Tis the season for predictions as we close out the last ten years and head into 2020 and a new decade of bold technological innovation. My answer is, 'Probably never.'" More than ten years following the financial crisis fintech has produced a breathtaking number of megatrends with products and services that make our lives better. Let's have a look at the fintech megatrends emerging from past ten years and what they reveal about the next decade of innovation in the global financial services sector. Digital Payments: 20 years ago PayPal and WorldPay kicked off the first wave of fintech making it easier for consumers and merchants to do business together on the internet.
Home to nearly 100 million people, Egypt is the most populous nation in the Middle East and North Africa, and a huge market with considerable scope for new IT and telecoms services. The opportunities are particularly clear in the area of financial technology, or FinTech. One big reason for this potential, Ayman Ismail of The American University in Cairo's School of Business explains is that, "Egypt has a low level of financial inclusion". "We have around 14 million bank accounts and a similar number of postal service savings accounts," says Ismail, who holds the Abdul Latif Jameel Endowed chair of Entrepreneurship at the university. World Bank data reveals that the Middle East has the lowest level of bank-account penetration in the world, averaging 14 percent of adults, in line with the in-country figure for Egypt.
Recognizing this, many FinTech startups in Africa are using a "high-touch," in-person approach to customer relations with their low-income customers. But doesn't this increase operational costs and hinder the scalability of these FinTech startups? Are they more likely to fail than counterparts in other markets? Last year, CGAP began working with several FinTechs to pilot and scale digital finance innovations for low-income customers in Africa. Through that work, we are seeing FinTechs find ways around their customer relations challenges by teaming up with a variety of organizations, from farmers' associations to savings groups.
We asked 9 industry experts to contribute their thoughts on the year ahead, and a common theme was the need for these technologies to mature, with the genuinely useful implementations finally getting to market. Expanding on last year, we have chosen seven areas of interest to focus on in 2019. Each represents a vital area of innovation in the financial industry, and has a particular relevance to Luxembourg's thriving financial technology ecosystem. Each week we will be choosing one of the topics to focus on, both in the content we share on social media, but also in a dedicated newsletter looking at the top five stories from that week. First, let's introduce the topics with some of our favourite summaries for the uninitiated: "Regtech growth will explode in 2019 because regulators worldwide will start truly driving it. Multiple countries will hold a joint hackathon at midyear, aiming to use technology to remove one of the biggest regtech blockers: how to share data widely to find risk patterns and fight financial crime, while fully protecting privacy and cybersecurity. Solutions will solve myriad regulatory problems. Even more importantly, the shared experience will move regulatory bodies into a new era of active innovation and collaboration with each other, industry, and academia. Anti-money laundering will continue to be a leading use case, because the current system is so broken and costly and there's so much low-hanging fruit to harvest through technology. We'll also see AI and blockchain solving more problems, from digital identity and financial fairness and inclusion to API-based regulatory reporting, machine-readable regulations, and even machine-executable compliance. These regulatory breakthroughs are not just nice-to-have. They are essential, if fintech innovation is to flourish. The regulations are the rules of the road we're all traveling."