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20 Transforming Fintech Trends Disrupting Industry in 2020 & Beyond

By Prateek Saxena
January 13, 2020 7. min read
Last update on: March 27, 2020

If humankind had blindly followed the “If it isn’t broke, don’t fix it” norm, we would still be-

  1. Communicating with telegrams and not smartphones
  2. Making trade by barter system and not Digital wallets and Cryptocurrencies (a work-in-progress though)
  3. Using hand-painted portraits for pictures instead of AR-powered snapchat filters, among other things.

Thanks to human curiosity, we evolved and developed with time and created technology. Result? Now, technology is evolving us – ironic, right?

Since technology has hit almost all the industries in its wake, the Finance and Banking industry is not excluded from the picture. Hence, the birth of the Fintech industry.

Over the years, the Fintech industry has seen many changes brought by different technologies, facilitating the whole working process more and more.

So, why don’t we catch up on what’s hot in the Fintech?

I.e., What are the Fintech trends to look forward to in 2020 and beyond? Something you must be familiar with since Fintech can have numerous effects on your business in 2020.

If you are also worked up like us, then sit back while we reveal all fascinating 20 Fintech trends for 2020 that will become huge and will continue to disrupt the industry, if they haven’t done so in 2019.  

1. Open Banking

One of the top banking and fintech trends for 2020 and beyond has to be Open banking. It leverages APIs that allow third-party developers to develop apps and services around the financial institution, in order to help users enjoy the online banking service via multiple platforms. 

Among many, some of the advantages of open banking and the reason why it is deemed to become prominent are – increased customer experience, innovative service models, better revenue streams for businesses, etc.

{Learn how open banking APIs are being used in the fintech industry}

2. Voice Search in banking apps

The fact that by 2020, almost 50% of all searches will be voice-based on the internet, is enough to give you a hint of Fintech’s future in 2020 and the role it is playing in transforming the banking and finance sector. Voice-based search in banking software will assist customers in easily accessing banking services, provide ways of encryption while supporting communication with NLP-powered voice assistants.

{While we are on this topic, we suggest you also have a look at our article “How Can Google Voice Assistant App Make Your Business Efficient?”}

More and more industries and banking institutions are adopting the voice search- one of the latest fintech technologies, and why wouldn’t they when it can save up to $3 billion.

3. Blockchain on banking software

Blockchain market in fintech

Blockchain is not called a disruptive technology for no reason. It has become unprecedentedly popular in just a few years. As a matter of fact, financial services organizations are raising investments to catch up with blockchain innovations. Moreover, 77% of these companies are waiting to see the live production systems by the year 2020.

The above graph shows the incessantly growing blockchain technology in the fintech market and is predicted to grow at a high CAGR. 

{Bonus: What is The Impact of Blockchain on Fintech? [Complete Guide]}

Some of the decentralized financial technologies derived from Blockchain are proving to be highly useful in the banking and finance industry and setting up trends for the year 2020. Let’s have a look.

  • Smart contracts

Without a doubt, a boon for the finance industry, Smart contracts (a decentralized financial technology) are quickly gaining popularity. They are an evolution of pen and paper contracts – more effective, more secure, and of course, immutable. Wonder how they work? Let’s take an example-

In smart contracts, parties sign smart contact by using cryptographic keys (digital signature as you will). Now, instead of using pen and paper, the contracts are encoded in computer language. And these codes are virtually tamper-proof, hence immutable contracts.

  • Crypto-To-Cash Conversions

Cryptocurrencies are becoming more prominent every day and institutional investors are expected to show their interest in cryptocurrency adoption. And this all is a result of new initiatives that have emerged to increase their real-world implications. New advancements may surface in 2020 targeting crypto-to-cash difficulty and may give us what we are looking for.

In fact, many digital-only banks or the banks collaborating with Fintech are already actively considering the possibility of cryptocurrency implementation in order to perform money operations.

4. AI and ML-powered chatbots and automated customer services

Market size of AI in the Fintech

A generally accepted statement – AI is our past, present, and future clearly shows how humongous this technology is going to be, changing the face of every industry, including Finance and banking. As per AI technology trends, the market size of AI in the Fintech market is predicted to increase from $959.3 million in 2016 to $7305.6 million by 2022, at a CAGR of 40.4%.

QUOTE 1

  • Chatbots 

These are increasingly becoming a choice of financial institutions for customer support services. You ask why? Well, these chatbots are available to the customer 24X7 without incurring additional monthly expenses. They leverage the advancements of ML algorithms and NLP (natural language processing) to serve customers in all possible ways. 

Another thing is that chatbots are incredible for enhancing customer engagement. Some of the chatbots used by popular banks worldwide are Ceba (Commonwealth Bank Australia), Erica (Bank of America), and Eva (HDFC Bank).

  • Robotic process automation (RPA) 

It is the new Fintech trend that would become major in 2020. The bot is designed to maintain records and transactions, execute calculations and do tasks that involve resolving queries. What is more, in instances where RPA cannot entirely automate the process, it surely frees up the time and enables you to focus on other prominent things and operations to facilitate clients.

  • Customer Intelligence 

AI-based customer intelligence is something financial bodies are gaining more and more interest in. It is because customer intelligence helps these institutions to have a deeper understanding of users through their banking relationships and transactions by analyzing data gathered via technology. Some organizations have already started implementing it in their analysis process while many will follow suit in 2020, making it a notable Fintech trend for 2020.

  • Regulators using AI to predict potential issues

Since we are about to hit 2020, we may encounter changes in the way regulators perform certain actions. Since AI is prominent as of now, they are bound to turn to AI’s algorithm, data gathering, and analytics tools to compare scenarios and predict probable issues and risks.

5. Mobile apps

Not as surprising as others, mobile apps are also gaining popularity in the fintech industry and have proved potent for becoming a trend. With the incessantly growing popularity of mobile apps, many fintech companies have started to tie up with fintech app development companies in order to create impeccable digital solutions. There are all kinds of innovations waiting around the corner which we will see throughout this year.

6. Co-browsing

The screen-sharing is generally the function where one party gives access to another party for sharing the device’s screen. With the help of co-browsing, users will be able to prevent others from gaining complete access to the device. Instead, it lets users share a particular web page with another party for mutual access. Something that is a boon for the finance and banking sector, as it is very useful in banking software.

With co-browsing intuition, representatives can easily assist customers with issues pertaining to the completion of bank formalities and documentation, to name a few. This is what makes it an emerging trend in finance.

7. Next-Gen Digital-Only Banks

A rapid increase has been witnessed in partnerships among Fintech companies and banking institutions, promoting the emergence of new financial intermediaries. Now, Digital-only banks are gaining unprecedented popularity, something that was not anticipated in this decade at least.

With an additional time economy option, these Digital-only banks offer an even more diverse array of services to their customers. No wonder, Digital-only banking is going to become huge in 2020 because of its connection with disrupting technology like Blockchain and cryptocurrency.

8. Digital Wallets

Digital Wallets are effectively on a way to eradicate fiat money from the wallets. In fact, in a report by Market Watch, it was revealed that the digital wallet market size was valued to be $16,650 million in 2013, something that is predicted to reach $ 5,250 billion by the year 2020 at a growing CAGR of 127.5%. Alone in 2018, the number of digital-wallet users was 440 million and has surely increased in 2019 and will continue to do so in 2020. To support this statement, look at the graph below depicting the rise in wallet users.

Digital wallet users worldwide

{Read: Mobile Wallets: Best Way to Serve Customer Engagement Via Several Ways}

Because of this trend, almost all organizations have integrated it into their business. Moreover, many financial institutions are taking advantage of blockchain and crypto technologies, expected to make bets in 2020 on ICOs along with the Asian market arena.

9. Cybersecurity combating Cyber Threats

Since everything is online now, there is a rapidly increasing threat of cybercrimes, something which all financial institutions, among others want to avoid at any cost. In this case, there have been many advancements in this segment developing robust security systems to creating next-gen tools for data protection. 

Cyber risk analytics has also merged to be an interesting implementation of AI in Fintech to detect probably threats. With what we have witnessed so far in 2019, it is without a doubt that improving the cybersecurity is going to be one of the top Fintech trends in 2020.

10. Big Data

Big Data is still a fairly new concept. However, the combination of Fintech and Big Data can be anticipated to become a major Fintech trend in 2020. Institutions are gradually coming to terms with this technology and trying to find a way to implement it.

Big data is helpful in many ways, i.e., develop protective strategies, personalized finance field promoting both clients’ comfort and organizations’ interests in service advertising or data gathering, customer segmentation, fraud detection, risk management, among other things.

11. Asian Market

The Asian market is rapidly becoming the biggest adopter of Fintech. As new Fintech companies start to emerge, we can expect great advances in the Asian market.

Consumer FinTech Adoption Across Various Markets

On analyzing the events of 2019, it was noted that China has emerged to be the global leader in the Fintech industry. With the world’s biggest population, the country has  800 million internet users – a combined percentage of countries like Mexico, Japan, Russia, and the US.

12. On-demand Insurance

The on-demand model has become one of the most in-trend concepts of this decade and will continue to do so in the coming one. In fact, on-demand mobile app economy statistics are legit proof of its popularity.

Just like you can get a taxi on-demand via apps like Careem and Uber, you can also avail insurance in a matter of minutes. Financial institutions have started to offer insurance facilities via mobile apps. Customers can easily apply insurance for real estate, car, and other belongings, simplifying and making the whole process more efficient.

13. Fintech Regulation

Regulation is a salient aspect of the Fintech industry, becoming one of the largest businesses that are overhead expenses. In the industry, there are still many regulation compliance tasks and processes that depend on manual action or at least involve human oversight. 

Because of the recent advancements in the industry, we won’t be wrong to expect more regulation technology solutions to be introduced in 2020, aiming to streamline all processes and reducing expenses.

14. Growing Chinese Fintech Ecosystem

The Chinese fintech ecosystem is based on already existing and engaging customer platforms. The industry giants, that have to build this ecosystem, target users that are already using specific platforms. For instance, Ant Financial is built on the support of Alibaba e-Commerce platform, offering numerous B2C solutions like Alipay for online transactions. This tactic has proved to be beneficial for many organizations and is expected to significantly influence the world’s fintech technologies trends.

15. Partnerships and collaborations are on a rise

Partnerships and mergers among fintech companies are going to be one of the top fintech trends for 2020, according to Kathleen Craig, founder, and CEO of HT Mobile Apps (a fintech company). Startups and small organizations are coming to the realization that partnerships are more profitable. 

More so, till now direct-to-customer fintech companies have been stuck on a particular piece of the market, but with these mergers, we can see a whole new spectrum of services they together may offer.

16. Sharing economy will become integral

What started with cars, taxis, hotel rooms, etc.will now expand its horizons to include financial services. The sharing economy is expected to become a huge Fintech trend for 2020. 

Here, the sharing economy pertains to decentralized asset ownership and the use of IT to obtain suitable matches between providers and users of capital, instead of turning to a bank as an intermediary element.

17. Public cloud to become major infrastructure model

Even now, many financial institutions seek help from cloud-computing for an array of work and processes. They use cloud-based SaaS apps for things that may be deemed non-core like HR, CRM, and accounting. The core service infrastructures in areas including consumer payments, credit scoring, and statements are going to become utilities by 2020.

QUOTE 2 18. Increase in ‘A’ rated Life Insurance Carriers

Another Fintech trend for 2020 related to insurance is the ‘A’ rated life insurance carriers. Now, the institutions will employ technology in a way as to eliminate the medical exam while simplifying the writing and underwriting of a new life insurance policy. 

Some of the fintech startups are implementing up to $1 million of term coverage without any medical exam and only refer to the data collected on customers regarding the prescription history based on their medical questionnaire for passing approval.

19. Using Fintech for protection

QUOTE 3 20. Traditional payroll disruption

Because of the existing problems faced by people with respect to the payroll process, technology has been again placed at the forefront to resolve the prevailing issues.

With the help of fintech companies, other organizations are improving the traditional ways of payroll. Companies such as Gusto, which has been valued at $3.8 billion, have introduced a flexible Pay feature that allows employees to pick a date to receive their payroll. Another example at hand is the Earnin app allowing users to get access to their earnings before their scheduled payday.

Now that 2020 has arrived, it is going to be a ride watching these fintech technologies trends gain popularity and give birth to other trends that may or may not have been anticipated. 

Technology is a Pandora’s box, so let’s see what else it has in its store for the year 2020 and beyond.

Prateek Saxena
Prateek Saxena
Co-founder of Appinventiv
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