It’s January 5th, is it too late to do a 2016 trends post? I hope not (a girl’s allowed to take a break for a few days).
Regardless, 2015 saw a huge (HUGE) increase in attention on the financial space, especially the application of technology and new FinTech solutions popping up every day. Investment skyrocketed, new terms like “InsurTech” (or is it “InsTech”? We’ll wait that one out) arose, banks and startups were fighting to the death, unicorns were winning….
It was a good year. But what will 2016 bring to FinTech?
NASDAQ rang in the New Year with the first blockchain transaction on its distributed ledger-based Linq platform. This is following a year where every tech conference not even focused on money was talking about blockchain.
Blockchain is going to continue to lead discussion in FinTech, as people try to figure out its true potential and its realistic applications. Some of that talk will result in action, but blockchain remains one of those elusive topics that will likely be mulled over for a bit longer before we see huge uptakes.
Leveling of excitement
Wow was 2015 an exciting year for FinTech, as we all watched the investment dollars pour in and unicorns be made. It’s still going to be exciting this year, but we’ll see things start to normalize, investment will certainly continue, but not quite at the pace we saw last year (this is partially due to an expected slower pace of tech investing overall in 2016).
[Note: The investment from large banks into FinTech companies and technologies will likely still be very strong this year, and I doubt we’ll see a significant decrease in that. In fact, I might predict an actual increase in that investment flow.]
Bank and startup ecosystem
2015 was a year that saw both collaboration between financial institutions and startups, and also a lot of discussion around and claims of their incompatibility. We’ll see this continue, but the big question will be what happens to those who collaborate versus those who don’t. I think we’ll start seeing answers to this question this year, rather than mere speculation.
Do I even need to explain this one?
Increase in machine intelligence
We’re obviously believers in the power of machines – it’s how we match tech talent to hiring FinTech firms – but it’s going to apply to a lot more areas central to FinTech than just the hiring process.
Data was the big things in 2015, and putting that data to smart use will be the big thing in 2016. Machine learning will be at the center of this, being applied to things like predicting the risk of loans, information extraction, fraud detection, and, of course, trading algorithms.
Layman will catch on
By layman, I just mean those professionals who aren’t right in finance or in FinTech (or investing for that matter). MBA students will start to visit FinTech startups on their pilgrimages to The Valley and consider them as viable options upon graduation.You’ll see it more in the non-tech, non-financial media outlets. Who knows, maybe I won’t have to explain what “FinTech” is to the locals at a Friday night cocktail hour!
This will partly be due to the fact that so many FinTech solutions directly impact the consumer, and things like mobile wallets or microloans will increasingly and directly be factors in their lives. Whether they tie it to the term “FinTech” or not, the advances in the space will be felt more widely.
Accelerator programs, bootcamps, and hackathons around the financial space will increase
Last year we saw some of the big banks run their own series of accelerators and hackathons around FinTech, and some of the big bootcamp shops like StartupWeekend introduced FinTech-focused editions to their line up. This is only going to increase in 2016, which means more opportunity for people to get exposed to FinTech, more potential for innovation in technology, more partnerships on this innovation, more movement in the tech hiring space and so forth.
Pressure on regulation
This may seem like an obvious, but what I mean by this is something very specific. So far in FinTech, the regulatory environment has been a big “issue”. In 2015, we saw little hints of something that will become more common, and put more pressure on particular regulatory environments this year. That is, a few countries (the main regulatory bodies for most of what we’re talking about) opened up on regulations, showed signs of forward-looking innovation, even adopted technologies that are still being debated even within the industry.
Why does this matter? Because it will start to dictate investment flows, where FinTech startups set up shop, and put pressure on the regulatory environments that haven’t budged yet. If countries want to maintain positions in the space, this is going to be an inevitable issue to tackle, or they’ll be left behind.