FinTech Trends That Would Transform the Industry In 2020
July 6, 2020
As we enter the next decade it is useful to reflect on what the emerging trends in financial technology will be for 2020, enabling banks and financial institutions to prepare for the opportunities and challenges that lay ahead.
The impact of regulation
Regulation will continue to dominate the banking and finance landscape of 2020. The introduction of PSD2 in 2019 marked the year by the effort that was required from banks to become regulatory compliant under the threat of facing heavy fines. However, even though visibly there was a huge effort, PSD2 was not implemented as expected with many banks failing to meet the deadline. So it seems like PSD2 regulation will remain a prevalent issue for 2020, guided by the European Banking Authority time extension to achieve strong customer authentication (SCA). With PSD3 approaching, the year will continue to witness a strong regulatory presence in business models, as it is essential that banks get the basics right before attempting to jump the additional hurdles PSD3 is set to bring – aiming to eliminate fragmentation by including a more precise and concrete specification of API standards, directory services and infrastructure.
For banks to overcome the regulatory challenges they face, a more robust and flexible digital strategy must be implemented. They must continue their efforts to facilitate digital transformation across the entire business ecosystem, to become modular, to increase the focus on financial and operational resilience, and to respond to political and social pressures in areas such as environment, sustainability and financial inclusion.
The rise of digital lending
The Fintech Revolution was a success in terms of growth, it is amazing how far it has reached and how it transformed traditional bank departments and services into complete new industries. But the revolution is not over and there are still some areas of the industry being disrupted. One of those areas is lending where the disruption seems to have only mainly reached the retail industry, where new innvoations and innovative players are appearing quickly. If incumbent banks and financial institutions want to stay competitive in 2020 they must develop their lending service offering. Traditional banking and financial institutions need to provide a far more unified, flexible and efficient approach, specifically when working within the SME market.