Fintech has been disrupting the finance and accounting industries for more than six decades now. As CFO, it’s crucial that you stay up to date with these upcoming fintech trends for 2020.
In a report by PwC, 70% of the leaders in the financial services industry have expressed concern over the speed of change in banking fintech trends.
They have reason to be concerned; after all, the amount of time that elapses before a breakthrough technology gains widespread market application has significantly diminished. It took the telephone more than 70 years before it was adopted by half of the US population; the smartphone, less than ten years.
Indeed, technology-driven disruptions have become the norm that no financial organization should be complacent. In the past decade, the fintech industry has advanced by leaps and bounds, and we can only expect that this will accelerate in the coming years.
Fintech Trends for 2020
With 2020 less than 3 months away, we reviewed top four fintech trends that will continue to transform the industry in the years to come.
1. New Ways to Use Money
Paper banknotes and coins seem to be slowly making its way out. New payment methods such as Google Pay and Apple Pay have been growing in popularity.
In the 2019 Digital Money Index by Citi and the Imperial College Business School, it was reported that in 2018, about $225 billion of personal payments were made electronically. Sweden, which was one of the first countries in Europe to adopt banknotes, now aims to be cashless by 2023. In fact, just 1% of its transactions were made with actual money in 2016.
With more and more countries deciding to go cashless, businesses will have to adopt newer payment frameworks even before banknotes and coins go out of fashion. We’ll see more contactless, NFC-powered payment portals in various places, such as in public transport, restaurants, groceries, and the like.
2. Blockchain Technology
Blockchain has captured the imagination of the fintech industry, with its growing popularity since 2018. We’ve previously written blockchain and its impact on accounting and how it will shape audit in the future.
Several institutions in Asia and Europe have already implemented blockchain solutions, and it is highly likely that other organizations will soon follow suit.
3. Fintech Capital Grows
In 2018, startup companies in fintech have raised around $40 billion in capital, which was a 120% increase in VC funding in 2017. This has allowed many companies to expand their services. For instance, Wealthfront, a company offering a mobile financial planning app, has added savings accounts, loans, and even real estate advice.
Big tech has also started dabbling with financial services: Amazon has been providing loans to their merchants to buttress their capacity to sell on their platform. Apple is also launching its first financial product with Apple Card, which aims to address security concerns on their platforms. This can pose a threat to traditional financial institutions and challenge them to shift to a more customer-centric paradigm.
4. AI and Robotic Process Automation (RPA)
We’ve seen how powerful artificial intelligence (AI) technologies have been used in fraud prevention, risk management, fund development prediction, and customer service, among others. Even in small business lending, banks have used AI in simplifying the customer application and automating the underwriting process.
Financial organizations have found many benefits of implementing RPA in their business. RPA bots can be configured to perform tasks routinely done by humans, dramatically reducing the headcount you need for your time-consuming, repetitive business processes.
Overall, the applications of AI in finance and accounting have been growing exponentially. AI remains to be a strong driver of innovation in companies, and we can expect its usage to continue to expand into other areas.
Learn More about Robotic Process Automation
Read our downloadable document, Robotic Accounting Primer, to find out more about RPA and how you can prepare your organization for it. Click the image below to download a copy.