grows, there is less necessity for physical branches. Consumer visits to branches are set to drop by 36% between 2017 and 2022, with mobile transactions shooting up 121% in the same period.
Banking apps are becoming more sophisticated with the integration of chatbots to allow customers to make payments, set up new accounts, freeze lost cards and order replacement ones with the touch of a button. Research from Accenture found that 63% of us now use messaging apps to speak to businesses and, together with innovation in AI and natural language processing (NLP), it’s only going to continue to grow.
The UK is a breeding ground for FinTech innovation, especially for online-only ‘disruptor’ banks such as Revolut, Atom and Monzo, who have launched without any branches at all.
As our data becomes more precious, criminals are finding new ways to access it. In reaction, financial services institutions are continuing to establish innovative ways to secure and protect their customers’ data.
Recently, biometric authentication has seen a widespread consumer adoption with smartphones introducing fingerprint authentication and face recognition to confirm someone’s identity in replacement of a 4-digit code. 2019 will continue to see the reduction in pin numbers and the further adoption of biometric security features on phones, smart watches and visiting branches – for those that still have them.
Technology has long been used to address regulatory requirements, but with ever increasing demands pressured onto financial institutions, RegTech is bringing a new perspective and agility to regulation.
Europe has led the way in revolutionising regulation, with the EU’s 5th Anti-Money Laundering Directive being brought into force in July this year to establish a centralised and public register of companies and their ultimate beneficial owners. 2019 will see how regulation will keep up with new technologies and how innovation will welcome a new phase in compliance.
While the marriage of the two words ‘regulation’ and ‘technology’ isn’t new, 2019 will see a new phase of agility, speed, integration and analytics to maintain a strong financial services sector and protect customer data from criminals.
2019 will see the FinTech industry continue to thrive as it challenges the banking status quo. With the innovation of technology, traditional banking is changing for the better – increasing security, opening up competition amongst the biggest names, digital banking and changes in regulation will ensure that the financial sector continues to be strong but also secure.