How FinTech Is Changing the Personal Banking Landscape in 2020
Online and mobile banking have been a big draw for consumers and business clients for two decades now, but even as individuals made the transition to preferring high tech banking tools to in-person visits, the big tech innovators have not been as influential in the industry until recently. Online payment options like PayPal filled a much-needed niche early on, but otherwise, it wasn’t until the last few years that financial tech firms really started to bring the kind of disruptive innovation seen in other markets. That began to change for consumers with the wider adoption of financial tools backed by tech giants like Google Wallet and Apple Pay. For businesses, it started a few years earlier with the popularity of peer to peer financing and other forms of alternative lending created by fintech innovators, but the average person was less informed about these tools until they began to have consumer applications. Here’s a look at what some of today’s top fintech trends promise to do for consumers and individual investors.
- Insights Offered By New Machine Learning Tools
Artificial intelligence and machine learning have been a hot topic with tech researchers for almost a decade, but it’s only the last couple of years that have seen widely available applications for those tools in most areas of business. Now, with faster and more precise trend identification tools, financial tech companies can offer customers insights to help them with all sorts of goals. Consumers can get budgeting tips and reinforcing messages when they take advantage of electronic payment and financial planning tools. Commercial customers can find financing companies that will help them use insights to optimize their cash flow management with short-term credit tools. Insight identification and communication tools have been huge in a lot of industries over the past 18 months, and it’s not surprising to see more firms picking them up.
- New Blockchain Applications
Blockchain has had a real rollercoaster ride over the last couple of years, mostly because it was so closely associated with the fate of Bitcoin. This year has many prospects that promise to introduce new applications for blockchain that range from escrow to financial transfers to cargo verification. A number of investors with a strong background in advisory roles have moved to support blockchain research over the past few years. There’s a range of ways they show that support, from investors quietly putting money into firms that promise to monetize blockchain applications to active tech community members like Matt Ocko choosing to serve as advisors at Blockchain Capital.
- Automated Wealth Management
AI tools aren’t limited to insights, even if insights play a big role. Fintechs have begun using automated tools to trade, harnessing the new artificial intelligence tools in ways that allow them to create wealth bots that identify key factors and make decisions about how to move money faster than ever before. While automated trading has already existed for some time, most automated trading platforms used rule-based systems to trigger trades whenever an opportunity fit certain criteria. The rules could be tweaked depending on whether the point was to reach an automated sell or buy threshold, to engage in automatic arbitrage, or to follow key Forex markets. Today, artificial intelligence allows the tools to learn as they go, building up profiles of successful trade parameters that not only consider more variables than ever before, but that also have the power to start considering new variables as trends identify them.
- Partnerships Between Banks and Fintechs
While there are a lot of industry alarmists who see financial tech firms and banks as natural competitors, there are also a lot of forward-thinking financial institutions who have enjoyed long lives at the head of the pack because they know when to embrace change. That means more and more identifiable names partnering with new firms to offer services that have previously been the domain of their fintech competition. Some of this has come as financial tech firms like Kabbage and Upstart have begun licensing their software to banks. Another big part has come from banks like HSBC acknowledging that certain parts of the financial services market are already dominated by alternative lending and other fintech operators. With more and more of these platforms producing consumer-oriented applications, banks are partnering with the likes of Zelle and other tech firms offering services their customers want.
What This Means for Investors
If you’re looking to position yourself to invest in the services that are poised to take off, these top choices represent some of the most active parts of the fintech world this year. They aren’t the only top trends, though. There is a lot going on because the convergence of several promising new technologies that have been in development for years has offered opportunities for new applications in lending and finance that have really turned the page on what is possible for everything from online banking to investment management and even short-term lending like payday advances. There are already a lot of new players in the field, so the time is right to dig into some research and find your next great investment opportunity.