2017 - Where next for FINTECH?

In investment dollars terms, we're expecting the final numbers for 2016 will show continued growth over the 2015 total of $14.5BN. But where is the FINTECH movement going next? In 2016 we heard much more talk around INSURTECH and this is expected to be a growth area. As we kick off 2017, PROPTECH will also be increasingly talked about, along with REGTECH to keep us all in check.

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Can PROPTECH improve the homebuying experience?

In the US, a completely paperless mortgage buying process has been successfully implemented. Can this extend to the full end to end house buying process? We think it could with many electronic processes in place such as e-conveyancing, online estate agents, online mortgages and insurance and removals. What we haven't yet seen is someone package it all up into a completely joined up proposition.

Different parts of the value chain are playing catch up. For example, in the Insurtech space, insurance products need to be simplified to make them work effectively on smart phones; fewer questions, simpler cover, less add-ons and clearer contracts. We know work is pushing ahead in this area and expect significant breakthroughs during 2017.

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  • Top 10 Fintech Trends
  • 1. Big data and analytics
    • Big data analytics is the process of examining large data sets containing a variety of data types -- i.e., big data -- to uncover hidden patterns, unknown correlations, market trends, customer preferences and other useful business information. In the Fintech space we see applications will become widespread. For example, when applying for Home Insurance, big data will be used to predict the profile of the customer rather than asking them dozens of questions. Data feeds will be used and algorithms applied to interprete the data into risk rating factors. The value of doing this will be to drive greater simplicity, reducing question sets, time and to become more mobile friendly.

  • 2. Unbundling
    • A lot of FINTECH solutions have focused on taking elements of the overall banking value proposition and making them more efficient, compelling and lower cost. For example; payments with PAYPAL and ApplePay.

  • 3. Rebundling
    • The FINTECH start ups still need the traditional banks, so we expect to see these new technologies rebundled by less agile banks to take advantage of scale and reduce costs of operation. This seems to be a sensible strategy in order to embrace new technology into traditional business models without distraction from current activities.

  • 4. Challenger banks
    • MetroBank received the first new licence in 2011 to operate on the highstreet for more than 100 years. More than a dozen new banks have sprung up since then. Metro‚Äôs branch strategy looks more traditional than soon to enter newcomers such as Mondo and Atom, who promise internet only, smarter [data driven] propositions and greater simplicity.

  • 5. Internet of Things [IOT]
    • Remember when we discussed web-enabled fridges? Now the connected home is here and promises to deliver added value, pricing and big data advantages to the Insurance sector. For example, new propositions are being developed to reduce costs of cover when purchasers have connected homes, because for example, water damage and theft risks can be reduced. Also expect to see a rise in the connected car as manufacturers deliver out of the factory connectivity. This opens up a whole new dialogue with users who have been less enagaged whilst on the move.

  • 6. Blockchain
    • Probably one of the most used terms in FINTECH. You'll also hear 'Distributed Ledgers or Distributed Databases' - referring to the same concept. Blockchain is exciting many people with its potential to radically change the way financial transactions are managed. Instead of the old architecture of multiple databases held by multiple intermediaries , such as banks, Blockchain technology creates one common database held securely by multiple parties. As transactions process all copies of the database are updated securely in unison.

  • 7. Biometrics and payments
    • We are expecting to see an increase in the use of biometrics - unique biological measurements that can be digitized and turned into a trackable record - as the security authentication process which replaces passwords for log in. Tthe technology is expanding beyond finger print recognition into other verification methods, including facial recognition and iris scanning. Its predicted 99% of smart phones will have finger print recognition capabilities by 202, so facilitating the growth in biometric security processes.

  • 8. Robo- advisory
    • Robo-advice is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. We also see this being adopted in the Insurtech space. A Robo-Broker will analyse your insurance product holdings, look for similar cover at a better price or better cover at the same price, and present you with all the information you need to apply. We see this as an important step towards our 'NOW MARKETING' model which is permission based, real time, one to one marketing.

  • 9. Social trading
    • Social trading is the process through which online financial investors rely on user generated financial content gathered from various Web 2.0 applications as the major information source for making financial trading decisions. Many investors don't have time to do their own research so following social traders and monitoring their success may be a viable but not necessarily low risk option.

  • 10. Mobile
    • The rise and rise of mobile usage for web browsing continues and we expect this to translate into a meteoric rise in mobile FS transactions. In the Fintech and Insurtech sectors, the adoption of products and services by younger millenials, will be hampered if products and processes aren't improved and simplified for mobile use. Older customers may not make the full switch unless mobile propositions become more attractive than their PC counterparts.