Fintech Trends 2020

Written by Yapily · February 4th, 2020

Investment into Fintechs has grown exponentially and the expectation is that this boom will continue in 2020, if at a slightly slower pace. Venture capital (VC) poured about $40 billion into Fintechs in 2018 – an increase of 120% on 2017, an up from just $1.8 billion in 2011.

Almost a third of the fintech survey respondents, published by FINTECH Circle, believe that investment in 2020 will be at least 50% higher than in 2019, and just under half predict it will be somewhat higher. The interviewees expect the investment bonanza to continue. According to Stefano Vaccino, Founder of Yapily : “Investment will increase as Fintechs are reaching maturity so there are more late stage companies to invest in and greater adoption by consumers is fuelling optimism.”

Open Banking - opening to the possibilities

Since PSD2 “opened” banking in 2018, Fintechs have worked to make the most of the opportunities it creates. In 2020, survey respondents expect personal financial management (PFM) platforms that aggregate data across financial institutions to be the area that will see the most growth due to Open Banking, as well as know-your-customer (KYC) solutions and credit scoring.

Stefano of Yapily adds: “Open Banking allows access to account information in order to provide new and innovative financial products. However not all types of data are mandatory to share and not all accounts are covered including mortgages or long-term savings. We need to extend the capabilities of APIs.”

Open Banking can become open finance - encompassing investment, wealth, insurance and much more

When that happens, Open Banking can become open financing - encompassing investment, wealth, insurance and much more. “I see the purpose of Open Banking as taking down the barriers to financial services, and I see huge potential in changing how financial services are offered in the future,” he says. “But it can’t change immediately. The first wave was accounting, coming from those who used an alternative way to access a bank account and had to change.

The second wave is where I think there will be huge benefits – the payments space. Payments can be expensive, around 2%, but Open Banking is bringing down the cost. And the third wave will be lending. With a loan application, traditionally, you would need to provide months of bank statements to prove identity and affordability. With data sharing, lenders can access the customers’ bank account data in order to approve loans more efficiently. Then it starts to become open finance, not just banking, and customers can be offered bespoke products and services based on their financial profile.”

Open Banking is also spreading geographically – as well as the EU, Australia and Hong Kong also have opened up. Brazil, Canada, Japan, Malaysia, Mexico and the US may follow suit in 2020.

Read the full report here >

FINTECH Circle Institute explored the broad trends we expect to see in fintech. Its research is based on a survey of the FINTECH Circle network - including fintechs, traditional financial services providers, consultants and fintech investors from around the world - as well as in-depth interviews with a range of experts.

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