Fintech Trends to Look Out for in 2018

Lynn Bizri, Dec 19 2017

According to the KPMG Pulse of Fintech report, total global fintech investment this year doubled quarter over quarter in Q2’17 to $8.4B, up from $3.6B in Q1’17.  Moreover, CB Insights reported an increase in venture capital investment in fintech from $3.75B in Q2’16 to $5.2B in Q2’17. 

In the MENA region, fintech startups raised over $100M in funding over the past decade, and over $24M in 2017 alone, a 13% increase on the $18M in disclosed investments last year. While fintech investment has previously been focused on peer-to-peer lending and payment remittance, looking forward, investment seems to be going into newer trends such as blockchain, AI, increased security.

This article addresses four trends that aim to greatly influence the digital banking industry and stir change in the fintech space in the upcoming year.

1) Blockchain & Cryptocurrencies

Gartner shows that as of February of this year, blockchain was the second top search term on its website, increasing 400% in just 12 months. Among its many benefits, blockchain has value in creating transparency, security and has huge potential in improving customer experience. Its nature also makes it useful for a variety of fintech applications.

2018 will continue to see the expansion of the cryptocurrency market as more and more innovators experiment with decentralized networks. Initial coin offerings (ICO), which is a way of crowdfunding where people can buy new tokens and trade them for cryptocurrencies, is also bound to become a trend next year.

2) Biometric Security

An increase in mobile payments, card-less transactions and account hacking has led to an increased need and demand for add security and improved infrastructure. Through the use of biometrics and technologies such as facial recognition, iris detection and fingerprint recognition for account access, fintech companies can add another layer of security over existing protocols.

In addition protecting consumers’ financials and allowing them to feel safe, biometric technology also prevent consumers from having to remember passwords for mobile payments or digital wallets.

3) AI & Robo-Advisors

Robo-advisors may replace financial advisors next year, as people search for more affordable and programmed investments. According to A.T. Kearney, an American consulting firm, assets maintained by robo-advisors will increase by 68% every year and reach $2.2Tr in a span of 5 years.

Robo-advisors can select and manage investments and create customized portfolios according to individual’s preferences in just a few minutes. They can also offer wealth management advice based on mathematical rules and algorithms, choose investments, and do trades in the stock market for their users.

4) Multiple Currency Digital Wallets

Digital wallets, such as Apple Pay and Android Pay, have granted consumers with a quick, easy and portable way to shop and spend.  2018 will likely see the development of digital wallets that will also make an impact on the international payments scene, allowing consumers to buy, use and reconvert foreign currency without the use of a credit card or exchange booth.

In 2018, we will also probably see more blockchain wallet apps that allow consumers to instantly transfer and exchange cryptocurrencies while remaining incognito.

 

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