Ever since the world has become one enormous marketplace, we have seen a constant change in how businesses take place. This has been further fueled by new technologies and rapidly evolving customer expectations. Even the highly regulated banking and finance sector in recent times has witnessed constant metamorphosis of its business models to stay ahead in disruptive times. Hence, when it comes to the financial services ecosystem, the FinTech industry plays a significant role in determining how the sector moves forward. Today, FinTech disruptors are changing how everything works –lending, payments, insurance, credit settlements, and more.
Global funding for fintech firms increased over the last year, and traditional banking institutions experienced disruption as fintechs developed new banking technologies and business models that are driving industry-wide change. It's an exciting time, and the implications for the future of financial services are promising. In this rapidly changing climate, industry stakeholders may wonder what to expect in the coming months. As the year comes to a close, we've rounded up our top five predictions for fintech in 2017. Banking is becoming an increasingly digital experience, and 2017 promises to continue the trend of replacing branch visits with convenient, intuitive digital experiences.
Here are the six biggest trends identified by Synechron in their annual forecast. Subscribe to The Financial Brand via email for FREE!2018 promises to be the year we see the culmination of some key technologies -- from blockchain and intelligent AI, to design thinking and the cloud. Here are the 10 biggest trends identified by reports from Synechron and Capgemini. Experiences with non-banking industries such as retail and communications have shaped consumers' expectations from banks and credit unions. As customers become more digital, more demanding and more tech-savvy, legacy bank infrastructure is strained to support new modes of engagement and grow digital efforts significantly.
In recent years, financial technology (fintech) companies, which are mostly start-ups, have increased dramatically in number--from about 1,000 in 2005 to over 8,000 in 2016--and have harnessed many new cutting-edge technologies to offer various financial services, while sidestepping the legacy cost structures and regulatory constraints of incumbent banks and financial services institutions. These fintech start-ups have also found significant encouragement in the form of increasing venture capital investments across sectors. In 2015 alone, an estimated $47 billion has been invested in fintech companies globally. Technology start-ups are considered the primary disruptors of the traditional financial services industry and its way of working. Along with technology start-ups, a number of non-core players have been entering the banking and financial services domain, primarily through technology innovation and consumer interfacing.
Innovation continues to be a strategic priority in the banking industry, with new business models emerging including partnerships with fintech startups. As competition expands and consumer expectations for enhanced digital banking services increases, new business models in banking are emerging and being deployed in real applications. Investment in innovation and in technologies like artificial intelligence are transforming the way rich data is analyzed and applied, creating the potential for real-time contextual banking engagement. The innovation agenda has become intertwined with the digitalization agenda, with both requiring changes in culture and back office operating systems. Investment in delivery channel innovation continues to be the most important focus for the banking industry, responding to expectations set by other industries.