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Pillars of New Fintech Trends

Analysts at McKinsey estimate that a large number (75%) of FinTech mainly disrupt retail banking, lending, wealth management, and payment systems for small and medium-size businesses. However, big players are actively developing Fintech solutions as well as are looking into a possible cooperation with technology startups. So what is happening in each and every sphere of FinTech changes?



Citigroup, Goldman Sachs, and JPMorgan Chase & Co are only the top three among large financial institutions that invested in FinTech. As CBInsights reports, the greatest titans of American banking industry concentrated their optimization efforts mostly on payments, distributed ledger technology, data analytics, regulatory compliance, and communications channels when joining the forces with FinTech. Why are banks so keen and eager to tap into collaboration with financial technology startups and incumbents?

To begin with, banks become more open to embracing innovations. For instance, German Fidor Bank has open API that connects to a broad range of banking platforms and offers a number of services such as emergency loans, sending money to friends and family and transferring funds using social media. Similarly, French Credit Agricole opened its APIs to offer programmers an opportunity to create extra perks on top of existing offerings including social payment, expense management, and control as well as performance analysis toolkits for customers. Furthermore, American SEED, a bank for small businesses, has its custom-tailored interface allowing entrepreneurs create financial instruments to suit their business needs. Going even more open, Goldman Sachs shared its proprietary code on GitHub and gave access to fellow-developers who can improve the code.

Technology-powered development and startups made traditional banking operations of borrowing and lending money more agile by introducing modern platforms with better security, seamless access, customer profiling techniques as well as a myriad of promo features to attract tech-savvy customers. With banks driving consumer demand and FinTech companies offering more edge through innovative tools, the synergy of the two result in a unique selling proposition.


Artificial Intelligence was meant to be a part of the extremely complex trading market where forecasts are everything. Whether or not a financial goal will be achieved depends on foreseeing the market climate and accounting for all the fluctuations.

Machine Learning and Artificial Intelligence is essential in analyzing piles of data quickly and guaranteeing a greater accuracy. No wonder, FinTech players use this technology creating cutting-edge offerings. Algorithms decide on best-case scenarios and help traders make informed decisions.

AI changes the ecosystem of financial trading by offering important market data at a fraction of a cost that is charged by market data providers. Thus, the application of artificial intelligence offers a powerful set of instruments to not only large enterprises but anyone dealing with stocks. For instance, Kavout offers next generation investing with deep learning and AI embedded into its offerings. The company helps to make an important decision and suggests where to put funds, the amount of money to invest and the right timing to do that.


Wealth Management

Investment advisors use the services offered by FinTech to serve their customers better, too. Capgemini experts note that digital instruments allow wealth managers to automate routine paperwork and operational tasks which frees more time for client-centered offerings. The latter results in the shift from technology-powered human interaction to a digital customer journey with a human consultant on demand.

Moreover, adoption of the digital component has a direct impact on asset acquisition and retention; thus, it guarantees larger profitability coming from larger assets under management.

In addition, more advancement in analytics and research capabilities can help with the more efficient decision-making process and make the most of the client data and contact information.

When wealth management meets technology, a sub-category of financial technology is born. Capgemini's TOP trends in WealthTech for 2018 mention emerging technology as one of the focus areas in the industry: the robotic component that is a part of the digital transformation is to keep the operational costs low especially when the regulatory compliance becomes one of the main challenges to account for in wealth management.


Payment and Transactions

According to Statista, the value of digital transactions and payments is going to grow by around 10,000MUSD each year from 2018 to 2020. E-commerce, peer-to-peer money transfers, and mobile payments will add up to these numbers:


The Rise of P2P and B2B payments

At the year end, multinational tech corporation IBM announced about its collab with Zelle, an American peer-to-peer network that offers easy transactions in the blink of an eye. The tech company offers integration of the network with its Financial Transaction Manager portal to offer payment processing real-time connecting consumers and banks. A popular messaging app, WhatsApp with a daily audience of more than 1 billion users will tap into the p2p payment niche and offer functionality to send money to peers. The rollout of the feature is likely to happen in Great Britain first. Facebook decided to keep up with the trend and touched the base with the UK market offering cash transfers through its messenger.

Furthermore, FinTech innovators steadily move to B2B sector and eliminate the complexities so typical for the traditional segment of business transactions that heavily relies on expensive paper checks processing that is prone to human errors. In the US, for example, Automatic Clearing House is used primarily for business to business transactions and payroll.

Every year, through ACH about forty trillions of dollars USD are passed from one company to another with the network for the financial transaction being an intermediary between the corresponding banks. Mineral tree, for instance, offers its Invoice-to-Pay process that does the heavy lifting of manual work and offers electronic payment options. The idea is to bridge the bank account and a firm's accounting system to streamline B2B transactions.


Mobile payments are the new black

Another iconic example of benefits digitalization and financial technology can bring to payment system is mobile or digital wallets are free applications that are easy to use when paying for goods and services or transferring funds to peers. If you look at China, the growing trend of digital payments was a result of the rising popularity of smartphones that were purchased by a great number of PRC citizens that have never even owned a PC. These days, more than 90% of Internet users in China surf the world wide web from the screens of the mobiles phones. Alipay, the payments system of the country's famous Alibaba, quickly became a preferred e-wallet of locals. However, shortly after that, the online merchant was challenged by Tencent, headquartered in Shenzhen, that introduced its payment capabilities in WeChat, another smartphone application. To keep up with the Jones, a Chinese web search giant Baidu, launched a similar offering.



UK's Business Insider believes Insurance is still the hottest topic in FinTech, others call it the "next frontier" of financial technology - InsurTech. There are a few reasons why insurance badly needs digitalization.

To begin with, insurers can benefit from Big data usage e.g. insights coming from social networks or buying the history of a prospect. When it comes to more sophisticated life insurance matters, a potential client might hide the truth when filling in a standard questionnaire or disclosing personal info to only some extent which is not enough for a proper risk assessment. Thus, for an insurance company having access to the data behind the curtains might be a great advantage to not only have a clear picture on one particular prospect but foresee the industry trends on the global scale when processing multiple records…

What is FinTech when we speak about insurance? Despite the fact that some insurance players already have fully-fledged processes digitized such as electronic document signing and submission, on a bigger scale this is yet to be widely adopted e.g. when it comes to more sophisticated life insurance matters. However, more holistic integration of insurance roadmaps can be the next step of digitalization in the nearing future. In the post-sales process, digitalization can deliver a unique service experience by claims processing solutions and apps as well as loyalty schemes that can more efficiently manage and to persuade a prospect to purchase a greater quantity of products or a premium version of those.


There is a chance that distributed ledger technology is another big "a-ha moment" for the industry. The protocol is the core of distributed architecture of a few main as well as other altcoins that are disrupting the world of digital currency. Still, the latter market is volatile.

However, it is obvious that in case mature industry players decide to adopt this revolutionary open approach to the financial sector, it will add up to the transparency of operations and cost optimization. If it happens and blockchain moves out of the labs, they are likely to end up dealing with a great number of engineers and IT professionals apart from the internal pool of talent resources.


In the short run, we're going to see emerging fintech technology joining forces with traditional businesses, changing dynamics in the financial sector and offering a smooth transition to products and services into digital goods, evolving consumer demands and legislation to control the ecosystem of the digital transformation of finance.
The use of a digital toolkit becomes a new normal, and along with regulatory component and market challenges, it is disrupting the global world of finance.

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