(FinTech Egypt – Bloomberg.com)
As we enter a new decade, technology has never been more relevant to all industries and finance is no exception. It seems that FinTech is thriving so much that people are hungry more and more for easier, more convenient solutions that simplify their daily financial concerns. CB Insights claims that nearly 60 FinTech startups were valuated at more than $1 billion in recent years around the world.
With partnerships, mergers and acquisitions flooding the international ecosystem, and as FinTech companies of all ages gear up to prepare for the coming year, leading banking experts have highlighted crucial trends that will define the way forward into 2020.
Speaking of mergers and acquisitions in FinTech, 2019 was a fruitful year in that regard. Payment processing in the U.S has basically been transformed through deals made between Fiserv Inc., Fidelity National Information Services Inc. and Global Payments Inc.
Senior Intelligence Analyst at CB Insights Lindsay Davis had this to say on the topic: “Wealth management will likely see more consolidation from incumbents, who are under pressure to compete for next-gen customers and an army of virally growing fintech apps who have abstracted the client relationship away from the old guard. Charles Schwab buying TD Ameritrade is just the beginning of more strategic consolidation to come.”
In an attempt to reel in traditional finance houses to the FinTech boat, leading regulatory agencies and companies are encouraging banks to work with digital finance initiatives and services to reinforce both worlds and create regulatory processes that cater to both worlds. It goes without saying that, by 2020, banks and other FIs that are not ‘connected’ need to get in line and implement digital in their upcoming strategies.
Digital Banks Are Here
Taking the United States as a reference, we find that Chime, the leading digital bank in the U.S is currently valued at $5.8 billion. It’s not the fact that it’s digital that’s impressive, but that it’s more valuable than some of the biggest institutions there, such as New York Community Bancorp or CIT Group Inc. Also known as neo-banks or challenger banks, these innovators have managed to raise more than $3 billion in VC funding during the first 3 quarters of 2019. Traditional FIs obviously need to acknowledge the risk involved in not going digital.
Big Tech Is Here
Further proof that FinTech is taking over the world lies in the imminent and now-declared participation of tech juggernauts in the digital finance world. 2019 saw an outstanding acceleration in regards to big tech, with huge deals and partnerships such as Apple releasing a credit card with Goldman Sachs Group Inc., Citigroup and Alphabet Inc. launching a checking product.
Although 2020 is here, experts are still trying to predict and anticipate the future of FinTech and how it will develop during this year. Technology has been expanding at abnormal rates and finance has managed to latch itself on the best parts of it, with futuristic tech like AI and ML taking the lead of an inevitable paradigm shift in traditional finance.
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