Another year of tech innovations and business growth has now begun. In the fintech sector, the rapid pace of change hasn’t slowed at all, but the direction in which it moves may be changing. Here are a few trends to keep an eye on in 2020:
The Evolution of Mobile Payments
One of the most visible parts of the fintech sector, mobile payments continue to evolve. In 2020 and beyond, mobile payments will harness new innovations in AI, personalization and faster 5G mobile networks to improve users’ experience and access to financial apps.
The largest area for improvement in the eyes of consumers is making all digital payments and especially mobile payments, instant, invisible and free (IIF). As the speed and reach of mobile networks expand, users expect the speed of their transactions to increase as well. For fintechs, this presents a challenge to optimize the infrastructure they run on and improve user experience, requiring top tier talent on their team to continue growing.
As fintechs move consumers away from cash with digital wallets and P2P payment apps they’ll need to focus on the user experience most of all. In 2020 there is a need for speed in the fintech market and with that a need for experienced leaders in Product Management, Digital Channels, and Global Payments.
Expansion of Chinese Fintechs
How does the growth of Chinese fintech companies affect our markets here in the US? Even if US consumers aren’t using Chinese fintech providers, our fintechs can learn a lot from their global competitors. One major difference between China and the US is the focus on specialization.
Fintechs in the US find a niche with a challenge and focus on solving that. Venmo focuses on P2P payments, Simple focuses on providing digital banking, and Acorns is all about investment. In China, fintechs traditionally reach across many applications, adding functionality to cover new niches whenever they identify a new challenge facing their users.
For western fintechs, there is much to be learned from their Chinese counterparts. While mastering a niche and expanding your user group in that space works, as the fintech sector becomes increasingly saturated, the need to diversify could be the next step for many established companies. With the size of the Chinese market, the data and knowledge that you can gain from such a large test group show that change may be on the horizon. Building a team with experts in navigating industry partnerships and expanding payment platforms is critical, and many companies will be searching for AI, Strategic Partnerships, and Platform leaders in the coming year.
Continued Growth for Digital Lending
The poster child of the fintech vs banking landscape is lending and securing loans. Where consumers would normally have to go to a financial institution in person, fill out a loan application, and wait for a credit check, fintech disruptors have taken over the lending landscape with simple digital lending. Users have unparalleled access to funds through very simple applications that they can complete from their couch. With new innovations in data profiling and sharing, previous data users have shared can be used to further increase the speed of digital lending.
In 2018 the global digital lending market size was just over $4 billion, and by 2025 GM Insights expect it to grow to over $17 billion. Driven by the convenience and speed of fintech platforms, digital lending is accomplishing things that financial institutions can’t without significant restructuring. The rush isn’t only from consumers either, SMEs are also singing the praise of decreased wait times and shorter applications for funding.
In 2020, as digital lending continues to expand, users will demand similar improvements as they do for the payments industry. They want to see faster approval times and access to funds wherever they may be. While face to face interactions are still valuable, lending consumers are looking to remove the middleman and keep the ball rolling. To keep up with consumer’s needs, top fintech companies and banks alike will need experts in Digital Channel Operations, Digital Product Marketing, and both Consumer and Small Business lending.
Banking v. Fintech Continued
Recently, some large scale banks have taken a stand in their fight against fintech disruption. Whether on purpose or a glitch, PNC customers recently found themselves unable to connect their accounts to Venmo. After the disruption, many customers moved their accounts and expressed their displeasure alongside many fintechs who accused the banks of restricting access on purpose to force customers into using their services.
Whether malicious or an accident, this shed some light on the next phase of the fintech vs banking saga. It highlights areas for improvement for both fintechs and banks if they want to continue doing business. Banks worry about the security of fintech offerings and may refuse to support them based on concerns for their customers. Fintechs are showing banks that although they created the landscape, refusal to change for your customers is deadly, no matter your size. Banks have replied, creating their own P2P services built on their knowledge of security.
The biggest opportunity for some experts is still in the collaboration of banks and fintechs. Each has its own innate strengths and challenges that when combined can result in robust and user-centric offerings. While asking businesses to happily share markets is unorthodox, for the time being, and to avoid a fight in which the consumers are the losers, they may need to put differences aside and work together. Driving that collaboration are consultants, analysts, and leaders in Digital Finance and Banking Cybersecurity from both the fintech and banking spaces, leveraging their experience to drive innovation.
If you’re looking to add the best fintech talent to your team and capitalize on 2020’s biggest trends, Martin Executive Recruiting has the expertise and network to connect you with your ideal hire. Get in touch today and learn what we can do for you.