Last year proved a turbulent year for the FinTech sector. Although the industry continued to boom, the Brexit vote and the election of Donald Trump seem to have caused many investors to pause and reconsider investing in Europe and North America. According to statistics from KPMG and CB Insights, less than half the amount was invested in FinTech firms in the third quarter of 2016 compared with 2015.
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2017 has so far brought with it little political certainty and, as the FinTech sector starts to mature, it is increasingly hard to tell what is next for the industry. In this article, we highlight some of our top predictions.
1. Mobile and contactless spending will continue to grow
Mobile payment apps such as Apple Pay, Google Wallet and Venmo have transformed the way we pay and, in 2017, they are set to gain more momentum. Mobile-to-mobile payments are now easier and cheaper than ever and, according to an ABI Research study, contactless payments are expected to double in 2017. There is even the suggestion that advances made in mobile payments could cause credit and debit cards to start to disappear altogether.
2. More transparency for consumers
The Second Payment Services Directive must be implemented in the UK by 13 January 2018. Under this directive, banks will be required to open their account interfaces to new payment apps. As a result, there will be opportunities for FinTech companies to partner with banks to create more exciting customer experiences and provide increased transparency on performance and fee structures. The intention is to encourage competition and create greater choice for consumers, but it may also lead to an additional element of risk, as consumers may have to ask themselves whether the payment app they are using is really legitimate.
3. Security will become even more important
The increased activity in the FinTech sector has created fresh fraud risks and, in 2016, we saw data breaches in government departments and retailers (most notably Tesco Bank and Three) alike. This has led to an increased demand for security offerings. Any FinTech start-up must now have security as a major factor in its software development. The Bank of England announced at the end of last year that it is working with FinTech firms to work on ways to combat fraud.