The year 2017 so far has been one of the most fascinating periods in the history of FinTech. Explosion of ICOs, revision of regulatory frameworks around the world, and a lot more. With such an unprecedented speed of changes in FinTech, it is a challenge to envision what the future of the financial services would look like.
Accounts Receivable Automation
With the rapid advancement in payment technology, I see the need for collections diminishing. The days of traditional collections are ending. Agencies and the industry will need to either redefine themselves or become a casualty of innovation and disruption. I envision that collection agencies will become ‘customer engagement’ agencies where value is derived by growing the customer’s lifetime value, not debt collections. - Ken Green, Founder & CEO, ItsPayd
We see banks and other financial institutions opening up to working with startups in the FinTech ecosystem and leveraging the skills and ideas these companies have to offer. - Eliad Saporta, CEO, Coriunder
I think the change in some measure will be driven by social media itself. I believe that with the coming of functional AI, we’re on the verge of seeing social media as an AI cohort – almost virtual reality avatars instead of keystrokes of ourselves. A friend of mine called me “crazy” for thinking that, but I think that’s the next big leap. It’s up to us to be ahead of the curve when it hits. - Jeff LoCastro, Founder & CEO, Neener Analytics
Self-driving cars, going to be a HUGE market and potentially difficult to capture a large market share so that is going to be a big change. Also, regulation – right now, what we are doing is legal in many jurisdictions but in most, it is unregulated currently but it won’t be for long. So we are curious how those changes affect what markets we can enter. - Ian M. Worrall, Co-founder, MyBit
Blockchain is the most important change coming into FinTech industry. Companies that will not adapt to blockchain will fall behind and become obsolete in regard to their efficiencies and effectiveness. - Saiful Khandaker, CEO, Famacash
We are building the world of instant finance where everybody can receive, send, lend or borrow from anywhere with a tap of a finger – a world where transactions happen at the speed of light and at negligible cost to all users. - Alexi Lane, Founder & CEO, Everex
The biggest challenge facing retailers in the next 3-5 years will be mastering mobile. Mobile adoption has grown significantly in recent years, but we’re only now seeing a shift from people just browsing retailers’ websites or apps on their phones to actually converting and making purchases.
In order to keep up with consumer demand, retailers will need to optimize their entire mobile experience, including the checkout process. Shoppers don’t want to waste time entering their 16-digit credit card number into a small screen. By giving shoppers more payment options that are faster and easier to use on mobile, retailers will be able to drive more sales with these mobile-centric shoppers. - Bobbi Leach, CEO, FuturePay
Governance, Risk Management, Compliance
It will be interesting to the run for GRC solutions as BFSI and other institutions start adopting blockchain technologies. A lot of opportunities will open up across industry verticals once blockchain is implemented in supply chain and other business transactions. - Shanmugavel Sankaran, Founder & CEO, FixNix Inc.
Health Insurance, HR Technology
While it’s happened quite rapidly in the western world, I think that over the next few years, automation is going to explode. More and more industries will look to streamline their businesses through automation across all departments. - Talal Bayaa, CEO & Co-founder, Bayzat
Digital wallets are here and digital identities will be here soon. Informed people are feeling more empowered to take charge of their digital identity online and in the physical world (with biometrics), and are likely to demand that counterparties do the same. We believe owning your own digital identity in certain markets will become a given and also believe that younger generations will expect it. - Justin Oberman, VP of Identity Strategy, SureID
The $100B US small business insurance market is on the verge of a big paradigm shift. Business owners are beginning to expect to deal with insurance online, in the same way, they use consumer-friendly online technologies to deal with banking, payroll, accounting, or sales. - Maxime Rieman, Director of Product Marketing, CoverWallet
We will see the traditional agent/business owner relationship breakdown entirely as technology, like ours, is developed to break the dependency on an old fashioned agent. The business owners of today and tomorrow want a self-managed solution that is fast, reliable, and that doesn’t require speaking with a human. - Phillip Naples, Founder & CEO, UnBrokerage, Inc.
The most important change is that more and more students and their families will use private student loans in place of income, retirement savings, credit cards and home equity lines to fund the education gap. Likewise, we see private student loans taking share from federal student loans, as the government looks to reset its balance sheet.
We know the current White House administration is looking for ways to reduce some of the outstanding federal student loan debt, which now stands at $1.29 trillion. The Wall Street Journal reported that some 40% of federal student loan borrowers are not making repayments. That’s a problem that is unique to federal student loans; private student loan default rates are way below that in the single digits.
One solution would be for the government to sell its loans to private lenders, who can then treat them like an investable asset. Or they might put limits on federal loans that aren’t need-based, like PLUS loans for graduate school or parents, which would position private student loans as an invaluable financing option.
In terms of industry change, private student loans are really an untapped asset class. There’s an addressable market of $172 billion in annual higher education spending that’s not covered by federal aid. Currently, only $10 billion of higher education costs are funded with private student loans, and further opportunity exists in student loan consolidations and refinancing.
As more financial institutions see how easy – low risk and profitable – it is to enter this asset class, we’ll see a stronger demand for origination, servicing, and insurance. More competition in the marketplace will lower the cost of borrowing capital and increase the terms and choices available to students. To put this another way, with more skin in the game, the incentives will grow for lenders, resulting in even better pricing for students. As it stands right now, we have more lending capacity than we have borrowers. We love being in this position and not being reliant on securitization markets. - Mike VanErdewyk, Founder & CEO, ReliaMax Holding Company
I think there are two; I suspect there will be a wave of consolidation particularly for small country-specific operators. I think on the bigger industry landscape, compliance with the Payment Card Industry Data Security Standard (PCI DSS) in some countries is patchy or poor at best. As online payments continue to grow in this region, so does the ever present risks of data breach to non-PCI DSS merchants exponentially grow. I feel there are interesting times ahead in this space. - Alan Pigott, Chief Executive, IPGPAY Limited
Online Payments, Prepaid, Cryptocurrency
What we’re most excited to watch over the next five years is the evolution of Bitcoin and cryptocurrency. We firmly believe that cryptocurrencies will be an integral part of the online payments landscape in one form or another, but it’s not clear altogether which technologies will survive and thrive. FinTech is in a period of massive transformation thanks to blockchain technology and cryptocurrencies. This is a crucial moment that will pave the road for the future of online transactions. - Firoz Patel, CEO, Payza
Payment Assurance Platform Provider (SaaS)
The same day ACH through the NACHA Network which is already changing the pace at which funds can be delivered. - Richard A. Levitan, President, Neighborhood Pay Services (NPS)
We see the cross-border B2B market segment still in its early stages, and we believe that in the next 3–5 years many SME will take notice and want a more flexible payment solution besides their bank as they expand their business globally. - Nagarajan Rao, CEO, Disburze
Payments, Balance Management
If we are talking about the trends in the payment and banking industry, I personally think that we will see many changes in the way how people do their financial transactions that are technology-driven.
I believe that especially blockchain technology will influence the process of redefining and redesigning financial services for many uses cases, but also other technologies like biometric identification and AI will help to simplify, for example, online and offline payments and shopping experience for average consumers. We already see the first steps in this direction with “Amazon Go.” - Natallia Martchouk, Co-Founder & Managing Director, balancr.io
Payments, Money Transfer
There will be more companies like Cashaa focused on including cash transfers – we frequently get approached by people asking us to launch our product in their country or build a similar version of Cashaa for them. So far, they are not our competition as there are so many opportunities worldwide that it leaves room for 20 copies of us.
There have been predictions that cash use will decline to half in the next years in places like the UK, but it is not predicted that it is going to disappear, and there are countries still almost completely using cash. - Kumar Gaurav, Founder & CEO, Cashaa
Global economies becoming cashless. Growth in mobile and consumer devices as payments and service delivery channels. - Rajeshwar Mitra, CEO, Radiius Corp Inc.
Most purchases will be made via mobile phones. - Tim Sheehan, Co-Founder & CEO, Greenlight Financial Technology, Inc.
Transactions once handled with paper money, bulky computers, and human interaction are now being completed entirely on digital interfaces. As technology integrates deep into consumers’ lives, the financial services industry is undergoing rapid expansion and significant structural changes. Mobile banking and payments are gaining traction while new software and automation programs are streamlining work for businesses and individuals. - Varun Mundra, Co-founder & CEO, RupeeVest
Micro-transactions are becoming a popular thing in the FinTech space. Over the next few years, we plan on seeing new regulations to increase the speed in ACH transfers and payouts. This will be huge for our market segment. - Christian Zimmerman, Co-founder & CEO, Qoins
PFM, Banking Software
In order to attract account holders, financial institutions will have to offer a high level of personalization in their product offering. As fewer and fewer individuals are visiting branches, this personalization will need to be online and completely automated. - Christian Ruppe, Co-founder & CEO, Monotto
There is a growing consensus that rental history reporting should be considered to reformulate credit scores. As you know, monthly rent payments are highly correlated with the ability to repay debt in a timely manner, yet they have not been one of the historically accepted data sources for calculating credit scores. The Consumer Financial Protection Bureau recently put an inquiry out seeking feedback from the financial industry and the public about using alternative data such as rent payments to formulate credit scores. - John Simpson, CEO, RentReporters
With an increasing demand for machine-learning technology, AI will continue to be a powerful force in regulatory compliance and risk assessment in the next five years. Manual tracking and operational administration will soon be replaced by automated tools that can adapt to the continuously changing regulatory rules. These technologies will eliminate tasks such as researching and tracking that can take days of work. We will also see an increase in financial institutions looking to imbue its processes and businesses with automated compliance offerings. - Brian Clark, Co-Founder & CEO, Ascent Technologies
The scale of e-commerce growth will continue as will mobile payment methodologies. Just as omni-channel payment functions have blurred the lines between the POS and CNP environments, risk and control technologies and methods will expand and extend to these realms as well. - Alex Baydin, Founder & CEO, PerformLine
Our prediction – not for the immediate future of RegTech, but maybe the next few years – is the emergence of new technology to enhance RegTech. The vision many have at the moment to use artificial intelligence to respond to regulatory requirements is still unrealistic; however, using machine learning to identify patterns in data and respond accordingly is highly possible. We also believe that blockchain may provide an interesting application to prove controls assurance within a network of providers, consumers, and regulators of services. There is a very long path of increasing maturity of blockchain applications ahead before we can imagine the technology being useful for RegTech, but we definitely see great potential. - Stefan Sulistyo, Co-Founder & Chief Customer Officer, Alyne GmbH
The future of the market is that within the next 5–10 years, there will be no high street stores left. All financial services will be delivered via mobile. The FinTech industry will be a very different world in the future. Our world today is very much mobile-first and that could easily become mobile-only in the years to come. For financial services, that means that 2 billion more people will have smartphone-centric mobile wallets in places like Africa and Asia, putting them financially on grid – think about what that would mean for the families and the economies in those regions.
As smartphone sales reach saturation point in developed markets, technology adoption growth is now solidly focused on emerging and developing nations. Following on from the success of domestic millennial-focused payment apps such as Venmo in the US, sending money mobile-to-mobile around the world, instantly and at low cost, will take off in 2017. - Michael Kent, Co-Founder & CEO, Azimo
Remittances, Money Transfer
The biggest challenge still facing the remittance industry is mobile. While other parts of the payments industry have been able to keep up with the rise of mobile payments, the remittance segment has traditionally lagged. In the next 3-5 years, the biggest change won’t just be the shift to a mobile-centric mentality but getting mobile right – seamlessly balancing user experience and security. Pangea is at the forefront of this push to serve the mobile-centric customer, as a vast majority of our existing customers access our platform through mobile devices. - Nishu Thukral, CEO & President, Pangea Money Transfer
Robo-Advisory, Investments, Financial Planning
If you track the journey of the user, a lot of fulfillment of solutions still happens offline. Also, lack of interoperability between service providers creates barriers in consumer movement. Over the next few years, a majority of origination and fulfillment will happen online and there will be complete mobility of a user from one service provider to another. There will be a strong focus on advisory and convenience as value additive services which will be directly monetized from the user and not as commissions from product manufacturers. - Kushal Kothari, Co-Founder & CEO, Expowealth Technologies Private Limited
Security, Fraud and Authentication
The cyber industry realizes that protecting the perimeter using firewalls and antiviruses is failing. To address this problem, the cyber industry says that “identity is the new perimeter.” We are here to deliver it. - Eli Talmor, CEO, SentryCom
We see two big changes over the next five years: 1) The current 25–40-year cohort is more financially literate compared to their parents and will drive the adoption of commission-free investing; 2) Common KYC for banking and investing will reduce the friction associated with onboarding new clients today. - Gaurav Rastogi, CEO, Kuvera
Wealth Management, Capital Markets
The usage of artificial intelligence and blockchain is creating a paradigm where the cost of deploying client-centric solutions is coming down significantly. For once, we are able to design an experience where a customer feels “taken care of,” thanks to data analytics capabilities. - Alex Medana, Co-Founder & CEO, FinFabrik