Because fintech has become so integral to the financial services industry, it can be easy to forget that fintech is still relatively new. We’re only in the early stages of what will surely be an ongoing transformation.
It’s important to step back and consider fintech’s future. What types of new products and services will arise? What trends will impact fintech? How will traditional financial institutions adapt to these changes?
Just keep in mind that no one can predict the future of fintech with complete accuracy. The following are simply a few trends that will develop over the coming years. It’s highly likely more will arise as fintech’s popularity grows.
The Increasing Popularity of Mobile Payments
Mobile payment apps and solutions already account for some of the most popular and mainstream fintech products. It’s easy to understand why. The ability to make payments easily and efficiently appeals to plenty of consumers.
However, experts predict that mobile payment solutions won’t remain mere alternatives to traditional options forever. They’re going to play an increasingly dominant role in the way consumers pay for just about anything.
There are several reasons why. First, mobile payment apps are particularly popular among the middle class in the Asia-Pacific region. This population is also growing, with more and more people gaining access to more and more disposable income. They will, in turn, use mobile payment solutions more often, taking these products and services into the mainstream for good.
Mobile payments will also grow in popularity due to the rising influence of Generation Z. Young people have simply grown up with easy digital solutions for almost everything you can imagine. When they eventually become consumers, they are unlikely to rely on traditional methods of making payments, such as cash.
Serving the Unbanked to a Greater Degree
Traditional financial services can be difficult for many people to access, so one of the best advantages of fintech is its ability to reach the unbanked and underbanked.
For example, in many parts of the world, people are unable to hold bank accounts because geographical or financial barriers prevent them from accessing physical bank branches. However, smartphones, which are much more commonplace and more affordable, allow people to handle their finances through mobile banking apps.
Experts predict this trend will continue in the next decade. As a result, financial services and products will become commodities, helping the previously unbanked participate in the economy to a greater degree than ever before.
Non-Fintech Companies Offering Fintech Products
While consumers embrace fintech products because they are convenient, their convenience hasn’t necessarily been optimized just yet.
Think of fintech products the way you might think of groceries. You don’t go to different stores to buy individual grocery items—that would be a hassle. Instead, you go to a store where you can pick up all your groceries in one place.
The same will be true for many fintech products in the future. Instead of operating as distinct products separate from others, they’ll become naturally intertwined with semi-related services.
To some degree, this is already happening. Amazon is such an example. To help sellers get started, Amazon offers loans to qualified applicants. Tesla is also taking a similar approach by offering its own car insurance.
This doesn’t mean that individual fintech companies are doomed. On the contrary, traditional companies hoping to offer fintech services will need their expert assistance.
The main point is, the line between fintech companies and non-fintech companies is likely to blur as fintech becomes more mainstream.
Serving the Financially Well-off to a Greater Degree
Many of today’s popular fintech products serve average consumers. However, that’s going to change this decade. Fintech is likely going to become more popular among high-net-worth individuals as well.
This is due to the fact that younger generations, comfortable with tech, are playing an increasingly important role in the economy. In the past, high-net-worth individuals might have relied on a personal financial advisor to help them better understand their assets.
Now, younger people don’t want to wait to get on the phone with an advisor when they have questions about their finances. Instead, they want tech solutions that allow them to access key information with ease. This isn’t to say that financial advisors are going anywhere. The way in which they serve their customers will merely change.