2019 promises to be a wild year in the banking world. Fintech software development trends point to some drastic changes in how consumers handle their money.
This spells new challenges for fintechs and finance professionals, but also great opportunities.
Below, we’ll look at some of the biggest things likely to happen in this space.
Read on, and you’ll learn about:
- How entirely new kinds of banks are changing the landscape
- How what looked like a mere convenience could be a gamechanger for the industry
- Why insurance and insurtech will continue to grow
- How tech will help digital challengers keep up with regulations
- The real secret to pleasing the consumer and achieving fintech success
Peer to Peer Lending
P2P lending has been gaining steam since the runaway success of Zopa in 2005.
There’s a strong trend in finance to move away from traditional banks, and peer-to-peer’s ability to directly connect lenders and borrowers is a powerful draw.
The industry is expected to hit nearly $900 billion USD by 2024. The technology is a win-win, with lenders able to maximize their ROI, and borrowers able to access funds that may have been unavailable to them through traditional loans.
In 2019, look for the market growth to accelerate, as governments around the world begin to update laws and regulations to better serve this new way of doing business. China, the UK, and others have already started the trend, and the rest of the world will follow.
The other rapidly growing vertical in the fintech space is insurance solutions or insurtech.
Insurance is a very old, very large industry. Like many other business models in the finance sector, that makes it susceptible to disruption by new technology.
That’s a good thing for fintechs, their clients, and the end-users.
By rethinking pricing models and risk assessment to better fit the modern world, startups like Lemonade are starting to rival even big names like Allstate and State Farm.
And by leveraging cutting-edge tech like machine learning, these insurtech disruptors can serve their customers better than ever before, and at incredibly low prices.
For experienced fintech developers, insurance is one of the hottest things going. There’s a perfect storm of consumer demand, media attention, and financiers looking to make their mark in this new world, and tech companies are perfectly situated to guide them to success.
Also known as a digital wallet, an E-Wallet is any software service that allows a user to store and spend money. The best-known example is certainly PayPal, but dozens of other services have cropped up over the years.
The primary advantage of these services is security. A digital wallet can be funded only as much cash as is needed for a particular transaction. It can also be shut down quickly and easily if compromised, and some services even offer one-use, disposable wallets that are simply destroyed after a purchase.
Another advantage here is that an E-Wallet can offer its own set of features, separate from the credit card or cash that may have funded the account. Common services include currency conversion, automatic reloads, and integrations with other payment providers, such as cards or PayPal.
With the increasing reliance on digital and mobile payments, along with the growing dangers of cybercrime, E-Wallets are growing in popularity. By 2023, the industry is expected to be valued at nearly $2.5bn USD.
More and more, mobile devices are where consumers do their business. Online shopping, while still smaller than brick and mortar, is growing at an astronomical pace.
So, it’s not surprising that online banking is also starting to overtake traditional banks.
Digital-only banks like Ally and Starling are attracting massive numbers of customers with their low fees and high-convenience features.
These banks keep their overhead to a minimum by eliminating brick-and-mortar branches. Although you’ll never walk into an Ally office and speak with a banker face-to-face, live customer service is available 24/7, and transactions are handled with astonishing speed.
With the savings they realize, digital-only banks can offer features like free ATM withdrawals, high-interest rates, and seamless integration with a slew of modern payment processors like Zelle.
Student debt, credit card debt, and other potential financial pitfalls are growing. And more and more people recognize the problem, fintechs are stepping in to offer technological tools to manage personal finance.
Companies like Credit Karma and Mint (owned by Quicken) help ordinary people keep tabs on their financial health through free credit monitoring, identity protection, and budgeting. Qapital, a startup founded in 2013, taps into the psychology of “gamification” to help users save.
Meanwhile, other companies are bringing a new, customer-centric philosophy to fields that are traditionally perceived to take advantage of the needy. Earnin is a payday loan app with a twist: No fees. Users can choose to “tip” the developers, but only if they so choose.
Another term garnering buzz is Regtech, short for Regulatory Technology. As finance becomes more and more international, there’s a growing need for technology to assist in keeping up with government rules and regulations.
Deloitte famously called Regtech “the new fintech”, predicting that it will overtake every other development segment over the next few years.
Whether that’s true or not, it’s clear that there’s a need for the technology. Some governments, like the UK with its Open Banking standard, are explicitly requiring that banks practice good data security and standardization.
Others around the world are developing their reporting requirements so fast that keeping up using traditional methods is no longer feasible.
In this environment, banks must leverage technology or risk spending all their time updating their systems to comply with ever-changing regulations.
Refined User Experience
Finally, the most important fintech software development trends have to do not with cutting-edge technology, but with design.
Fintechs, challenger banks, and other disruptors in the financial space have an uphill road ahead of them. The institutional banks have been around for longer than most consumers have been alive, and overcoming their inertia requires that disruptors offer something genuinely new, unique, and appealing.
The way disruptors can differentiate themselves is by offering a superior user experience. Through stellar UX design and customer-centric features, fintechs can turn banking from a chore into a real pleasure.
By integrating partner services, payment processors, and more, these companies can be far more agile than traditional banks, and offer a one-stop-shop for all their clients’ financial needs.
And although the institutions may try, they’ll never match the sheer polish of startups like Simple or N26. The mindset just isn’t there, and that’s where innovators can shine.
Opportunity in Change
Above all, look for the entire financial industry to change rapidly in 2019.
The sheer volume of new technologies, new business models, and new customer demands is picking up speed.
From the rise of peer-to-peer to the fall of brick-and-mortar, the way people handle their money is transforming.
It’s been building for years, but a confluence of new market conditions and new techs mean that things will come to a head soon.
For finance professionals, it’s the perfect time to bring exciting new ideas to life. There’s a real niche to be filled, and new markets to serve. The market is hungry for new solutions to serve the market better than ever before.
For fintechs and software developers, the opportunity is clear. All those innovators will need experienced guides to lead them down the path to success in this new world.
After all, any new idea is only as good as its execution.