Rarely a day goes by that the financial industry isn’t being infused with the latest and greatest technologies. Fintech, or the marriage between finance and technology, is several decades in the making. For market participants, this means a world of possibilities.
While it’s nearly impossible to predict what the latest fintech breakthrough will deliver, at Tradesocio we have a few ideas about where the market is headed. After all, the past ten years have laid the groundwork for where we are today, and 2018 is expected to be the culmination of those efforts.
Below, we propose three predictions for the fintech market in 2018. As you can tell, the focus this year is on efficiency, transparency and collaboration. In my estimation, these will be the definitive trends of the next 12 months and beyond.
- Artificial Intelligence
The growth of Artificial Intelligence (AI) has been anticipated for some time, and there’s reason to believe its infiltration into finance will intensify. We’ve all heard of robo-advisors and AI experts, but rarely do we talk about what they are doing with the scores of data being generated by the markets.
In 2018, it will be harder to separate AI from big data and machine learning. Combined, these emerging technologies are enabling a new breed of fintech innovation by creating more efficient scale and improving existing products and services. As an example, fintech startups are now able to use machine learning to map how consumers are using their money. This critical information can then be used to offer “predictive advice” on the types of financial products they should be using. As one might expect, big banks are placing considerable emphasis on technologies that can help them make sense of the scores of data they already collect about their consumers.
2017 was the year of cryptocurrency, but 2018 will be the year that blockchain gains a greater foothold in the traditional financial sector. Investors, big banks and even governments have embraced blockchain, whose public ledger can boost speed, efficiency and transparency across all sectors of the economy. Over the next 12 months, the market surrounding blockchain will continue to mature, and investors will finally be able to differentiate between speculative investments and real use cases of the technology. Case in point: look at what Ripple is doing. It is developing major partnerships with Asian banks around streamlining cross-border payments.
Another example is IOTA, which is a cryptocurrency that seeks to capitalize on the market for connected devices.
Blockchain has been called the “new technology of trust” by Goldman Sachs. In its estimation, the distributed ledger technology “has the potential to change the way we buy and sell, interact with government and verify the authenticity of everything from property titles to organic vegetables.” So, while banks may not be so hot on cryptos, they are fully embracing what blockchain has to offer.
- Integrated Ecosystems
If technology has done one thing, it’s bring us closer together. Social media has revolutionized the way we interact, do business and learn about the world, and now the same forces are making their way to fintech. Nowhere is this more apparent than in the investment world. Social trading, or user-generated financial content, is already a thing. In 2018, this will go a step further to include all participants in the ecosystem. This means brokers, traders and other market participants will get to know each other on a deeper level.
My company, TradeSocio, has already developed an ecosystem that links various components of the financial community under one platform. Through Alpha Suite, traders, brokers, introducing businesses and asset managers all share one ecosystem for the purpose of sharing ideas and conducting business. This is just one example of an integrated ecosystem empowered by fintech.
As fintech continues to break down walls, financial institutions will be under renewed pressure to innovate. For the big banks, innovation is no longer a luxury, but a necessity to survive. That’s exactly what Daniel Pinto of J.P. Morgan Chase said as far back as 2016:
“Our industry is going through a transformational time, driven by competition, regulation and advancements in technology. As a leading global bank, we are committed to driving industry change by investing heavily in internal development, but also by collaborating with the talent of determined, young startups.”
Mr. Pinto’s remarks are on the money. After all, traditional financial service providers are no longer calling all the shots. Much of the fintech revolution is being driven by small- and medium-sized enterprises that have the flexibility and creativity to conceive of new solutions even before the market knew it needed them.
Buckle up, 2018 is going to be an exciting year for fintech.
Wael Salem is an established thought leader within the Fintech and Investment scenes. CTO at TradeSocio, speaker and serial technology entrepreneur, Wael is passionate about innovation, simplifying complex problems and creating equal opportunities within the tech & investment scene.