4 minute read
Despite ‘fintech’ being added to the Oxford dictionary last year, 2017 is set to be a defining year for fintech. While analysts aren’t entirely in agreement on whether the industry is still nascent or if it has moved into the mainstream, it’s clear that 2017 will be a year of change for fintech. Indeed, this year could decide whether fintech will lead a financial revolution or simply become an evolution of the norm.
Here are the 3 hottest trends in fintech for 2017.
Concentrating on Customer-Centricity
Fintech is changing as companies strive to meet rising shopper expectations and industry regulations. Today, fintech demands an unprecedented level of transparency and customer-centricity and companies are rethinking how they serve their most important stakeholder – the customer.
Up until now the finance industry has been focused on one thing, itself. Between ‘bankers’ hours’ and a customer experience that was far from streamlined, financial institutions were the antithesis of customer-centricity. But that is all changing. Whether they are buying a new outfit or opening a new bank account, shoppers today expect a seamless and streamlined customer experience from start to finish. With fintech’s overall focus on creating outstanding user experiences and leveraging technology to make managing money easier, faster, and more accessible, the pressure is now on the finance industry to catch up. Theodora Lau, Director of Market Innovation for AARP recently said that in 2017 “a customer-centric approach will be a ‘must have’ instead of a ‘nice to have’ for financial institutions”.
One way that companies are putting customers first is by having a greater focus on providing a robust and comprehensive mobile experience and allowing customers to build their own customer journey, be it online, in-store, or in-app.
Mobile Transactions Take Off
Mobile has been an important retail channel for years now, but this has never been more true than today. Mobile has worked its way into the center of the shopping experience as consumers today use their phones not only for product research, but also for shopping – both in-store and online. A report from Deloitte Digital found that 76% of shoppers interact with brands or products before arriving at the store, having already made digitally influenced decisions.
But that’s not the only place where mobile is having an impact. Between contactless payments, P2P transfers, and mobile commerce, there has never been more opportunity for consumers to use their mobile to pay. eMarketer predicts that in 2017 NFC mobile payments will more than double from 2016 and that 31% of smartphone owners will use P2P payments. Experts are also predicting huge growth in mcommerce, with some of the more conservative estimates calling for 100% growth. For retailers, it may be the prime time to invest in improving your mobile shopper experience with a simplified design, streamlined checkout, or mobile payment option.
One of the reasons behind this increase is the fact that mobile has reached maturity. Adoption numbers are at record highs not just in the US but globally, with countries like China, Russia, and India experiencing huge growth in mobile adoption. Beyond just adoption, we also have huge amounts of data surrounding mobile shopping, and more importantly, we have more insights about how to attract, engage, and convert mobile shoppers.
The Rise of Coopetition
2016 wasn’t exactly a banner year for fintech investment. According to a report from CB Insights and KPMG, Q3 2016 saw fintech investment hit a 5-quarter low.
2017 could see that start to change as large financial institutions seek out partnership and M&A opportunities with smaller, more agile startups. Initially these large financial institutions thought they could create their own financial technology, however they’ve quickly realized that the speed and agility required to succeed in fintech is incredibly demanding. This revelation is predicted to spur a greater amount of M&A and partnerships in 2017. In fact, a survey by ACI Payments found that more than three-quarters of banks, and a similar number of fintech companies, cite partnership with the opposition as one of the keys to overcoming the challenges of building momentum and scale.
One example of this partnership that we’ve already started to see is the creation of open banking platforms. These banking platforms, such as Capital One’s DevExchange, provide developers and fintech companies with access to open APIs and allow them to create new customer experiences.
While this form of “coopetition” may give innovative startups the infrastructure and capital required to seriously disrupt the way we interact with money, some experts feel it’s cause for concern rather than celebration. The worry is that by being acquired by a large institution, these startups will lose the agility and innovative mentality that they were built on. Ultimately this could mean the difference between fintech revolutionizing the traditional banking paradigm or simply becoming an evolution of the status quo.
Are you ready for the latest trends?