The new year is almost here and everyone is busy planning for new year eve and new year resolutions, but it is also a perfect time to start preparing your business plans for the coming year, which is 2020. So, to help fintech companies in planning their coming year, we are here with some key new year predictions.
The market of financial technology is booming as fintech startups are trying to disrupt every corner of finance. The growth that this sector has enjoyed in this present year is expected to continue unabated in 2019, with one forecast pegging the compound annual growth rate at 74.16% from 2019 through 2025. Crowdfunding
The areas that startups are aiming to disrupt range from the banking sector to the insurance sector, covering a massive expanse of the entire fintech universe. And keeping in mind that some industries will see more growth than others, traditional financial services companies should brace for a further shakeup in 2019. With that in mind, industry players across the fintech spectrum weighed in with their predictions for the fintech marketplace in 2020.
So, Let’s have a look at some of the key new year predictions, that can help fintech firms in optimizing their growth.
- Insuretech goes mainstream:
When it comes to fintech, insurance is one area that is slowly being disrupted. Regardless of the decrease in overall funding in 2018, the world is still looking for alternative insurance offerings. In the first quarter of 2019, the number of deals reached 68, with overall funding of $1.98B, which accounts for 21.64% of global fintech funding.
One area according to the investors that will see dramatic growth is in cyber insurance as it becomes commonplace for businesses to have this type of coverage. As hackers grow more sophisticated and data breaches happen at an even faster pace threatening the reputations of any sized business, companies will want to protect themselves.
- Online Lending Growth May see a Dip
Online lending is a more mature area of the fintech sector, but that doesn’t mean it will see a slowdown in the coming year. And that’s even with a backdrop of macroeconomic uncertainty and a growth rate that could see year-over-year declines. Vince Passione, CEO and founder of the lending platform and online marketplace, LendKey predicts fintech companies in the lending space will create white-label lending platforms and will develop software as a service relationship with banks and credit unions as an alternative revenue stream. What’s more, Passione predicts fintechs will make the loan origination process even faster in the New Year.
According to our new year predictions, Online lending growth may slow down but Fintechs will adapt.
- Fintech unicorns emerging everywhere
The term ‘unicorn’ refers to a privately held financial technology company or a start-up with a total worth of $1 billion or more. The initial three months of the year 2019 saw the birth of three unicorn companies, and the next quarter brought additional three companies to the mark of their $1B, and 2 more were rumored to get there.
Some experts were expecting over 10 to 15 companies by the end of the year 2019. These fintech services startups represent various financial subdomains, including personal finances, digital banking, lending, and others.
- Cryptocurrency will grow as a Payment method
Till now cryptocurrency payments have been a niche application with Bitcoin failing to take off with the masses. Few economic analysts predict a big change in cryptocurrency is forthcoming as institutional money enters the market. Additionally, there is the possibility that cryptocurrency will be floated on the Nasdaq, which would further add credibility to blockchain and its uses as an alternative to conventional currencies.
It is also predicted that there will be a rise in cryptocurrency payments as more customers get educated on the advantages of using digital currency. Lower transaction costs are one of the major benefits, that will motivate companies as well as the audience in using it.
- Rise of blockchain
Blockchain technology changes the manner in which we understand the security of data storage. It can be utilized for global payments, management, digital identity, or even regulation of capital raising. From 2013 to 2018, the worldwide private investment in blockchain and cryptocurrency multiplied by 22.5 times, with 715% growth in the number of deals.
As for 2019, there are over 1,130 blockchain-based companies across 74 different countries. The aggregated amount of funding in blockchain reached $16.9 Billion, in over 12 subcategories.
According to the predictions made by Gartner, by 2025, blockchain-based fintech deals will reach $176B, and by 2030 it can score a $3.1T mark, expanding the overall fintech services market.
These were some of the new year predictions 2020, that can play a significant role in drafting your new year plans for your fintech company.
Aashish Yadav, Content-Editor, FintecBuzz
Aashish is currently a Content writer at FintecBuzz. He is an enthusiastic and avid writer. His key region of interests include covering different aspects of technology and mixing them up with layman ideologies to pan out an interesting take. His main area of interests range from medical journals to marketing arena.
