There have been many debates as to what exactly will happen to the financial technology world in 2020. They have ranged from those who have outlandishly bullish predictions for the fintech space to those who don’t even believe that there the fintech space even exists. Believe it or not, the fintech crystal ball presents a lot of risks and opportunities for both traditional and non-traditional financial institutions and how they adapt to changes is what will separate the winners from the losers. Based on past and current trends, here is what to expect from the fintech space in the incoming year.
Branch vs. Branchless Question Will Be Answered
Those members of the fintech space that have argued for and against branches and branchless fintech institutions will now realize that neither extremes come 2020. In cases where branches and the physical presence of people are needed, such as in areas where technology density is low and in economically disadvantaged areas, the branching factor but on a limited basis will begin to play out. Generation Z works better on a peer-to-peer basis and this will be a fundamental aspect for new fintech startups next year.
We are also going to see a reduction in redundancies in financial institutions with branches where certain types of functionalities in terms of job roles and descriptions have been replaced by one form of technology or the other.
Reliance on Artificial Intelligence or Humans?
While most people don’t realize that many of the smart systems that are currently deployed are prone to error, they also forget as well that humans aren’t just as efficient as machines. This “us vs. them” approach when it comes to technology and human beings won’t work next year. Human beings are excellent in something while machines are efficient at others. It is that simple.
We will have bigger role-based definitions in the fintech space next year as machines will do what they can do and humans as well. Job roles shall also shift as tasks that require creativity, innovation and insight shall provide opportunities for the humans suitably required for these tasks. Also, there is going to be a bigger debate on the regulation of the activities of artificial intelligence. This is because AI is one of the big things coming in the next decade.
Data Security and Privacy Issues Will Be on the Front Burner
When it comes to data security and the privacy of consumers, many issues shall arise come next year because of how exactly fintech firms handle the data of consumers. Pro-consumer regions such as the European Union shall most likely go after those fintech firms that handle vast amounts of consumer data with new laws, rules, and regulations. Consumers themselves shall also become more sensitive about who they give their data to and why.
Decentralized Systems Will Arise
One big issue within the fintech space that many love and others hate is the rise of decentralized ledger systems. 2020 shall see a bigger inclusion of the products of decentralized systems and cryptocurrencies in the fintech space. While some argue that cryptocurrencies don’t fit the traditional definition of money in every sense, the one fact that they seem to forget is that definitions change.
Cryptocurrencies and decentralized ledger technologies (DLTs) are proof-of-concept as far as this is concerned. As such, we shall see a big rise in these kinds of innovations as of next year.
Fintech Market Will Slow down for Some Players
Key players who won’t be able to adapt quickly will get left out in the rapid pace of innovations as we are going to see a shift in the kinds of innovations that entrepreneurs will come up with coming up with. We shall also see key players who can’t adapt to change disappear under the radar quickly and suddenly. This will prompt many to question if we are all in a bubble. The truth is that the current growth rate of fintech solutions doesn’t indicate that we are in a bubble but just that we are on the verge of the next level of development in the global technology industry.
2020 shall be one of the biggest years for everyone who functions in the fintech space. Being the start of the new decade, the rise and fall of many fintech players are a given. What however remains yet to be seen is how to change shall be managed.