2016 and 2017 saw us talking quite a lot about where fintech and mobile payments are headed and what this means for banks. We focused quite a lot on upcoming regulation which is set to drive a lot of this change.
Specifically, much of our focus was spent pointing out how the big tech companies will seek (and have started) to make the most of the opportunities open banking and bank API access will afford them.
For example, here we talk about how Facebook’s following the same payments formula of the big mobile payment success stories we all know – Alipay in China and Scandinavian banks.
Further, we discussed how banks in Europe need only turn to India to see how Google has made the most of the new open banking regulations in the area with Tez.
Below we’ve outlined some thoughts about what’s in store for the world of fintech in 2018. We’d love to know if you agree/disagree with these or what you think we should also have included. Comment below!
I predict that we will see a further rise and then the momentous fall of most current cryptocurrencies. Many speculators will leave the market with a lot of money while others will be left with worthless wallets, as governments create crypto-siblings of established currencies. It doesn’t matter if it’s the ruble or some other domestic European currency that goes onto the public ledger first – but in 2018 I predict it will happen.
This will drive down the value of unbacked coins in favor of ‘real money’ that goes digital. On the back of the public ledger and exchange revolution, we have seen from bitcoin and its derivatives that the world will benefit greatly as money flows virtually for free amongst anyone using real currency on a public ledger. Bitcoin proved the technology, but banks and government will make it work for the rest of us.
Even Apple, with its love for their own near field communication (NFC) implementation such as it was that they’ve previously spent quite a lot of time and money on defending it from third-parties, is moving away from NFC technology for payments. They’re building QR functionality to their software, focusing on App based P2P Payments and just now opening up their NFC to some third party applications as a last effort to gain some volume. Android offered the same to others already and it didn’t catch on. Could this be because they realise that the future of payments doesn’t rely on NFC afterall and therefore, the “competition” are welcome to it? NFC wallets will die and be replaced by payment apps that free payments from hardware requirements.
Hang on, I hear you say, hasn’t this been on every fintech prediction list for several years now? Well, yes, but 2018 has reason to be confident open banking will truly break into the mainstream. That’s because the second payments services directive (PSD2) comes into force. PSD2 compels banks to create open channels through which data can be requested and used by any licensed third-party with the consent of the customer. This means that banks must create and have the means to open an API which links account information they store to the outside world.
Its accompanying regulatory technical standards (RTS) mandate that compliance doesn’t have to be immediate. Despite this, we’ll see fintechs and third-parties starting to launch payments solutions and banks fighting back across Europe (and beyond).
Much like open banking, the rise of mobile payments has been hyped for at least the last two years. Many of these predictions focused on the usage rates for payments being conducted with a mobile device in any scenario, however – like NFC payments (discussed above). Open banking regulation will see a host of new innovative mobile payment solutions becoming available for widespread use. These solutions will go far beyond contactless payment. They will allow customers in their regions of launch, regardless of bank affiliation, the ability to pay in any circumstance and in any way.
We know that eCommerce/omnichannel retail is still on a rapid growth trajectory and consumers have an increasing preference for purchasing online as opposed to in-person. But, new biometric and augmented reality tech opens up a whole new range of possibility in the world of digital commerce.
What we previously considered shoplifting – picking up items and leaving the store without making a physical payment – will increasingly grow in normality as your favourite stores confirm your presence and identity as you walk in.
Further, what we’ve seen in stores using AR so far ain’t no big thang compared to what’ll be possible as the tech evolves further. Ikea already has functionality that lets you see how a piece of furniture looks in your house and online glasses company, Glasses Direct, lets you “try on” glasses before committing to purchase. Both Apple and Google released AR toolkits for developers this year. We can expect some pretty cool functionality to become more commonplace next year.
Remind us to check in at the end of 2017 to check up on these predictions.
Want to know more? Get in touch.