5 FinTech Predictions for 2018 You Should Know Now

Lately we are living revolutionary times and technology innovation in finance industry has its fair share of contribution. As we just entered a new year, we cannot refrain to ask ourselves what 2018 will bring to the scene.

As his fellow 2017, 2018 promises to be an exciting year for the financial industry. Some major fintech tendencies and predictions are:

Major AI benefits will follow an ascending curve 

2017 could be considered a cornerstone year for the artificial intelligence employed in the financial sector, it was the year it breakout to show how financial institutions will function from now on.
This year AI will gain momentum and we will witness the first AI based solutions and retail products that put upfront the consumer, his desires and his experiences. Besides interaction methods known as AI application, like chatbots or voice, AI will play a major role in the creation of a culture and technology that is customer centric. Top priority will be the user, his expectations and exigencies and the second great issue will be to streamline the processes and increase efficiency.
Banking industry will rely heavily on AI to collect, sort and analyze data, particularly concerning implementation of new regulations like the Revised Payment Service Directive. And also, to create and provide more personalized financial services to consumers, ensuring that its offer remains relevant for clients, in due time and proactive for the client’s needs.

 RegTech will advance further

A financial technology trend that will grow significantly is the regulatory technology (RegTech). As updated legislation comes into force, like GDPR and MiFID II, financial institutions need to implement it and be compliant. Thus, they will be searching for solutions to adhere to the new rules while reducing costs and risks.
Large financial actors are expected to spend billions yearly on regulatory compliance. New regulations will impact highly on relationships of financial institutions with regulators, as they rely on shared real-time data to ameliorate risk management and overall market stability.
Consequently, they will invest more and more in software systems that will help them achieve easier the compliance with an increasingly complex regulation. These are parameters that will push new levels of innovation in RegTech area.

 Open Banking brings the industry into a new age

Regulatory initiatives like PSD2 in European Union and Open API framework in Hong Kong have smoothed the paths of open banking and APIs (Application Programming Interfaces) opening. It is poised to phenomenal growth, break down barriers and modify from scratch how clients manage their money, it will be a fundamental feature of the banking future.
Open banking will enable consumers to really control their financial data and 2018 will see banks taking position and FinTechs crafting new innovations. Once open banking enabled, clients will be able to identify when they are paying too much for a certain service, be it banking service, insurance, utilities, etc. Competition will be enhanced in areas almost ignored till now like small business lending.
Perspectives enabled by open banking still need to gain the trust of consumers. And also, the regulatory authorities to ensure that they are up to date with technology advances and banks are fully complying.


Blockchain and a cashless world 

Real life blockchain based applications will arrive in 2018. As new technology in financial services, blockchain has huge potential across several segments like money transfers, currency exchange, smart contracts, international payments, clearing and settlement etc. Since our world is preparing to use less and less cash and digital payments are the replacer, the expansion of virtual coins based on blockchain is to be expected.

Cybersecurity and fraud– staying away from black swans

The prosper future of the FinTech industry highly depends on security, integrity, trust and transparency. Data security is a major concern and one of the sharpest challenges, incidents like cyberattacks when sensitive consumer data are hacked are to be avoided at all cost. Because frauds or cyberattacks can seriously damage the benevolence customers and financial institutions have towards FinTechs.

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