2017 has been an exciting year for the financial industry.
Venture Capital groups invested more than $12.23 billion in the first three quarters of the year, and 25 of the top FinTech unicorns exceeded a combined valuation of $75.7 billion.
In addition to the growth in funding, new technologies and consumer demands have challenged the industry, all but promising us that 2018 will be equally, if not more, exciting than 2017.
What do we think will be particularly exciting in 2018? Check out our list below where we give our prooV Predictions for the rising importance of security in FinTech, the increased dependency of machine learning, the impact of the GDPR on the FinTech world, the importance of blockchain and so much more.
prooV Prediction 1: Information and Data Security Will Be Critical
In 2017, many companies experienced detrimental security breaches that emphasized the importance of information security and brought the issue to the front pages. Furthermore, the GDPR is set to go into effect on May 25th 2018, and it is expected to bring with it a shift in the way private consumer information is handled.
Taking that into consideration, as well as the increased reliance on mobile banking and virtual currencies (more on that below), we believe that 2018 will bring an unprecedented focus on information security, cybersecurity and anti-fraud innovation solutions.n
prooV Prediction 2: Blockchain Will Continue to Dominate
A while back we stuck to our guns with the belief that blockchain was here to stay. With the rising popularity of blockchain technology both in and out of the FinTech space, we can confidently say that blockchain will continue to disrupt the world in 2018.
We predict that much of the shift will come from the institutions that once rejected FinTech innovation – banks. For the past year, many banks have been running their own blockchain PoCs, speeding up the integration and adoption of blockchain for mainstream uses.
The increased popularity of cryptocurrencies like Bitcoin that run on blockchain technology will likely propel it forward even further, making 2018 a breakout year for blockchain.
prooV Prediction 3: More Industries Will Need Regulatory Technology
Regulatory challenges will continue to increase due to the digitalization of almost every industry, but the impact will be most critically felt in the FinTech space. As FinTech companies find themselves in need of digital solutions for compliance and regulation issues, they will turn to RegTech companies for the solution.
The adoption of blockchain technology and cryptocurrencies by financial institutions and governments will continue to rise, and with it, the need to regulate and automate mobile payments, digital payments, financial transactions and more.
Since RegTech aims to bridge the gap between disruptive technologies and the current software and monitoring limitations, our prooV Prediction is that the RegTech industry will grow at a rapid rate in the upcoming year, enhancing the rate of FinTech innovation adoption worldwide.
prooV Prediction 4: Traditional Banks Will Be a Thing of the Past
Innovations in the FinTech industry have shifted the way consumers view digital transactions, and as a result, changed the way financial institutions are perceived by consumers.
From the launch of PayPal in 1998 when it became easier to pay for goods online, to the decentralization of banking that began with the 2008 recession and the launch of bitcoin, the financial world has transitioned from an antiquated brick-and-mortar world to a digital-dominated one.
Today, mobile payments are on the rise, and consumers expect to be able to pay for everything with their mobile phones, from their Starbucks order to their Whole Foods groceries. The rise of apps such as Apple Pay, Google Wallet and more have further propelled the reliance on digital wallets, and experts believe that by 2019, mobile transactions will account for more than $100 billion.
The result of this will, in our opinion, be felt most drastically in 2018, as financial institutions replace traditional banks with virtual alternatives that will lure millennials away from their traditional bank branches.
prooV Prediction 5: Enterprises and Startups Will Strengthen their Relationships
As the FinTech industry drastically changes, enterprises looking to retain their competitive edge will need to increase the rate at which they adopt and release new innovation. Already in April of 2017, a PwC report revealed that 82% of executives said they wanted to work with FinTech startups, and we believe that number will only go up.
When startups and enterprises collaborate, they truly get the best of both worlds; enterprises are able to easily test solutions and find the one that works best for their infrastructure, and startups are able to enjoy the massive scaling capabilities enterprises bring with them. In the financial industry, this is particularly important due to the need for innovation to come from a trusted authority.
Enterprise and startup collaborations are not the only ones we predict will rise in 2018. As the magnitude of the digital transformation taking place in the FinTech world grows, many financial institutions will not be able to, nor will they want to, take on the projects on their own. As a result, coopetition in the FinTech world will also continue to rise in 2018, making way for more rapid adoption of innovation.
For more on FinTech in 2018 read GDPR Summary Part 2: How the GDPR Will Impact the Financial Industry
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