As Intellectsoft has been a long-standing provider of FinTech solutions, we list the most promising FinTech trends of 2018.
The financial industry has been adopting a wide variety of current tech for the last two years. What is important, 2017 has become milestone for financial services companies going digital and embracing new tech, which is what FinTech essentially is. According to EY’s recent report, FinTech reached the “early majority” adoption stage, as 33% of clients in 20 countries now use at least two FinTech services. From a wide spectrum of blockchain-based solutions to AI, InsureTech, and Big Data — the finance sector will continue to implement FinTech solutions to address the demand of modern customers and achieve wider adoption in 2018.
Blockchain in Financial Services
The technology that underlies Bitcoin will take center stage in the development of financial services in 2018. If 2017 was mostly about looking into the benefits of blockchain and testing it, 2018 will see the first major blockchains in financial sector. For example, Ernst & Young and Maersk will roll out a blockchain-based marine insurance platform.
In 2018, the finance sector will leverage everything the blockchain technology has to offer, across most financial services. Blockchain-based securities trading will reduce costs, minimize complexity, and increase the speed of trading and settlement processes. Blockchain-based P2P and SME lending platforms will help financial institutions scale easier and more efficiently. Cross-border payments and mobile payments will become cheaper and easier, as blockchain significantly reduces the number of participants and payment delay. Additionally, smart contracts will gradually bring automation to the majority of financial services — from trading securities to lending and insurance services. Initial coin offerings (ICOs), custom smart tokens, and identity solutions will also remain in high demand.
Most importantly, blockchain brings the highest level of security to finance industry across the board. As a result, financial services providers and their clients will always be confident the funds are secure.
Mobile Payments and Transfers
Partly owing to the adoption of blockchain, the usage of mobile payments and transfers will continue to grow. More and more millennials use financial services, and they prefer a digital approach that includes mobile. They also expect a better and much faster service, with as fewer steps as possible (older age groups follow suit quickly). Additionally, the globalised business environment increasingly relies on instant international money transfers. The ability to send and receive funds across countries in a matter of seconds becomes a must in today’s competitive business world.
To succeed, financial institutions and companies will follow the steps of J. P. Morgan and create their blockchain-based mobile payment systems. In 2018, the world will also see more blockchain wallet apps that instantly allow to transfer and exchange cryptocurrencies while staying incognito. The number of blockchain-based online exchanges like KlickEx will also rise, as solutions like this allow to process cross-border payments in a matter of seconds.
Finally, the demands of millennial clients will give a push to more digital-only banks and instantaneous smartphone payments at checkout (with Apple Pay, Android Pay, or other).
Artificial Intelligence in Financial Services
As the developments in the field of artificial intelligence continue to advance, and as more and more industries adopt it, the finance sector will follow suit.
The promise of AI is as big to finance as it is to any other industry. In 2018, financial companies will employ machine learning algorithms to detect fraudulent activities and potential hacker attack spots in FinTech software; use these algorithms to automate financial reporting, reducing processing time and human error; implement deep learning algorithms to quickly derive unexpected insights from Big Data and gain a competitive edge.
Finally, as the world continues to go mobile and stay busy, the need for more advanced financial consulting is growing rapidly. The solution comes in robo-advisors, which will be available mostly in FinTech apps. They will provide automated financial planning services driven by AI algorithms — for more solid, spot-on, and quick financial advices. Moreover, FinTech robo-advisors will allow younger and less financially savvy people to start investing.
Insurance industry continues to adopt its own FinTech solutions to keep up with the digital economy and evolve. According to the recent report by EY, car insurance that uses telematics (IoT-based sensor systems) is the second most used FinTech service after mobile payments and transfers.
The trend will continue to grow in 2018. IoT-driven car insurance allows to closely align driving behaviour with premium rates, as sensors installed in a car monitor a wide range of metrics. This allows insurance companies to become more flexible, and eventually break free from the old model of charging annually.
More so, telematics lower the chance of an accident and car theft, as well as provide insurance companies with Big Data to improve on their services. Insurance premium comparison sites and activity-based health insurance will also gain more traction in 2018.
Other FinTech Trends
Chinese WeChat messaging platform now offers instant loans up to $30,000 without collateral. More so, Facebook has partnered with PayPal to allow for small money transfers in the Messenger app. The FinTech trend of non-finance companies providing financial services will grow faster in 2018.
Big Data will play a major role in 2018’s FinTech solutions, too. It will help financial companies’ succeed with their AI efforts, it will solidify the success of InsureTech, it will aid in making mobile payments services better for the customers. More importantly, Big Data will transform risk assessment — as finance managers and AI will be able to make spot-on analysis in a joint effort.
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