FinTech is one of the fastest-growing sectors in the world these days and incorporates a leading position in terms of its development dynamics and investment volumes. In Europe, the growth of the FinTech sector over the past 2 years amounted to 209%, while in the Philippines the trend is not so obvious yet.
What is FinTech?
Before we delve into the latest trends in the FinTech sector, let’s explain what FinTech is. Well, FinTech is the short abbreviation for Financial Technology and is used to describe new technologies that intend to enhance and automate the delivery and use of financial services. The main goal of FinTech is to help companies, business owners and consumers better manage their financial operations. Â
This post will talk about the barriers that FinTech companies may face, which areas will show significant growth in the coming year and what are the opportunities for financing your business in 2020.
Online Lending
In 2019, the biggest investments in the FinTech sector were poured at companies that developed virtual card projects – which eliminate the need to deposit money. This is currently relevant for countries where a very small percentage of the population has credit cards but has access to the online economy. Moreover, people in these countries usually cannot get a credit card unless they deposit money in their credit card account, and this brought up the main problem: people get cards to get loans.
Therefore, one of the trends of upcoming years will be focused on the creation of affordable financial services for low-income groups in emerging economies, such as Brazil, India, Philippines, Mexico, Argentina, countries in Africa and more.
Online lending will take a major part in this trend. Already today we are witnessing a rejuvenation of the customer base in companies providing alternative lending services. It’s much more convenient for young Millenials to receive money in a couple of clicks online than to study the complex conditions of a bank loan and wait for weeks until they get a reply, which usually isn’t positive. Advanced-Data collection algorithms and scoring systems are developing very quickly in the FinTech sector. This naturally contributes to the popularization and growth of online lending.
Ecosystems
Nowadays companies are trying their best to get more and more information about their clients. They want to use this data as profitably as possible in hopes of making their clients spend more now, and in the future.
One example is large banks, who see an opportunity for their growth in creating ecosystems: They purchase ticket services companies, delivery services companies, or establish partnerships with non-financial organizations in order to get access to more channels and an even larger amount of data and clients to which they can offer their services. However, no one knows how effective the creation of ecosystems is, because no one has yet reported on the results.Â
Another trend is companies in the non-financial sector that are launching financial products, like GRAB for example. GRAB users can use GrabPay to transfer money, pay for purchases through the GRAB platform.
Recommendation Services
There are so many products out there these days – that sometimes you don’t really know how to choose which one is the right one for you. However, the amount of data that smart apps can collect on us is already sufficient for these apps to understand what is best for you. They can actually recommend to you what to buy, and you will probably be happy with their tip. In the near future, we will be able to see special offers from banks where the card really adapts specifically for us. We will be given targeted cashbacks based on our purchase history, searches, visits, etc.Â
These apps will increase margins due to the fact that cashbacks will be given not to all restaurants, but to certain ones where a particular client is likely to go. There are already recommendation services and personalized offers and these are likely to continue to develop and grow.Â
*******
Prepared by a financial advisor and analytic of CarisCompany.com
A graduate of Marketing Management who tried his luck with Sales and soon found himself writing for a living. He began as an Academic Writer before turning into online content and getting serious with his own blog. He daydreams of embarking on an exploration of what the world has to offer while finding inspiration to put his thoughts into writing. He currently contributes for WhenInManila.com. You can check his own blog at themusescamecrashing.wordpress.com.
