A review of the past year indicates fintech’s overall popularity continues to grow at a steady pace. Although it would be impossible to identify all the major fintech milestones and trends that defined 2018, the following are some of the most noteworthy. These examples can also offer perspective on developments we should expect in 2019.
1. Shifts in Banking Services
Fintech companies offering specialized banking services (as opposed to general financial services) are on the rise. If they continue to provide customers with a greater degree of convenience, finance experts fear those customers may abandon their current banks in favor of these emerging options.
That doesn’t mean banks are doomed. As noted before, a certain degree of collaboration between fintech startups and traditional financial institutions is beneficial to everyone involved. Banks can help startups navigate the complex regulatory waters of the financial services industry, while startups could leverage their innovative technology to help banks boost efficiency, and customers will enjoy improved overall service without having to switch their accounts over to new institutions.
2. Increased Focus on Blockchain
We can thank Bitcoin for the rising popularity of blockchain solutions in 2018. Although the cryptocurrency market may not have delivered on everyone’s expectations, it has given fintech entrepreneurs greater reason to investigate potential uses for blockchain.
This is an example of a 2018 trend that will continue to impact the fintech industry in 2019. After all, blockchain isn’t useful just as a means of facilitating the purchase and sale of cryptocurrencies. It can disrupt the industry in many different ways. The transparent nature of a blockchain ledger may speed up real estate purchases, allow for greater efficiency in cross-border transaction processing, and much more. It will be interesting to see how entrepreneurs apply what they learned about blockchain in 2018 to their work this year.
3. Going Global
The fintech revolution has gone global. Investment in fintech startups remains strong not only in North America, but in Europe, Asia, and South America as well. Though this particular trend didn’t emerge in 2018, it did disrupt the market more than ever before.
This serves as a reminder that fintech isn’t just for the average financial services customer—it has the potential to transform emerging markets. By offering underbanked and unbanked populations easy and quick access to financial services, fintech products could have a major impact on the overall global economy.
4. Fintech Payments Booming
Fintech is a relatively broad term. It applies to products that offer many different financial services. Within the overall category of fintech, there are also smaller sub-categories, such as insurtech.
That said, facilitating various types of payments remains one of the most popular uses for fintech products. For instance, Square, a financial services and mobile payment company, reported third-quarter earnings of $431 million, a 68 percent increase over the same period in 2017.
This explosive growth in revenue is due in part to the accessibility and ease-of-use of Square’s Cash app. People and organizations make and receive payments constantly—a service that expedites this essential financial process has an enormous potential customer base. As long as products such as Square continue to function reliably, they’ll continue to demonstrate exactly why fintech has been so disruptive.
5. Increased Focus on Security
Fintech products aren’t without certain weaknesses; there are key concerns that can prevent customers from immediately embracing them.
For instance, security is a major source of apprehension. If a digital product involves the handling and storage of sensitive financial information, users want to be extremely confident their information remains safe. This is particularly important in the wake of major security breaches, such as the recent Wells Fargo data breach that impacted millions of customers.
Thus, fintech entrepreneurs made a point of prioritizing security in 2018. Their attitude will be no different in 2019. For fintech products to succeed, they need to be secure, and a greater focus on security will result in more effective fintech solutions.