The 10 Fintech trends 2019
The Fintech sector is booming. 2018 saw record figures, with 120% growth in investment in this area! So, what does 2019 have in store for us?
Fintechs have accumulated nearly $112 billion in investments in 2018. This is “the best year in terms of investment in Fintech” according to Fabrice Odent, KPMG Partner in charge of the banking sector. “A fact that can be explained by a year that was generally favourable to fundraising in the world, marked by several mega-deals,” he says. Will this virtuous trend continue in 2019? We propose 10 trends in this regard
2019 presented an intensification of consolidation processes in Fintech’s mature sectors, such as payments and financing, or in emerging areas such as blockchain.
Increasing power of deals
The size of transactions is expected to continue to increase in 2019 as investors seek to reduce risk by concentrating their equity investments in advanced Fintech projects.
New banks will continue to diversify their service offerings and pursue their international development.
Artificial Intelligence (AI) and Application Programming Interfaces (APIs) will be more intensively integrated to improve the customer experience and reduce the cost of processing certain operations. It will now be possible to respond to customer requests 24 hours a day, 7 days a week. More online payment options will be available to follow the downward trend in cash usage. The example in this respect remains the Scandinavian countries, particularly Sweden, which is very advanced in cashless transactions, since cash is used for only 20% of transactions (compared to a world average of 75%).
Open Banking regulations in Europe and around the world are an opportunity for technology giants and Fintech. They jointly play a controlling role in the provision of financial services.
The relationship of dependence of individuals with banking entities ends with the advent of block chains. Basically, the blockchain eliminates intermediaries, decentralizing management.
KPMG notes a significant increase in investments in Fintechs dedicated to the construction of products and solutions based on blockchain technology.
Insurtech: towards new business models in insurance
Insurance start-ups (InsurTech) are booming and will pave the way for new partnership models with traditional insurers. These partnerships will focus on data processing, claims management and front office solutions, as well as technologies. InsurTech will play a major role in reinventing the customer experience, improving operational efficiency on a large scale and creating new business models.
Simple to use, affordable costs and easy access are just some of the benefits that consumers can expect from Insurtech. Tailor-made insurance offers have been created, as well as online brokerage services, or car insurance evaluated according to the policyholders’ habits and their use of the vehicle. The future of the insurance sector will require better customer service through the integration of new technologies.
In the same vein, investment in Regtech is expected to accelerate sharply due to regulatory changes, which are driving up compliance costs.
Everyone agrees that since the 2008 financial crisis, banking regulation has shifted towards greater severity and control. It is in this context that start-ups specialized in regulatory compliance have emerged. Regtech (regulatory technology), the Fintech of regulation in a way, support financial institutions, through AI and data management, in compliance with the regulations in force: updating rules, risk management, biometrics for individual identification, data security…). The sector is achieving double-digit growth and the trend for 2019 and beyond is upward: 75% annual growth by 2020 according to the Financial Stability Board.
Investment by traditional institutions will remain high, with the development of partnerships linked to Open Banking and the pursuit of these institutions’ M&A strategies.
Collaboration in Asia
Cooperation between Fintech and banks in Asia is expected to intensify in 2019, particularly in the areas of KYC, anti-money laundering and digital identity management.
Finally, the last prediction put forward by KPMG is that traditional banking players should continue to digitise their services, thus supporting the growth of autonomous and agile neobanks.