Services across the fintech sector are evolving, becoming faster, more intuitive and more user-friendly. This has a lot to do with the switch to mobile that has radically transformed the financial service industry.
Traditional banks are noticing that brand loyalty amongst their customers is diminishing as fintech disruptors are driving the new business model. Traditionally, five high street banks (Lloyds Banking Group, HSBC, Royal Bank of Scotland Group, Santander and Barclays) had an overwhelming majority of the personal current account market as customers would choose one bank and most likely stay with this bank for the foreseeable future. The market completely changed a few years ago with the emergence of challenger or digital-only banks such as Monzo, Revolut, Starling and N26 who embraced the mobile opportunity and reimagined banking from a user perspective. Monzo, for example, gained over 2 million customers within 2 years of launching, with customers abandoning traditional banks in favour of superior customer experience.
Not to mention, footfall has plummeted in recent years as consumer visits to retail banks is set to drop by 36% between 2017 and 2022 in comparison to mobile transactions set to rise by 121% in the same period. Customers are favouring the ease of use and accessibility they receive from digital-only banks such as convenient expense management, quick balance review features, real-time analytics and even ‘snap-a-pic’ bill payments.
Monzo is spearheading fintech disruption, branding themselves as ‘banking made easy’, they have fought for customer space in terms of money and membership. According to Monzo themselves, 40,000 people open up a Monzo account every week to spend, save and manage their money. Superior offerings that allow for a far more personalised banking experience include setting up an account in less than 10 minutes, getting your salary paid into your Monzo account a day early and 'bill pots' to allocate money for exclusively paying bills making sure ‘you can't accidentally spend the rent.’
Forecasting for this year reveals that financial services in amalgam with tech companies will advance their use of AI to reduce costs, mitigate financial risks and address key pressure points within the financial services industry. AI and machine learning have proved to be extremely valuable in regards to interpreting data and recommending actions based on real-time data streams. However, AI's true value lies in its capacity to improve customer experience motivating financial service companies to upgrade their traditional tech stacks with proven new technologies.
It seems that the accuracy and personalisation of payment are set to improve dramatically with the increased take up of AI in financial institutions. Financial institutions are looking towards facilitating a far more personalised banking experience through social and emotional intelligence, language processing and logical reasoning to help companies look beyond the bank teller or customer representative with technical capabilities that still provide a personalised customer experience.
“63% of [financial] CEOs believe that the Internet of Things will be strategically important to their organisation [in 2020].” - PWC Global Report
According to LinkedIn’s latest report, Blockchain is listed as the number one most coveted skill for 2020.
“Blockchain has emerged from the once shadowy world of cryptocurrency to become a business solution in search of problems.” - LinkedIn
Blockchain will continue to disrupt the industry in 2020 and beyond as the surge in funding and innovation into blockchain will continue. The fintech sector will move from its traditionally retail focus to include more institutional usage and the use of the blockchain ‘public ledger’ will become an integral part of financial institutions’ technology and operational infrastructure in 2020.
Gartner analysis has dubbed blockchain as amongst the top ten technological trends for 2020 with IBM forecasting that investment into blockchain on behalf of financial institutions will rise throughout 2020.
It is estimated that an astonishing $1 billion of value is derived by banks from blockchain-based technology - Gartner
Social media giant Facebook has recently revealed its plans to unleash its own cryptocurrency 'libra' early this year which is generating much hype around the future of digital currency and how quickly it will evolve if an organisation the size of Facebook expands into the realm of fintech.
Plans for the libra currency are intertwined with the launch of their Calibra wallet enabling users to exchange libra through Messenger, Whatsapp or potentially the creation of a standalone app. With both Uber and eBay being members of the libra Association, it is highly likely that they will except libra payment following its launch which will drive take-up of users in 2020 and beyond.
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