5 fintech trends that are transforming financial services
Investment in fintech (financial technology) continues to boom — breaking records in 2017 with an 18 percent rise in venture capital investment across the globe, and 30 percent in the U.S., according to Accenture’s latest report.
As headline-grabbing cryptocurrencies struggle to find their feet, plenty of other innovative and exciting fintech is already racing to market. Artificial intelligence and voice interfaces are leading the way, while emerging markets are producing smart and simple financial solutions at an impressive scale.
At this year’s Money20/20 in Amsterdam — Europe’s largest fintech event — the world of financial technology came together to discuss such topics.
Here’s a look at the five hot fintech trends that were among those that shaped the 2018 event.
Artificial intelligence (A.I.) will continue to dominate fintech in new ways. In 2018 we will see businesses use A.I. technology to develop new commerce interfaces, with the number of companies looking into voice set to increase.
Consumers are becoming more at ease using digital assistants and several are now readily available for use in the home. Call centers are an example of where voice will excel, with bots being able to offer help and direct calls more quickly and easily.
Voice assistants are also being developed to handle banking functions. OCBC Bank recently partnered with Google to launch the first A.I.-powered voice banking in Singapore. This allows customers to start conversations about bank services which include calculating mortgage loan amounts, planning future savings, receiving the latest finance market updates and searching for nearby branches or ATMs.
Mastercard’s Vice Chairman Ann Carins gave an insightful keynote speech on conversational commerce. “Voice technology has a fantastically important role in fintech because it becomes a frictionless consumer experience,” she said. “But there has to be trust behind it.”
There is still progress to be made but with big improvements in the underlying technology, voice interfaces are poised to provide a truly frictionless experience — and it’s one technology that customers seem eager and ready to embrace.
Text is still key for the majority of customers, and this is where conversational commerce has come into its own. Last year Kasisto, the company that created KAI Banking, the conversational artificial intelligence platform, partnered with Mastercard to launch virtual assistants and smart bots on every-day messaging services, starting with Facebook’s 1 billion users. Customers will be able to access their accounts with a virtual bot and ask all sorts of questions including analysis of spending, review balances and purchase history. The end result is an easy, natural, conversational interaction with your bank account, where results to questions like, “how much money did I spend at Starbucks this week?” can be quickly quantified.
Zor Gorelov, CEO and co-founder, of Kasisto says, “This bot enables entirely new experiences to consumers with human-like conversations that are personal and contextual. We’re powering conversational commerce, anytime, anywhere – just as consumers have come to expect.”
As pressure mounts on big banks to innovate, and start-ups struggle to navigate regulations and court new customers, a collaboration between the two is a win-win for both.
Mastercard’s Start Path works directly with later-stage start-ups and brings them through a core six-month program to enable them to scale. The program has already helped some stellar products — smartphones converted to secure contactless payment terminals from Mobeewave, a bank in your pocket for online payments with Revolut, and payments within social networks from PayKey.
Amy Neale, VP and senior business leader at Mastercard, explains that collaboration helps Mastercard as much as the start-ups themselves. “It’s really three-fold. We want to stay close to what’s happening in the market and by vetting over 2,000 start-ups every year, we learn. Secondly, we find opportunities to build together by piloting and working across the business to bring products to market. And thirdly, and most importantly, it’s about opening up the Mastercard ecosystem to deliver the best available products and solutions for our customers.”
Across virtually all sectors collaboration is emerging as the most important way to deliver new customer-focused technology quickly, and we should see the appetite for this continue to develop in 2018.
The much-hyped technology upon which bitcoin and other cryptocurrencies are built, the blockchain, is a distributed, open ledger that can record payments or other transactions between two parties quickly and in a verifiable and permanent way.
The potential of the technology is hugely transformative, so the interest and investment in the blockchain are unlikely to waver. Many companies began rolling out pilot programs across a variety of industries in 2017 — everything from financial services, health care and even global shipping.
Last month several banks in Asia successfully conducted a pilot test in which blockchain technology was used to transfer cross-border funds in a matter of seconds between Thailand and Singapore. Bank of Ayudhya was instrumental in this pilot and its head of digital banking, Thakorn Piyapan, stated: “Technology-based transaction helps enhance their subsidiaries’ financial liquidity toward greater flexibility and efficiency.”
We will undoubtedly see the use of blockchain continue to grow in the future.
While the world is obsessed with the traditional fintech hubs — Singapore, London and San Francisco — it’s emerging markets where some amazing things are happening.
Able to roll out new technology at scale, and these technologies can be quickly and easily adapted for developed markets.
In Nigeria, consumers generally dubious when it comes to e-commerce, and reluctant to pay for things online. Nigerian tech start-up NetPlus (a Mastercard Start Path start-up) developed a solution with Mastercard that builds trust and empowers the consumer, the e-retailer as well as the delivery service by providing a simple and secure digital payment system. Consumers can pre-authorize the payment when placing their order, the e-retailer feel confident of payment and dispatches the goods through a delivery service who can authorize the release of the payment via an app upon successful receipt. A simple, clean solution that builds trust for both retailer and consumer.
Mastercard has historically been at the forefront of the fintech revolution, and their commitment continues to grow in 2018. In May, it announced Accelerate, a new initiative to drive growth at scale for the fast-evolving fintech industry. The initiative is designed to help support innovation giving emerging fintech players unprecedented access to insight, tools, technology and investment. Designed to operate alongside the successful Start Path program, Accelerate is set to deepen Mastercard’s engagement with fintech, and strengthen its place as leaders in innovation.
At Money20/20 this year, Mastercard had its biggest presence to date, showcasing the message “Next Is Now” with interactive demonstrations of the latest payment technologies. Mastercard also shared insights into its successful Start Path program, whose portfolio boasts over a billion dollars in venture capital investment, a huge piece of the overall fintech investment pie, estimated at $16.6 billion. “I think this speaks huge volumes to the success of our program,” says Neale.
One thing is certain, as finance continues to be hammered by disruption, companies must stay open to change in order to thrive. Jason Lane, executive vice president of market development at Mastercard, agrees, “Partnerships are important. Not just between start-ups, but also between incumbents and start-ups working together too. Open banking is an incredibly important topic and existing players must identify the opportunities they provide. And ultimately this boils down to knowing your customer and providing them with experiences that they don’t just need, they love.”
Mastercard Start Path is the company’s global initiative to help tech and fintech start-ups make a bigger impact by providing them the operational support and commercial access needed to launch pilots and scale. Start-ups that join the program can benefit from the knowledge of a global network of Mastercard experts, access to Mastercard customers and partners, and the ability to innovate on top of Mastercard solutions. Mastercard customers that join the program as partners get connected to the best and brightest start-ups and gain access to innovations from across the globe. Bringing together this global network of innovators through Start Path gives the industry the opportunity to launch partnerships and build the future of commerce together at a faster pace.
Since launch, the Start Path team has evaluated roughly 2,000 start-ups per year and engaged more than 170 of them around the globe. These companies cover a diverse set of areas including artificial intelligence, big data, wearables, logistics, security, financial inclusion and, of course, payments – proving how quickly the pace of innovation is happening in so many areas. It’s an exciting time to be working alongside start-ups to design the digital future.
Reach beyond your walls to co-create with the best and brightest minds in the business!
To learn how you can apply to the program or sign on as a partner, visit www.startpath.com for additional information.