Many people think of FinTech as “that new app” which helps you pay things with just tapping your phone on PoS devices without having to touch real physical currency. But, did you know that FinTech first flourished in the 1950s? This innovative industry is actually almost 70 years old!
Technology and financial services have been evolving together for decades. FinTech has been making the market more competitive, reduced prices paid by customers and created much bigger and easier access to worldwide markets, creating a positive impact on society and the economy.
This is only the beginning though.
With 2020 being less than 6 months away, (…we can’t believe it either) we want to share with you the FinTech trends that will dominate the near future.
Started from The Bottom, Now We’re Here
First things first. Before we start analyzing the promising FinTech trends of the future, we want to underline some important historical facts of this awesome industry.
Did you know that your grandparents are closer to the creation date of the credit card than you today? In the 1950s we were introduced to the “credit card” in order to move away from carrying cash.
We might be taking this convenient technology for granted today, but can you imagine your life without it?
Credit cards were a huge step towards modern technology, banking, and exchange. (You can view the whole credit-card history posted on creditcards.com)
Moving on to the 1960s, the ATMs flourished and managed to replace cashiers and bank branches. Engineer Shepherd-Barron whose team put together the first ATM in North London in 1967 stated “It struck me that there must be a way I could get my own money, anywhere in the world or the UK. I hit upon the idea of a chocolate bar dispenser, but replacing chocolate with cash”.
Onto the 1970s now, electronic stock trading started changing and evolving, and the National Association of Securities Dealers formed the National Association of Securities Dealers Automated Quotations (NASDAQ).
Fast-forwarding to the 1990s, those were the flourishing years of the internet and e-commerce business models, introducing the online stock market and replacing the phone-driven retail stock brokering model.
By the early 2000s, there was even faster hardware, allowing computers to manage pricing, timing and quality of trades which created the way for High-Frequency Trading.
Finally, today, in 2019 with all these evolutionary FinTech services available, we can do almost everything with one “click” on our phone. From online shopping to trading, ordering food (our personal favourite), digital technology has reached a point where it is an absolute necessity to have.
How much better can it get, you ask? Keep reading!
What the Future Beholds
1. Robotic Process Automation
What’s the first image that comes to your mind when you hear the word “robot”?
Most of you might probably think of an industrial robot which helps with the manufacturing of products, or the famous robot called Sophia which is the latest artificial intelligence robot creation.
Well, Robotic Process Automation (RPA) is basically the technology that allows us to “organize” computer software or a “robot” in order to integrate the actions of a human being.
This does not necessarily mean that RPA looks like Sophia or a big chunk of machinery. When we talk about RPA in terms of business process automation, we mainly refer to the transformation of office work done efficiently faster.
RPA bots are capable of copying many human actions digitally, such as logging into applications, completing forms, move documents into folders, provide useful information and analytics to the HR, IT and compliance departments, etc.
This type of technology has been evolving tremendously over the years, and is one out of five trends set to dominate in 2020. AI Multiple explores in depth the top 15 benefits of RPA and how businesses can thrive from it.
2. Facebook’s Libra Cryptocurrency
Cryptocurrencies have become highly popular in recent years, and many people that invested in them profited in unimaginable ways. If you are involved in this type of market, it may seem like a new type of cryptocurrency pops up every other day.
Well, according to Investing.com, there are 2,681 different cryptocurrencies at the moment. Many consider bitcoin to be the first original cryptocurrency that was created by someone under the pseudonym Satoshi Nakamoto in 2009.
As we previously mentioned, Facebook has been co-founding the project called “Libra” over the past two years.
This digital currency will be used to make payments across Facebook, Messenger, WhatsApp and Instagram, and it will also be accessible for general e-commerce, payments etc.
The aim is to turn Libra into a stablecoin which will be supported by a reserve of real currencies, and its many different partners are to contribute and maintain. As Zuckerberg stated back in May, that sending money online should be as simple and easy as sending photos.
Therefore, Libra will be designed to make this money transfer a lot easier and cheaper which might attract new Facebook users.
3. RIP Cash (?)
They say “money makes the world go round and round” but since we are now living in the digital era, money doesn’t necessarily mean paper banknotes and coins.
Companies like these, both bank and nonbank keep promoting this kind of services, as digital money benefits all stakeholders.
Citi and Imperial College Business School’s Centre for Global Finance and Technology published in their 2019 Digital Money Index that in 2018, about $225 billion of personal payments were done digitally.
On the Digital Money Index website, there is also a list of 84 countries showing what stage they’re in towards adapting officially to the “no cash” regulation.
Interestingly, Sweden was the first country in Europe to welcome banknotes in 1661 and now aims to “kiss banknotes goodbye” by 2023.
According to the website interestingengineering.com, in Sweden, only 13% of the whole population uses cash today. Back in 2012, the six biggest banks of Sweden got together and created an app called “Swish” where all Swedes could send/receive money regardless of what bank they were assigned to.
This year, Sweden is also trying to create its own digital currency called e-Krona. Woohoo, Sweden!
With all this being said, and with many countries headed towards the full digitalization of currency, it is quite safe to say that “digital money” will dominate even further in the year 2020, and we are ready!
4. Who Run the World? Millennials
The Pew Research Centre explains that a millennial is basically anyone born between 1981 and 1996. If someone was born from 1997 onward, is part of a new generation.
Millennials have been bombarded with student loans, and most of them are considered to be financially unstable after the hit of the Great Recession.
A study by the Federal Reserve Board, claims that the depressed rate of owning a house or a car among millennials was entirely about income and affordability.
With no car, house, low income and overwhelmed by debt, millennials are viewed by many as “the poor generation”. This, however, is not always the case.
A recent survey done by the Bank of America proved that millennials are starting to revolutionize against the stereotype that they have no financial management skills.
The bank claims that “16% of millennials now have savings of $100,000 or more, double the amount of young people who had socked away that much in 2015”.
If you measure millennials based on baby boomers’ old metrics, they do come off as poor. But since we live in a changing world, they are just choosing to invest in different assets that back in the day were either not available, or not as evolved.
Millennials have a better understanding of technology and are investing in it every day with their time and effort. This also makes them excellent candidates for future positions in growing tech-related industries such as FinTech.
Currently in their savings phase, millennials don’t have the need to buy property, a car, or start a family at the same age baby boomers used to. Owning a degree (even if they are in debt) and building a successful career seems to be their main priority.
The CEO of the Bank of America, Brian Moynihan said that millennials at the bank hold nearly $200 billion in deposit investments “Millennials represent a big part of our business today. The representation is currently outstanding.”
Continuing, the CEO of Charles Schwab said that a very large number of millennials make up 53% of their new accounts.
Millennials have all the resources they need including excellent technology that was part of their lives from a young age, in order to thrive in the next year.
5. “Talk to the Bank”
As we explained in our previous blog “How Artificial Intelligence Is Changing The Face Of Banking”, AI technology keeps thriving in many different sectors including banking.
We are now starting to leave behind the tiring days of having to actually call the bank, wait for 10-15 minutes while hearing a number of options, just to talk to the right person and ask a simple question.
Thanks to conversational banking, we can directly interact with a chatbot and solve (almost) all of our banking issues.
Abe is an example of such chatbots that can be worked through Slack or SMS messaging. Keith Armstrong, co-founder of Abe said that “Conversational banking is about managing your financial life through voice or text”.
This trend is set to dominate in the next year as it has the ability to process big amounts of information instantly by answering questions, breaking down spending and it is both fast and accurate.
2020, where you at?
With all this information being said, the future seems very bright and promising.
We have all this fascinating new technology available and still growing, millennials are on the rise, ready to take over the world and we have cool robots involved.
All we know is that we can’t wait for 2020 and witness this FinTech evolution!