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Scary Pace Of Tech Disruption In Finance

Crowdfunding will outpace venture capital funding in the coming months; this is quite interesting considering that crowdfunding itself is considered a sector within the FinTech market.

As banks look at their mounting regulatory and client management costs, they are going to look to FinTech to help solve inefficiencies, reduce those costs and remain competitive.

Strides in FinTech are adding increased transparency and accessibility to finance. Niches such as real estate crowdfunding democratize investing, opening investments previously limited to institutions to the public

Existing banks have the customer base but are hampered by legacy processes, while startups have the tech and skills but not customers/ trust. Partnerships and strategic alliances to create banking platforms will begin to take shape.

Millennial & emerging market demand will drive innovation in mobile activity and growth in mobile payments. Wearable tech will be hot. Cyber security will be a hot button issue.

More un-banking. Companies like SoFi will continue moving consumers away from traditional banks and into cheaper, more user-friendly financial services, accounts, and tools.

The UI/UX is going to be the big change in the next few quarters. FinTech solutions have to support the consumer’s desire for a native app level ease of use.

FinTechs that seek out Deposits – As interest rates rise in 2016, the deposit side will start to look sexier to Sand Hill Road. Look for new alternative finance deposit business models.

The “mobile first” societal shift will drive partnering between large legacy financial players and agile FinTech companies to deliver convenient, secure and seamless customer centric engagement and transaction experiences.

The primary change we see is the availability of information in real-time. Automation allows finance departments to see the numbers in real-time enabling faster, smarter decisions.

FinTech’s new expansion point is Cognitive Computing. Highly available open source machine learning libraries from Google, Facebook, universities and others, have significantly accelerated growth in this new segment of FinTech.

Institutionalizing innovation, and applying the methods seen in virtual internet enterprises will require a change from a sequential design, development and deployment to a constant delivery model, leaving a major ripple effect.

Banks and lenders continue to take the hit for frequent data breaches across industries. We can expect to see new technologies and protocols reshaping how we detect and fight fraud.

API-based banking and ‘cloud banks’ will grow as players like Visa open APIs. This will disrupt traditional banking, as merchants will go to Visa rather than banks for their e-commerce solutions.

A new credit rating system that takes into account significantly more qualitative factors in addition to credit history.

The inevitable government victory to access private information upon demand which will forcibly deputize FinTech to collaborate and participate in a rapidly emerging Orwellian fascist era.

Banks will start adopting a Chief API (Application Programming Interface) Officer role – following in path of BBVA and SVB.

Digital channels will gain increasing preference for large cross-border payments as a growing segment of global consumers look for more convenient, cost efficient and transparent options.

Increasing use of blockchain technology to mediate transfers of more complex financial products, not just currencies.

B2B FinTech solutions will move from Software-as-a-Service to Software-with-a-service: instead of making financial processes less cumbersome, FinTech will take them over entirely, so employees can focus on core activities.

More and more self-service offerings with robot (software) assist. Why pay high fees to a class of humans (“investment professionals”) when 80%+ fail to beat simple index investing?

Within the next year we will see a true, comprehensive robo-advisor. One that can take a client through the entire financial planning process from start to finish.

As FinTech goes mainstream, InsurTech will become known. Innovations like Oscar are happening in all areas of insurance as brilliant minds leverage new technology to solve the industry’s oldest problems.

Financial firms will start perceiving FinTech companies less as pests and more as partners, or even predators as new models get validated and begin to scale

We will see mobile banking apps becoming heavily used by consumers in day-to-day – just next to your Facebook, Instagram et al. apps.

Increasing financial literacy and rise of cost efficient robo-advisors will lead to better financial inclusion – especially among the low income segment.

Long-term, IoT will impact payment, credit, trade finance and risk management as IoT enables transactions to happen without human interventions and at reduced risks.

Banks and other traditional financial institutions will realize they have no alternative to innovate. We’ll see far more partnerships with FinTech players, as well as a new wave of acquisitions.

Blockchain promises a massive disruption to the world of back office systems and ledgers – the technology could eliminate as much as US$20 billion of costs from the financial sector.

Bank and FinTech partnerships will evolve past investments into acquisitions. If startups prove their potential following a bank’s early investment, they will consider acquiring those and bring the technology in-house.

In 2016, FinTech innovators will shift thinking towards piloting Blockchain concepts. This will be the next frontier to understand and develop in financial technology.

Increasingly, businesses and individuals will bypass traditional banks and use crowdfunding and peer to peer lending instead, as well as become more willing to use cyber currencies, such as Bitcoin.

Insurance will be the next industry to be disrupted by FinTech startups. Investments, Banking & lending are all being disrupted and Insurance will be the next big thing.