Firstly let’s take away the implications of Covid-19 as they are really still an unknown quantity and we really would be making ‘best guesses’.
International Payment Transactions – Smaller and Faster
During the start of 2020 we have seen an acceleration in real-time low-value payments across borders at a reduced cost, driven by customer requirements for on-demand payments. This has resulted in a gaining of transaction and scaling up for suppliers of interledger and distributed ledger technologies.
Watch out for a raft of pioneering Cloud-hosted banking technology providers
Many banks are already using banking-as-a-service tech platforms to evolve their cost-to-serve and cost-to-charge offerings. However technology costs with the operation and development of these services continues to climb we fully expect the finance sector to turn to cloud providers to reduce these costs.
Cloud-hosted banking tech providers have already developed new platforms with the latest technology, and are best placed to economically plug into the emerging blockchain networks employed and other areas if FINTECH. We wonder how longer it will be until we reach the tipping point from face-to-face premise banking to agile, cheaper cloud hosted banking.
Creating a Ripple in Mobile App Payments
Again we are seeing consumer purchase payment choices changing as many embrace mobile app as their preferred payment choice. Linking with blockchain technology, mobile apps driven by technology like Ripple are key to achieving this especially in the tourist industry (when it kicks back in) as a UK Tourist visiting the far east could trigger instant cross-border payment from their Sterling Account to a merchants local currency account.
The use of Ripple will also enable SMEs to invoice and receive international payments immediately, in small amounts. This reduces cash flow issues for the more agile SMEs as well as reducing cost-of-business, alongside opening up the potential of new markets.
The Consumers Micro Wallet
The use of micropayments has traditionally been limited to pure payment messenging apps, however as the larger tech companies introduce their own payment services, we can expect many developers rushing to create solutions for in-app, real-time on-demand payment processing.
Will the future be built on Blockchain?
With about 80% of the total of digital asset trading coming from Asia there has always been an appetite for payment innovation. Blockchain,with its ability to make micro-transactions such as loans, payments, remittances – much more efficient and transparent, has been a key factor in this innovation.
There is still an opportunity for continued advances for both consumer and enterprise remittances, there are opportunities for the use of blockchain technology to primarily address issues of liquidity, speed of implementation, and the cost of readily available capital.
So what about the implications of COVID?
The UK’s focus during the COVID-19 outbreak has been in the preservation of jobs and supporting the self-employed. Measures have been implemented to help businesses of all sizes manage the immediate cash flow problems which came with the pandemic.
Many have spoke about a repeat of the 2008 Financial crisis, however this time the banking industry is being seen as an integral part of the solution not the problem. UK regulators have acted quickly to provide easier capital and credit conditions for banks.
The final impact of COVID-19 might not be known for months or years, it will however effect the whole of the UK to differing extents. Oxford Economics estimates that cities such as Cambridge and Bristol may be more resilient due to their larger professional services and digital industries; Only time will tell.
Campbell & Fletcher Recruitment work across the United Kingdom sourcing the highest equality talent in the banking and financial services industries.
Firstly what is Fintech?
FinTech emerged about 15 years ago; the term was initially applied to the technology employed at the back-end systems of financial institutions. However more recently there has been a shift to more consumer-oriented services and therefore a more consumer-oriented definition.
The term now describes a wider variety of financial activities, such as money transfers, smartphone cheque deposits, credit applications without the need of visiting a bank branch, raising money for a business start-up, or managing your investments, generally without the assistance of a person.
Given the strong development of the sector we are, not surprisingly, seeing a growth in recruitment for roles right across the United Kingdom for retail and corporate institutions of all sizes.
FinTech is the future of finance
With the insights that we’ve gained from working in this sector it’s clear to see that the UK has set the global benchmark for innovation in the FinTech sector; early acceptance and integration has shown that the UK financial services sector can thrive in this digital revolution. It also suggests that there is no longer a clear divide between the traditional finance sector and FinTech – the sectors success is intertwined.
A trend of disruptive payments & cryptocurrency
Paper money has slowly been giving way to innovative payment solutions, as digital wallets and contactless payment have become the norm.
2019 saw the rapid growth of cryptocurrency, as it was the main driver for changes in the token and payment systems. The EU Payment Service Directive adopted in 2015 has allowed companies to use outside payment services providers as an alternative to bank institutions.
Our view is that we should expect further innovation and growth in this sector into 2020 and well beyond as more companies and individuals come onboard.
Millennials have adopted the concept of virtual currencies and represent a large percentage of cryptocurrency owners; there is also more willingness of young people to support forward-looking startups and ICOs.
The UK, however, still falls slightly behind on numbers of consumers who own cryptocurrency, a survey in 2018 undertaken by ING on mobile banking*1 showed that only 6% of responders in the UK owned Bitcoin or similar digital currency. This was against 8% in the USA, 10% in Spain and 18% in Turkey.
The crypto market is growing rapidly, driven in part by the phenomenon of crowdfunding, and is likely to change the shape of the FinTech industry further over the next couple of years.
Total Automation? Our opinion
We fully expect to see a further growth in the complete automation of key financial processes. Intelligent automation has come about from a combination of continuous innovation in artificial intelligence, robotics and financial business process automation.
A Capgemini survey*2 shows that the implementation of automated elements into the financial ecosystem brings many benefits including higher returns, additional cross selling opportunities, faster product delivery, increased customer satisfaction and stronger financial health.
The survey shows that some Insurance companies, and Retail and Commercial banks have seen customer satisfaction growth of over 65% since the implementation of intelligent automation.
However, despite the obvious advantages, only a small number of FinTech companies have actually started to deploy automation in their activity primarily due to the lack of FinTech specialist and resources to deploy the automation.
Any new wave in finance technology trends is often based on smart collaborations. Rather than competing for clients, traditional banks and FinTech startups are now working in partnership.
In 2017, a Canadian bank used a blockchain technology in partnership with Ripple and ReiseBank AG to make a large international payment; the payment transaction that would have previously taken several business days was completed in a few seconds.
New partnership relationships between the traditional and FinTech sector are starting to bring amazing results through delivering optimal customer experience, challenge solution and enhanced security through biometric technologies and blockchain technology.
Although many of these trends are early stage, we believe it will change the shape of the industry soon. Businesses should be considering how to change your strategy to the new moves in the industry to alter your business pattern to meet the constant changes of the digital world we live in now; this can only be achieved by ensuring the level of expertise your team have complies with todays demands.
*1 Source: ING International Survey Mobile Banking. The question was phrased to 1000 responders in each country as follows “I own some cryptocurrency” with answers “Yes” or “No.
*2 Source: Capgemini Research Institute – Automation in Financial Services survey
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