Fintech: 5 Predictions for 2016
Technology is transforming the traditional workflows and processes of the financial services industry. This concept was the topic of a recent study by BI Intelligence on the fintech ecosystem, which offered five predictions for 2016.
As we mentioned in a previous article, mobile payments across the world are calling for more and more global payment solutions, such as mobile banking in Africa or e-commerce in Eastern Europe. These solutions must be adapted not only to new consumer habits but also to varying types of economies.
As the study indicates, the situation is twofold: first, numerous opportunities are implied for startups in the fintech industry, a market that is globalizing by the minute; and second, there is an increasingly urgent need for major financial players to come into the twenty-first century and avoid becoming obsolete.
Taking it a step further, many companies are looking to the fintech industry not only to avoid customer attrition (and therefore a drop in sales), but to multiply their numbers by improving mobile strategies. New payment solutions are not seen as a necessary evil resulting from technological advancement, but rather as a whole new world of opportunities.
What does BI Intelligence predict for the fintech industry in 2016?
- Blockchain technology, a solution for interbank transactions. Blockchain is the technology that bitcoin uses to keep a public ledger of all transactions, which lends security and transparency to its operations. IBI predicts that this technology will be a viable solution for transactions between different banks, most likely through an open code system such as the one offered by R3CEV.
- Payment solutions that are more and more oriented to the consumer. Payment platforms owned by Samsung, Android, and Apple are constantly improving the user experience, and it seems that this is only the tip of the iceberg. This year, fintech companies are expected to focus on gaining customer loyalty through coupons, offers, and promotions aimed at incentivizing purchases and mobile payments.
- mPOS management apps, a must for small business. The use of mobile devices as a point of sale (mPOS) has had a trajectory similar to that of smartphones, and has experienced widespread adoption by small and medium businesses. There is a new market for these apps, which allow companies to manage payments and, most importantly, to collect data that can be analyzed for effective decision making.
- Online ordering apps, a new and useful option for restaurants. Platforms that allow customers to place food orders and to pay quickly and easily online are a key component of the benefits that fast food restaurants offer. These apps are expected to increase online ordering this year through loyalty programs and discounts.
- The solution to new competition: if you can’t beat them, join them. Traditional banking is faced with the issue of new, non-bank systems that offer alternative payment options. The solution? Partnership agreements, and perhaps even acquisitions. The major players in this industry will have to acquire and incorporate the solutions of these new fintech startups in order to survive. In fact, some agreements have already been signed, such as the partnerships between ING and Kabbage, and JPMorgan and On Deck.
Based on this analysis, the general trend is obvious: this competition is won through unity, not conflict. Whether through the consumer—by enhancing customer loyalty and the user experience—or through agreements with large and small players in the fintech industry, we are moving towards an increasingly globalized win-win model for all.