Expert opinions, FINANCE

Five global fintech trends in 2020

Technology and financial services have been going hand in hand for fifty years. Fintech is showing rapid growth and has many benefits such as making the financial sector more competitive and cutting prices. It becomes easier for companies to enter the international market, which has a general favorable effect on the global economy. We have identified five fintech trends that are going to prevail in the near future.

Widespread deployment of RPA systems

RPA is software that automates business processes. The systems perform tasks better and faster than humans; with RPA tools, users can soon forget about manual data entry and processing. This should definitely increase efficiency in banks: employees will not waste time on simple routine tasks, but rather focus on complex and important processes.

In recent years, RPA has achieved phenomenal growth. According to a Gartner forecast, in 2020, the RPA business will grow by 57%. These tools have obvious major advantages such as error-free data analysis and a 25%-60% reduction of labor costs as many employees will be replaced by automated systems, leading AI expert Andrew Ng and Deutsche Bank CEO John Cryan confirm. Furthermore, RPA will minimize fraud and accelerate problem-solving.

Demise of Physical Money

 We live in a digital age when money is becoming less strongly associated with paper banknotes or coins. Apple Pay, Google Pay, Samsung Pay and other systems have made payments easier and faster.

This is beneficial not only to users but to many banking organizations as well.

In 2019, Digital Money Index, Citi international financial conglomerate and Imperial College Business School published a joint research, according to which in 2018 the total worth of digital money transfers was approximately $225 bln. The research also included a list of 84 countries ranked according to their departure from cash. For example, in 2016, people in Sweden used cash in 1% of transactions only. Some companies no longer accept cash through cashier’s desks and more than 50% announced their intention to stop using cash by 2025. Currently, only 13% of all Swedish population is still using cash. This year, the country plans to develop its own digital currency, e-Krona.

Expanding access to banking services

More than 1.5 mio adults in the United Kingdom have neither a bank account nor a credit card. Unless it is a personal choice, the lack of access to banking services may indicate an unstable financial situation in the country. In big regions like Latin America and primarily Africa, few people actually used banking services in the past. However, thanks to mobile phones and electronic payments, the situation has overturned. According to the World Bank, in Sub-Saharan Africa the scope of instant payments in 2017 increased compared to 2014. In 2017, 21% of the population learned how to use mobile payments and the number continues to grow.

In 2017, mobile payment systems processed $1 bln per day. Banks will come to these regions, and, according to forecasts, by 2020 their number will grow by 60% in Latin America and Africa.

Asia: A new center of technology innovations

The world is witnessing a rapid growth of the middle class, especially in the countries with developing economies. It is expected that in the next two decades this segment will grow from 2 bln to almost 5 bln people, mostly in China and India. The middle class in these countries will be considered by global economy the main source of global demand, which is a key factor of economic growth. According to World Bank experts, over 70% of China’s population will consume almost $10 trln worth of goods and services by 2030. In the next 30 years, some 1.8 bln people will relocate to Africa and Asia, which will create new opportunities for financial institutions. This trend is directly related to technology innovations, which made it possible for Western companies to move their manufacturing to the Philippines and India, thus creating jobs with a more or less acceptable compensation. This, in turn, has improved the infrastructure in the cities. This model provides access to the world markets to many employers.

Introduction of RegTech

RegTech, commonly known as regulatory technology, helps companies meet the requirements of regulators using big data, cloud computing, artificial intelligence, blockchain, and other innovations. RegTech is aimed at sectors with high demands – normally, these are financial market and government agencies.

According to experts’ estimates, the work of about 15% of bank employees is related to compliance, one of RegTech’s major areas. AI can seek new or revised rules, make reports, and share the amendments with interested parties. Algorithms automatically perform these tasks and analyze data during key stages of decision making by compliance specialists. Software will help avoid GDP fines as no law will be left unnoticed. Rabobank, a large a Dutch banking and financial services company, has already introduced the RegTech technology in its system, which has allowed for reducing the process of compliance inspection from 15 to three minutes. Some experts forecast that by 2020 investments in RegTech in the financial service market will grow at least five-fold, increasing to $53 bln from $10.6 bln in 2017.

Studies of fintech trends that will dominate in 2020 show that the financial sector will invest in new technologies and AI systems. They will encourage productivity growth, cost reduction, and a greater quality of services. Digital money will further gain popularity, while the mobile banking services market will open up new areas.

By Maxim Chernushchenko, founder and general director of Cashwagon fintech company 

Technology and financial services have been going hand in hand for fifty years. Fintech is showing rapid growth and has many benefits such as making the financial sector more competitive and cutting prices. It becomes easier for companies to enter the international market, which has a general favorable effect on the global economy. We have identified five fintech trends that are going to prevail in the near future.

Widespread deployment of RPA systems

RPA is software that automates business processes. The systems perform tasks better and faster than humans; with RPA tools, users can soon forget about manual data entry and processing. This should definitely increase efficiency in banks: employees will not waste time on simple routine tasks, but rather focus on complex and important processes.

In recent years, RPA has achieved phenomenal growth. According to a Gartner forecast, in 2020, the RPA business will grow by 57%. These tools have obvious major advantages such as error-free data analysis and a 25%-60% reduction of labor costs as many employees will be replaced by automated systems, leading AI expert Andrew Ng and Deutsche Bank CEO John Cryan confirm. Furthermore, RPA will minimize fraud and accelerate problem-solving.

Demise of Physical Money

 We live in a digital age when money is becoming less strongly associated with paper banknotes or coins. Apple Pay, Google Pay, Samsung Pay and other systems have made payments easier and faster.

This is beneficial not only to users but to many banking organizations as well.

In 2019, Digital Money Index, Citi international financial conglomerate and Imperial College Business School published a joint research, according to which in 2018 the total worth of digital money transfers was approximately $225 bln. The research also included a list of 84 countries ranked according to their departure from cash. For example, in 2016, people in Sweden used cash in 1% of transactions only. Some companies no longer accept cash through cashier’s desks and more than 50% announced their intention to stop using cash by 2025. Currently, only 13% of all Swedish population is still using cash. This year, the country plans to develop its own digital currency, e-Krona.

Expanding access to banking services

More than 1.5 mio adults in the United Kingdom have neither a bank account nor a credit card. Unless it is a personal choice, the lack of access to banking services may indicate an unstable financial situation in the country. In big regions like Latin America and primarily Africa, few people actually used banking services in the past. However, thanks to mobile phones and electronic payments, the situation has overturned. According to the World Bank, in Sub-Saharan Africa the scope of instant payments in 2017 increased compared to 2014. In 2017, 21% of the population learned how to use mobile payments and the number continues to grow.

In 2017, mobile payment systems processed $1 bln per day. Banks will come to these regions, and, according to forecasts, by 2020 their number will grow by 60% in Latin America and Africa.

Asia: A new center of technology innovations

The world is witnessing a rapid growth of the middle class, especially in the countries with developing economies. It is expected that in the next two decades this segment will grow from 2 bln to almost 5 bln people, mostly in China and India. The middle class in these countries will be considered by global economy the main source of global demand, which is a key factor of economic growth. According to World Bank experts, over 70% of China’s population will consume almost $10 trln worth of goods and services by 2030. In the next 30 years, some 1.8 bln people will relocate to Africa and Asia, which will create new opportunities for financial institutions. This trend is directly related to technology innovations, which made it possible for Western companies to move their manufacturing to the Philippines and India, thus creating jobs with a more or less acceptable compensation. This, in turn, has improved the infrastructure in the cities. This model provides access to the world markets to many employers.

Introduction of RegTech

RegTech, commonly known as regulatory technology, helps companies meet the requirements of regulators using big data, cloud computing, artificial intelligence, blockchain, and other innovations. RegTech is aimed at sectors with high demands – normally, these are financial market and government agencies.

According to experts’ estimates, the work of about 15% of bank employees is related to compliance, one of RegTech’s major areas. AI can seek new or revised rules, make reports, and share the amendments with interested parties. Algorithms automatically perform these tasks and analyze data during key stages of decision making by compliance specialists. Software will help avoid GDP fines as no law will be left unnoticed. Rabobank, a large a Dutch banking and financial services company, has already introduced the RegTech technology in its system, which has allowed for reducing the process of compliance inspection from 15 to three minutes. Some experts forecast that by 2020 investments in RegTech in the financial service market will grow at least five-fold, increasing to $53 bln from $10.6 bln in 2017.

Studies of fintech trends that will dominate in 2020 show that the financial sector will invest in new technologies and AI systems. They will encourage productivity growth, cost reduction, and a greater quality of services. Digital money will further gain popularity, while the mobile banking services market will open up new areas.

By Maxim Chernushchenko, founder and general director of Cashwagon fintech company 

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