Fintech 2018: The hottest new trends for the year ahead
The rich and vibrant fintech industry continues to blossom and grow at an incredible pace, especially in the UK and across Europe. But what does the year ahead have in store for us? Here at Future Finance, one of fintech's fastest growing companies, our management team pick out their predictions for 2017.
What will be the hottest trend in fintech in 2017?
2017 will witness a rush of mergers and acquisitions in the fintech space. We’re finally going to see some big financial brands snapping up small groups of razor-sharp fintech start-ups as they realise the best of these firms are now actively shaping the future and it’s simply too slow-going for the incumbents to build new competitive products and services from within. There’s going to be a lot of jostling for position and a lot of rumour. It should be interesting.
Edtech will really take off in 2017 too. There has been a new wave of bubbling tech entrepreneurs in education for a few years now, without it really exploding. But it’s on the cusp. Edtech investment is set to reach $252 billion globally by 2020 and the UK has more than 1,000 edtech start-ups. The ones to watch will be Raspberry Pi and FutureLearn, an Open University initiative. Knowledgemotion are scaling up rapidly too so they could join the party.
Finally, and with a genuinely and completely unbiased perspective, we have to emphasise that the private student loans sector is going to be red-hot in 2017. We are incredibly mindful at Future Finance that the growth in our area has alerted many potential players to the commercial possibilities. With tuition fees at record highs, and inflation on the rise, the shortfall in student funding is growing quickly. We expect a lot of emerging competition next year. The most established US firms in the sector will be looking to enter the UK market and banks and lenders already in the UK will try to carve out student-focused products.”
Where do you think the biggest opportunities lie?
The loans sector in general is crying out for a shake-up. Many big firms that offer loans are archaic, unfriendly and in need of a facelift. We’ve seen big strides in the payments and investment sec-tors in recent years but lending has remained behind the transitional curve, by and large. We think B2B fintech entrants will emerge strongly here, using big data as a way to better service borrowers end-to-end, particularly for individual consumers but also for small-to-medium sized businesses.
Meanwhile, financial education is going to become more important than ever, and a sure-fire way to win customers. At all levels, we need to dramatically improve financial literacy in this country. Empowerment and control of one’s finances is great, and that’s been a key theme of fintech in recent times, but you can’t responsibly hand over the reins unless you give people the right information and advice at the same time, to help them make the most of such new-found freedom. Financial firms that best intertwine education, insight and targeted help into their online services will reap the biggest rewards.
Which brands, trends or thought-leaders are going to be the ones to watch?
It’s going to be a fascinating fintech year ahead for the new breed of challenger banks. You can see the likes of Monzo, Atom, Starling and Tandem getting tough in 2017 as they fight for first-mover advantages and millennial market-share. It’s going to be fascinating and it could get pretty feisty. Starling are well positioned to come out on top.
The payments sector is another hugely competitive arena. It’s hard to see many companies rivalling Klarna and GoCardless here in 2017. To do so, anyone else would need to invest really well in product development and accelerate change by making some tough prioritisation calls. Or, be brave and pick a niche they can quickly dominate.
In the investment sector, I think we’ll see, for the first-time, the robo-investor model face up to some big questions from industry sceptics. The usual anti-fintech grumbles about short-term profitability will snowball. But this is probably good news for those already in the space as it just means the big banks yet to dip their toe in the water will likely keep their powder – and their feet - dry! It simply justifies their decision not to compete just yet. We’ll see the likes of MoneyFarm, Nutmeg and your more traditional-but-adventurous Charles Stanley Direct expand their product offerings. And the first to effectively combine wealth management with financial advice at a mass-market B2C level will clean up.