In the modern world, society has grown accustomed to the fusion of technology and financial services. Otherwise known as fintech, it’s not uncommon for most individuals to use some element of this innovative technology in their everyday lives. That said, here’s what happened in the fintech industry in 2019 and what we can look forward to in 2020.
Fintech Year Review: 2019
Over the past several years, fintech has become far more than merely online banking. Instead, many people depend on it for protection and to save money versus the traditional financial model. The following are some trends we saw in 2019.
Increased online security
Significant headaches for the banking industry are undoubtedly security issues and fraud detection. After all, the global economy takes a $2.1 trillion hit each year thanks to financial crime. However, 2019 met these challenges head-on with predictive analytics and machine learning. These innovations help to secure user authorization, foresee hacking, scan cybersecurity, and become aware of network intrusions.
More protection against financial fraud
From bankrolled teenagers to elderly grandparents, 2019 offered more protection for your money. These two groups of individuals tend to face more risks than other parts of society.
As a result, fintech stepped up the game to help them both to be more financially independent and secure. Parents and caregivers can feel confident in controlled spending and fraud detection services with products, such as pre-paid Visa cards and EverSafe.
Most people control their music, TVs, navigational systems, and even household functions by voice. With voice automation spearheading so many areas in life, the financial world is catching up. Voice banking is offered by several big names in the industry, such as Capital One and Ally Bank. Of course, what you can do through a traditional bank is limited to checking balances and recent transactions—Neobanks are more advanced. But developers are working fast and furious to make voice banking a regular part of life.
Automatic savings/pay down apps
Fintech app developers know that people tend to struggle at putting money in a savings account. So, 2019 tech advances made it simple and automatic with “round-up” apps. As the name suggests, these apps round up daily purchases to the closest dollar. The change from your purchase is automatically deposited into a savings account. Many student loan lenders are following suit, as well, helping students to pay down their loan balance painlessly.
Fintech Trends for 2020
It’s safe to say that Millennials are leading the fintech momentum with Gen Xers only a few steps behind. Now, society demands convenience and to carry on their banking with little hassle. Here are a handful of trends we expect to see this year.
New technology and data
To improve scalability and decrease IT costs, financial institutions will focus on cloud technology this year. This technology aims to roll out new products easier and faster, comply with new regulations, customize client solutions, and save on IT infrastructure.
Along with cloud technology, the financial industry is rich with data and AI—but it’s been hiding behind firewalls. In 2020 and the coming years, fintech will use the vast amounts of data at its fingertips to provide personalized products and services.
In addition to Millenials, a considerable amount of traditional banking clients are turning to their phones. As a result, platformification will shine in 2020. To meet the demand for data-driven technology, products and services will develop new revenue channels.
Robotic process automation (RPA) will influence the finance industry more this year, boosting efficiency and supporting regulatory compliance. Some processes RPA will perform are security checks, data analysis, and customer verification, along with other administrative functions.
Chatbots will create a boom in banking this year, as well. Not only will they improve speed, but they’ll also help interchanges to be more flawless and productive. Conversational interfaces will also provide financial institutions with plenty of readily available customer feedback.
As mentioned, two of the most significant threats to financial institutions are fraud and identity theft. But Blockchain helps to make routine functions more secure and efficient. The financial industry will be leaning on Blockchain for smart contracts, trading shares, and identity management.
It will also be used for digital payments, which will help support mobile payment innovations in 2020. Few experts believe we’re ready for a cashless economy, but tech-savvy customers do want unique safeguards, such as fingerprint and facial recognition.
Voice use interface (VUI) is also on the rise. The fintech industry is learning that people will take action more if they can talk rather than type or text. In response to this new trend, financial institutions have already created VUIs, such as paying bills or checking balances. We can expect VUIs to expand to vCommerce, too, as well as more innovative banking solutions.
Gone are the days when traditional banks ruled the roost. Instead, banking through non-traditional financial institutions, such as Google, Apple, or even Facebook. These platforms can offer tailored products, making them highly attractive to multiple generations.
Another welcomed trend is that the financial industry is shifting to make financial health a priority. Plenty of partnerships are in the works for 2020, which are aimed at increasing the financial industry’s customer-centeredness.
Insurance Trends for 2020
With so many trends surfacing in the world of finance, the insurance industry won’t go unimpacted. Technology will simplify writing and underwriting new life insurance policies. Typically, to purchase a life insurance policy, you must undergo a medical exam.
However, some fintech startups have already carried out million-dollar term life policies successfully—and with no medical exam. We expect to see more of this from other companies, as well.
As we look forward into 2020 here are our predictions that relate to commercial insurance in the Fintech space:
- Increased regulatory scrutiny by underwriters as fintech companies like apply for licensing to expand operations to traditional banking activities.
- Upward market pressure on premiums due to states like California in acting their own privacy regulation like CCPA, increasing the likelihood of higher regulatory penalties after a breach. The International Association of Privacy Professionals have an awesome figure showing where each state is with regards to their own privacy laws.
- Investor lead growth in available capital and support for new fintech and insurtech ventures should lead to increased carrier capacity to take advantage of the increase in potential new business. Check out Crowdfund Insider’s piece for statistics on the increase in capital in the marketplace.
Understanding the details of what coverage your company needs can be a confusing process. Founder Shield specializes in knowing the risks your industry faces to make sure you have adequate protection. Feel free to reach out to us, and we’ll walk you through the process of finding the right policy for you.
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