Whether you’re new to the market or not, you need to keep up with the trends to stay relevant. When you know what’s going on in your industry, you can take proper steps to stand out and grow.
That’s especially important in fintech, where technological developments are constantly disrupting financial services. Since the digital market is very competitive, staying up-to-date with trends is key to cutting through the noise of the competition.
We sat down with Guy El Khoury, the CEO of Accomplish Financial, to discuss the latest trends in the fintech industry. Here are his thoughts on the most notable fintech trends you can expect in 2020.
The Rise of Digital-Only Banking
Consumers nowadays increasingly use mobile devices to use various financial services. Why go to the bank when there are so many digital solutions available?
Guy El Khoury: 7 Key Fintech Trends That Will Dominate in 2020
That’s precisely why digital services in fintech keep booming. They offer simplicity, convenience, and cost-effectiveness.
Because of this, Guy El Khoury says, we’ll see more and more digital-only banks in 2020 and beyond. Everyone will be able to get all the financial services they need with just a few simple taps on the screen.
However, when customers encounter some complex problems, they may need to get to the nearest branch and settle them.
That’s why digital-only banks should partner with traditional banks if they want to stand the test of time, says Guy El Khoury. Otherwise, they may lose customers and eventually fade out, he says.
Banks Will Embrace AI and Virtual Assistants
According to an AI investment analysis by Autonomous NEXT, artificial intelligence is extremely cost-effective.
By 2030, AI could help banks reduce costs by 22%, helping them generate mind-boggling $1 trillion in savings.
Many banks are already using AI and chatbots to speed up administrative tasks and transactions and provide personalized customer service. They’re also using AI to combat cybercrime, as it can monitor the system 24/7 and detect potential fraud threats.
Guy El Khoury says that conversational banking will completely transform fintech, although it’s still in its infancy. But to reap the most benefits, banks need to hire in-house AI experts as soon as they can, he says.
Paid Surveys reports that many banks are already using AI and chatbots to speed up administrative tasks and transactions and provide personalized customer service. They’re also using AI to combat cybercrime, as it can monitor the system 24/7 and detect potential fraud threats.
Fintech Regulation Initiatives on the Rise
Regulations for banks and other established financial institutions have been here for decades. That’s not the case with fintech companies.
They’re growing rapidly, but there are still no proper regulations to support their innovation. Open banking and PSD2 in Europe are excellent examples that the US regulators need to follow, says Guy El Khoury.
To comply with PSD2, banks need to create APIs to share customer data with authorized third-party fintech providers, such as regulators. That way, they can significantly reduce the risk of fraud.
Because of the need for and lack of fintech regulations, the RegTech industry is growing. Every financial service provider on the globe should follow the RegTech trends, as Guy El Khoury advises.
Fintech Companies and Banks Will Join Forces
Traditional banks and other financial institutions don’t have trouble with this regulation conundrum. They do, however, lag behind fintech companies in terms of various digital solutions. That’s because they rely on the fintech firms themselves to develop solutions to enrich their existing systems.
And that’s precisely why collaboration is in order, says Guy El Khoury.
Fintech companies and banks will soon realize they need to start working together to revolutionize the financial industry. They’ll start collaborating or partnering up to harness the full power of digital opportunities and attract more customers.
Alternative Payment Methods Will Drive Innovation
Payments innovations are also driving a lot of change in the fintech industry. It seems like new alternative payment options keep popping up every day.
The essential payment methods shaping the future of fintech include:
- Digital wallets (Apple Pay, Android Pay, Samsung Pay)
- Mobile payments (mobile apps, QR codes)
- Contactless payments (NFC, Bluetooth Low Energy, wearables)
- Cardless payments (tokenization, biometrics)
- Cryptocurrency payments
Statista estimates that contactless payment users will reach a whopping 760 million in 2020.
We’re far from being a completely cashless society, says Guy El Khoury, but we’re getting there.
Credit cards have largely replaced physical money, and now it’s their turn. Soon, we won’t need them to pay for purchases or pay the bills. We’ll do it all via mobile apps, digital wallets, and other convenient alternatives.
Smart Contracts Will Digitize Trust
Every fintech company needs to leverage smart contracts to move forward in business, says Guy El Khoury. They’re much safer and more reliable than traditional contracts because they run on the blockchain.
This decentralized network makes every record immutable, that is, completely tamper-proof. The parties sign a smart contract using cryptography, so there’s no paperwork to worry about.
That’s why transactions are faster, more authentic, and more precise — and why smart contracts digitize trust.
They’re particularly beneficial when it comes to international collaborations. That’s because they eliminate the need to meet face to face but still manage to create authenticity and trust.
Fintech Companies Wil Turn to Unbanked and Underserved Markets
According to the World Bank report, more than 1.7 billion people in the world fall into the unbanked category. They don’t have banking accounts because they deem them either too expensive or unnecessary.
Traditional banks aren’t very interested in investing in unbanked and underserved markets, as it may not be very profitable. But that doesn’t stop fintech companies from expanding to those markets,
Their customers only need a smartphone and an internet connection to use their services. We’re about to see fintech firms grow exponentially in the coming years, thanks to those markets, says Guy El Khoury.
The main drivers of fintech trends are cutting-edge technologies and consumer demand for safer and more convenient financial services.
That’s the road we’re headed, says Guy El Khoury. His company has forged partnerships with financial service providers like Mastercard and will continue implementing all these fintech trends.
We don’t want our clients and partners to face challenges alone and lag behind their competition, he says. We want to help them overcome every challenge — not only stay in the picture but stand apart and thrive.