- Fintechs likely to go mainstream in 2019 as more people see how convenient it is to transact with them
- The biggest losers in the fintech race are traditional banks
- Fintechs will make cheaper transactions possible
Open banking will propel fintechs into the mainstream based on the findings of the UK’s Royal Commission. With the shift away from brick and mortar banks and the growing demand for transparency in 2018, fintech brands are likely to become household names next year. According to Beau Bertoli of Prospa: “more customers are now embracing product offerings from fintechs”.
Mobile-based payments have taken off in the past years and its users are increasing. In-store mobile payments are set to reach $503 billion by 2020 based on a BI Intelligence report. Retailers in the United States are also getting in on the programme as 50% of those who were surveyed in 2016 said that they will enable contactless payments soon. They already did in 2017 and more retailers, even small time players, now have near field communication technology to allow such payments.
In Africa, money transfer fintechs innovate out of need. In fact, most startups have built tech infrastructure from scratch to make their services possible. With the population largely unbanked, mobile-based banking has become a more accessible alternative often described as a lifeline for many families. This is particularly true for homes with family members who are now based abroad because of work.
While security is still a concern in countries like the United States, the rise of mobile-based banking in developing countries is also partly due to the millions of tech savvy migrants. A large portion of the migrant population around the world are labour migrants with low salaries, based on a UN report, and as such they want to ensure that they do not pay hefty fees when they transfer money internationally. Although security is also an issue when it comes to fintechs, the need for them outweigh what many from developed nations are afraid of.
Traditional means of sending money such as going to a Western Union branch are still popular, though based on WU data the brand said it is because they have continued evolving. They maintain their branches to ensure easier access for individuals who are not digital natives. The biggest loser, according to observers, are the banks, and this is happening around the world.
“This year also saw the establishment of Australian neo-banks in both the consumer and commercial space, which will create an even more competitive environment in 2019”, said Prospa’s CEO in a Finder interview. This is an indication of what’s to come, observers say.
TransferWise Australia also has a positive outlook for the new year. According to the fintech, the proposed opening of NPP will encourage more fintechs in the country to plug into the system and that it will result in more robust payment services. Nicholas Lembo, the country manager at TransferWise Australia said that sending money to friends and family at home and abroad will become faster and more reliable. He also noted that overseas transfer rates will be cheaper than before.
Transparency will also drive fintechs to enter a more mainstream market as it is a requirement for individuals and businesses. While banks are also transparent, their transparency is reportedly lacking. As people look beyond traditional banks, they will also ensure that the neo banks they use are trustworthy.
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