Around this time last year, I wrote a blog post with five fintech predictions for the year ahead. The time has come to take a look at whether these predictions have come true. I’ve also provided some thoughts about what 2019 holds.
In last year’s piece, I said that 2018 would be the year where bitcoin’s popularity and valuation would drop. This has proven to be the case, losing 73 per cent of its value over the course of the year.
I also stated that more and more previously NFC-based payments innovators would start to move away from technology that binds them to a reliance on a piece of third-party hardware to take payments. Whilst we’re currently seeing QR payments functionality ramping up in other parts of the world (specifically in our home territory of Scandinavia), the spread in 2018 was focused in Asia, driven by the huge success seen in mainland China.
In discussing the future of open banking and mobile payments and what 2018 had in store, I predicted that we’d see more third-parties beginning to address the opportunities PSD2 will bring – specifically in Europe. We have seen most recently that Google, for example, has obtained an e-money license in Lithuania, gaining permission to offer financial services across the European Union.
(Much) closer to home, Auka also launched Settle. Settle enables banks, telcos or anyone (such as large retailers) with a large customer base to offer risk-free mobile payments. Settle will become operational in European markets in 2019.
As for my comments on the advancement of AR and how it will continue to be integrated into retail e-commerce strategy… there’s basically a new example every day! From footwear to makeup, the cool virtual “try-on” experiences kept on coming and will only get more sophisticated with time.
So, what about 2019? Here are the top five key themes that I believe will make the most impact in the year ahead.
Finally. PSD2 comes into force, as the APIs from account operators (banks) have to be released no later than September. API documentation and test environments must be released no later than six months prior to API launch.
We will see a dramatic uptick in companies trying to play the one stop shop integration partner role. But, players like Facebook, Google and Amazon may be the winners. Ultimately the APIs will be unified and made available with a lot more structure, but we will have to wait for PSD3 for that to happen. See you in 2020.
As the number of new services grows and these services prove popular – beyond the expectations of traditional players – we will see a dramatic change in how big and traditional players address the threat.
Those such as Visa and MasterCard, especially in Europe, will partner, invest and buy companies that represent the next wave in payments and related financial services. It’s still early but eventually, they’ll venture beyond their current model with banks as distributors only. We will see big banks acting similarly. Smaller banks will adapt and innovate, with product development going beyond the lip service innovation initiatives we have seen up until now.
We will also see some extreme efforts to win going solo. Some of these efforts will fail miserably, while some will succeed. If fast enough with a new service that addresses a wide audience – if not the whole market – some players will win and thus steal customers from others. Telcos and retailers will join in as they can address the whole market utilising PSD2 APIs.
More than anything else, 2019 will see a big growth in narrow-band services (targeting a specific problem or audience). This will drive a flood of SME services making the pan-European business a lot cheaper, faster and more digital.
As regulation is tightened and we pass the big PSD2 dates, the regulator’s focus will be on the actual execution of the law. Who isn’t adhering and will be hit first by a group-wide turnover based fine? It’s likely to be a big fish that slip up first and are used as an example. Who will be hit first by aggressive SCA enforcement or lack of compliant API availability?
We will see a brand new revision of distributed ledger technology. The good parts of blockchain will be used without the sinkhole of cryptocurrency as we know it today. It’s likely that a government-backed currency will go onto a digital ledger (distributed or central is unclear). I expect this to happen in the Nordics or Asia first. It will simply enable the world to trade, instantly, beyond borders using a digital sibling of a known analogue currency. A digital ledger, such as the example, will be backed by something currently trusted today. For example, the Krone/Krona, resulting in an e-Krone, depending on this happening first in Norway, Sweden or Denmark.
It starts seemingly slowly. As we accept that players like Amazon, Google, Apple and well-known startups like Settle from Auka, Revolut and Transferwise deal with our money, artificial intelligence will start to take over much of our financial decision making.
Just like the tech giants will fight it out when it comes to better payment solutions, the battle for who makes the most money from AI will be predominantly fought by the established powerhouses. AI startups with great ambitions will harness the power provided by these companies, solving problems and making it easier than ever for consumers to manage their money in the way that best suits them.
The initial result of this will likely come in the form of assistant services everywhere. We will quickly move beyond ‘hey Siri’ and experience voice and text assistance in a wide range of situations. One such example could be a push message when you should move your funds from one to another currency, or when there is a sale on a product you like.
From everyone at Auka, we wish you a happy and prosperous new year!