The rapid development of new frameworks is expected to give life to some interesting fintech trends during 2017. Here’s a list of some of the things we could experience throughout the year.
Further robo-advisor adoption
Historically, you went to your bank, met your adviser and he or she took a commission in exchange of advice and money management. However, this notion is questioned by many and challenged by the rapid rise of robo-advisors. Such convert big data into meaningful data in order to make life easier for investors (quite often with fewer fees). Based on a report from MyPrivateBanking last year, 43% of high-net-worth individuals in the UK and US are already using online wealth management tools, and 70% think automated investment tools can positively affect their wealth manager’s advice.
More blockchain test cases
Blockchain was a hot topic in 2016, with many banks having tried to launch their own blockchain ventures, yet struggled to make significant progress in an industry that has historically kept all information safely guarded. The DTCC, a US post-trade services group that processes more than $1,500tn of securities a year, will start using technology from IBM, and US blockchain startups R3 and Axoni, as the backbone for its next-generation trade information warehouse (the unit settling payments in credit default swaps in multiple currencies). The project will begin early this year and represents a major test for blockchain implementation. One can be certain that it will be monitored closely by a variety of industry stakeholders.
Regtech moves deeper into the asset management infrastructure
Back- and middle-office financial services infrastructures will experience further changes as regtech moves deeper into such frameworks. Regtech will deliver regulatory requirements faster and more cost-effectively than existing systems. For asset managers, it will be particularly meaningful in solving regulatory data management challenges and complying with reporting cycles.
Growing cybersecurity needs leads to partnerships
Cybersecurity has become a major concern for many business sectors, and will remain so throughout 2017. Data breaches that took place at major retailers, government departments and financial services firms are likely to continue. Hence, one can expect fintech companies to establish meaningful and long-term partnerships within traditional sectors. Back in September 2016, a partnership was announced in the UK between the Department for Culture, Media and Sport (DCMS), the Government Communications Headquarters (GCHQ) and the nation’s top tech startups to develop new technologies aimed at protecting the country from cyber attacks.
Fintech for the unbanked
It’s no secret that many developing nations are ‘unbanked’, or rather ‘underbanked’. Deficiencies in terms of infrastructure has contributed towards that fact. Mobile phone adoption, however, has been strong worldwide. This has led to the success of P2P payments solutions such as M-Pesa (particularly in Kenya), allowing for more affordable payments via cellphones. Over KES 1tn (roughly US 10bn) of mobile money deposits and withdrawals took place in the country between July and September 2016, with M-Pesa maintaining a large lead (67% market share). We can definitely expect such technologies to expand to other geographical areas, and competition to ramp up.
The world is full of surprises. Perhaps geopolitical events will influence the direction of the entire fintech ecosystem … for better or worse.
This article was originally published on BankNXT as “Phil Siarri’s fintech predictions for 2017”.