2017 Fintech Predictions Roundup

It’s that time of year when everyone comes out of the woodwork to offer their predictions on what will happen next year. Some are right, some are wrong, but most deserve some consideration, either helping to confirm your view, teach you something new, or reveal that you have additional or unique insight that may be an advantage.

To save you time digging through multiple prognostications, I have pulled together and summarized a few below to illustrate the breadth of topics and opinions around the state of fintech in 2017.

Macro Risks
Pascal Bouvier, Venture Partner at Santander Innoventures, focuses on the macro forces that will shape key parts of the financial services industry. Regtech may be volatile, especially in the US if the tide turns toward material amounts of deregulation post-election. For marketplace lending, consolidation will continue and banks may start to acquire some lending platforms. Pascal sees more opportunity for roboadvisors, specifically with the potential for B2B startups helping incumbents. Risks exist in trade finance and supply chain finance in the face of a global trade war, but there is opportunity in payments around micropayments and small business payments. Consolidation and patent wars are likely for blockchain companies, and AI + process automation + messaging platforms will gain further steam throughout the year. Lastly, Pascal reiterates his view that digital identity will be a foundational piece of the finserv industry, as financial institutions can be the arbiters of trust, which enable payments and currency solutions.

Fintech Trends
The fine folks at Daily Fintech grade their 2016 predictions, followed by their thoughts for 2017. While they put a lot of emphasis on aspects of Bitcoin and the blockchain, there are a few more interesting calls. One is that bank analysts will start blaming disruption from fintech competitors while discussing a major profit drop at a major bank. Also, digital challenger banks will see funding dry up as incumbents launch similar digital bank offerings and erode the headstart that challenger banks had achieved, Similarly, insurtech startups who attracted early VC money will see a slowdown in follow on rounds as they will need to prove out their businesses with real customer metrics.

Banking Trends
David Horton, Head of Innovation at consulting firm Synechron, offers his thoughts on 5 trends he sees in banking for next year. Chatbots will continue to proliferate, though are currently most effective for specific servicing roles. Artificial Intelligence will increasingly power much of progress banks make in automating their internal processes, with focus on the customer onboarding journey, including stops in KYC and improved auto-decisioning thanks to natural language processing and OCR technologies. Organizational power structure shifts will occur in banks, as different executive positions gain and lose influence due to the changing value in certain types of technology and data. Open APIs from banks will gain more steam as firms take advantage of the opportunity to leverage new technologies into their offerings. Finally, blockchain applications will continue to be experimented with, but will not lead to major changes in the industry.

Financial Inclusion in Latin America
Fermin Bueno, Co-founder of Finnovista and Startupbootcamp FinTech LATAM, believes that 2017 will be the year of financial inclusion in Latin America. With his firm tracking over 1,000 fintech startups in the area, he sees that more than 40% of them are focused on developing services for those who are left out of the traditional financial system. Fermin sees the right environment coalescing with a strong startup ecosystem, venture capital, talent, governments, and a growing middle class coming together to make significant progress next year.

Other interesting takes:
The Financial Brand: Huge compendium of comments from top fintech leaders in the Digital Banking Report with survey of 700+ financial institutions. Many are focusing on frictionless customer journeys, Open APIs, data analytics, and partnering with fintech firms.

FICO: EMV rollout still not complete, fintech startups get more serious, and (still) no clear winner in mobile payments