The need for innovation and the advent of PSD2 and Open Banking will drive collaboration across the financial services sector in 2018 and beyond. As customers demand more efficient service and innovative products, many banks will look to fintech companies for expertise and technology solutions. Banks that shift mindsets to think of themselves as a platform business, rather than a product business, will be able to build and curate financial ecosystems, working with fintechs to enter smaller market segments. In this way they are not only expanding their own market but also building deeper engagement with their customers across their entire lifecycle – from their childhood savings account, to personal or business loans or their retirement nest-egg. In fact, 82% of financial service providers expect to increase fintech partnerships in the next three to five years. Fintechs, in return, can benefit from banks’ abundant customer data, which will enable them to offer deeper financial insights and refined services. The end result is an empowered consumer with greater financial literacy, and access to financial services and products at competitive prices.
The battle for digital talent will intensify
Fintechs, banks and large companies already battle for the best tech talent in the market and in 2018 this will further intensify as demand outweighs supply. As companies look to adapt and prepare themselves for future changes they need a team of qualified professionals to help them optimise their businesses and ensure their success. Planning ahead is crucial if companies don’t want to miss out on the top talent. At Spotcap, we’ve launched a scholarship programme to support the next generation of aspiring fintech graduates. As an industry we also need to do more to attract women to fintech because they bring unique skills to the table. Studies show that diverse teams perform better and deliver stronger financial results. In 2018 we hope to see greater gender diversity across the fintech industry as companies become increasingly aware of the benefits and programmes to promote diversity bear fruit.
Machine Learning will become increasingly mainstream
Artificial intelligence (AI) is opening new doors for businesses to better understand their customers. A report by McKinsey estimates that total annual external investment in AI was between $8B to $12B in 2016, with machine learning attracting nearly 60% of that investment. It’s no wonder that financial services providers are among the most enthusiastic adopters of this technology. Machine learning can help companies make faster and more informed decisions. From tracking customer behaviour to offer them the most suitable products, to market analysis or calculating risk – smart machines can add considerable value. At Spotcap, for example, all of our risk attribution and credit models are self-learning. We have developed a bespoke bank account model as well as a text mining tool to further enhance our credit assessment process.
Written by Jens Woloszczak, Founder and CEO of Spotcap