Five Fintech Trends to Watch in 2018
The future looks bright for fintech.
PHOTO CREDIT: Getty Images
Fintech is a rapidly growing area that has a lot of people excited, from entrepreneurs and CEOs to average people on the street. That's because new technologies have the potential to change the way we carry out transactions and to make a lot of people rich in the process.
At the same time, though, new technologies are being released at such a rapid pace that it can be difficult to keep up with them. That's especially true for the finance industry, in which people tend to be strapped for time with a hundred things to do. That's why I've done the hard work for you and investigated just a few of the trends that have the potential to drive the industry into 2018 and beyond.
1. Diversification of cryptocurrencies
It's no secret that cryptocurrencies have been big business throughout the last twelve months, with Bitcoin alone increasing exponentially. Because of that, there are also plenty of people launching cryptocurrencies of their own through ICOs (initial coin offerings), and that means that consumers and financial professionals alike have more choice than ever before when it comes to which cryptocurrency to use.
With this, though, comes fragmentation, as well as plenty of shysters and fast buck merchants who are launching spurious cryptocurrencies in an attempt to cash in on naive investors. The cryptocurrency market has a lot of maturing to do, but it's one to watch regardless.
No mention of cryptocurrencies is complete without a mention for blockchain, the technology that underpins it all and makes it all possible. A blockchain is essentially a decentralized digital ledger that's distributed across a number of different users. That means that no single entity holds the keys to the data and that it's not possible to change the ledger once data has been recorded.
This technology has much wider applications including in the field of healthcare, where it could be used to store health records while making them accessible to different providers. But equally, it also has plenty of potential to further disrupt the finance market. For example, it could change the way that houses are bought and sold because each property could have its own individual record in a blockchain, and banks would need to factor this information in when deciding whether to offer someone a loan or a mortgage.
Nzar field communication is already changing the way that we make payments. In many countries, it's being used to enable contactless payments where people can hold their bank cards up to a reader. It's also built in to most modern smartphones and the technology can even be surgically implanted into a person so that they can pay for their coffees literally with a wave of their hand.
Of course, there's a long way to go until we're all walking around with implants, but as NFC heads towards full maturity it'll be interesting to see the new ways that we find to use it - especially with more and more wearable devices entering the market. Perhaps 2018 will be the year in which we see a mainstream success for a fintech wearable.
4. Increased regulation
The fintech industry is evolving so quickly that regulators are struggling to keep up with it, but that's not for lack of trying. But like taxes and death, regulation is inevitable and we're likely to see larger institutions and governing bodies placing increased emphasis on the regulation of both software and hardware. Let's face it, the financial industry is a high-profile industry that demands the utmost security. This is people's money we're talking about.
Still, increased regulation doesn't have to be a bad thing. In fact, deployed correctly, regulation will make the industry stronger and more secure, increasing consumer confidence. And if consumer confidence is high, we can expect to see a corresponding surge in uptake and innovation in the fintech industry. The demand will drive the supply.
5. Fewer startups, more financial firms
The fintech market has historically been cornered by small startups that have been able to outmaneuver the global conglomerates to innovate at pace and to capture the public's imagination. But while those days aren't necessarily over, times have also changed and now those same startups are fighting off increasing competition from the larger, more established firms that are finally adapting to new technologies.
This change isn't necessarily for the worse, though. Bigger organizations tend to have more resources at hand and more expertise to tap into, but smaller startups are often more "in touch" with the general public. The good news is that all of this competition will help to foster innovation, forcing companies of all sizes to be at their absolute best. This might make innovators' lives more difficult, but it will also be good news for the industry as a whole.
The future of fintech is right there in the name. The industry has a heavy focus on technology, and technology is constantly changing. The only thing that we can know with any certainty is that the fintech market is set for further disruption and that the rewards for those who get the mixture of innovation and practicality just right will be enormous.
Still, the five trends we've talked about are sure to be the source of much of that disruption, at least in the next couple of years. If I could tell you exactly how it was going to happen then we'd all be rich, but I can't. What I can say, though, is that these five trends are going to be a lot of fun to watch, whether you're a passive observer or whether it's your company that's leading the charge.
One thing's for sure - it's an exciting time to be a part of the industry, and it'll be interesting to see how it continues to develop. And hey - if you spot an opportunity with one of these technologies, perhaps you'll be the one to usher in the change.