Tech developments
Tech developments that will shape the future of Fintech.
Fintech growth and adoption is all about the disruptive effect of technology. A consensus has formed on what the most influential technological developments will be that will shape Fintech's growth over the next 10 years. The five most significant developments are likely to be:
AI
Data represents both a major challenge and opportunity to both finance industry incumbents and disrupters alike. AI will be used by incumbents to block disrupters and vice versa. AI will be the key both constituents use to try to unlock value and competitive advantage. The prize may be as much as $US 1 trillion added to global banking income annually.
AI will be critical in assisting to build associations and identify patterns across complex financial networks.
It will be fundamental both in creating new revenue streams and reducing existing middle and back-end cost lines.
Blockchain and distributed ledgers
Distributed ledger technology (DLT) will continue to underpin financial ecosystems by allowing the storage of financial transactions in multiple places at once. Increasingly interoperability of blockchain technologies is likely to have profound impacts on payment processing and supply chain management.
Smart contracts, zero-knowledge proof and distributed data storage and exchange technologies will contine to drive Fintech innovation in areas such as digital wallets, digital assets, decentralised finance and non-fungible tokens.
Cloud hosting
Employed correctly, cloud technology can dramatically improve efficiency, significantly enhance security and permit start-ups to access server technology it would find too expensive to build itself.
On the revenue side, cloud technology is spawning new products and services such as open banking and banking as a service, shaking up the historical relationship between customer and financial service provider.
Open source, SaaS and serverless
Open source software and software as a service (SaaS) have become critical if immediate scaleability is required to cement leadership in fast paced growth products.
SaaS allows companies to use software as needed without having to own or maintain it, whilst serverless architecture removes the need for firms to run their own servers, freeing up valuable resources.
These products disproportionally benefit the disrupter Fintechs over the established incumbent.
Internet Of Things (IOT)
Three elements of IOT development are opening up exciting opportunities which Fintechs should be able to harness. These are smart sensor systems, wireless communication networks and application and operational supprt.
These technologies provide real time information that can be used by car insurers for example in determining risk based on actual driving statistics. Or network inventory tracking which will allow innovation in trade finance delivered by better and more timely shipping and logistics information.