A trending shift towards increased automation, mobility, and digitization has not bypassed the financial services industry.

Now even the world’s leading fintech companies feel the pressure to innovate which leads to an increasing number of fintech partnerships, acquisitions, and cutting-edge products. In response to this, we’ve made an in-depth fintech market research which depicts data from the latest fintech reports by PwC, McKinsey & Co, Capgemini, Accenture, CB Insights, and Deloitte.
As a result, we’ve outlined key financial technologies, leading fintech companies, and disruptive fintech trends that are expected to have a lasting impact throughout 2019.

Here’s a quick recap of what’s inside:

Change of fintech investment behavior

The amount of global VC funding in fintech continues to grow, while the number of deals starts to decrease. Now investors focus more on companies with a proven track-record which have already gained huge profits or innovative fintech startups utilizing AI, machine learning, robotic process automation, and other emerging technologies.

Digital and mobile-first wave

Today the terms “digital” and “mobile first” act as a clear directive for fintechs, representing how modern users want to interact with their service providers. Consequently, a growing number of fintech companies are starting to leverage disruptive technologies to differentiate themselves on the market. While digital-first startups are becoming key acquisitions targets for leading financial companies striving to innovate and engage new consumer segments.

Asia rising as a global fintech hub

Even though Silicon Valley is considered the world’s leading innovation hotspot, Asia is not lagging behind. This region has a growing population of digital natives and is on the way to becoming a prominent fintech powerhouse with China leading the global peer-to-peer (P2P) lending market. Moreover, a growing number of Asian fintech startups begin to focus on blockchain, cyber-security, and AI while a number of America’s leading fintech companies are planning to set up fully functional branch offices and R&D centers in Asia by 2020.

asia vc backed fintech fundings 2014-2018

Asia vc-backed Fintech Fundings 2014-2018

Blockchain technology

Blockchain-based financial offerings are gaining traction while the global blockchain market is expected to reach $60 billion in value by 2024. Its use cases in fintech are almost limitless, ranging from financial transactions and cryptocurrencies to automated contractual agreements and more.  Blockchain technology is being actively used for decreasing the overhead costs associated with confirming authenticity. What’s more, it can help investment banks reduce expenses by more than 30% in areas such as finance reporting, compliance, centralized and business operations.

Artificial Intelligence

Artificial Intelligence remains a growing fintech trend with around 41% of financial companies planning to implement it in the near future and 20% already utilizing its power.
Throughout 2019, we expect a variety of narrow-focused AI applications designed to identify hidden customer behavior patterns and automate repetitive tasks performed by humans. Moreover, leading fintech companies will use AI and machine learning in a form of advanced chatbots or imaging recognition software to launch hyper-targeted campaigns and facilitate client assistance.

Cloud solutions

A number of leading fintech companies are developing cloud-based applications or migrating existing solutions to the cloud to become more accessible to end users and increase their operational efficiency. While leading fintech companies use cloud computing for non-core business activities such as CRM, HR, and accounting, some are also planning to test its efficiency in areas such as security analytics or KYC verification.

financial services industry cloud readiness score 2019

Financial Services Industry: Cloud Readiness Score 2019

Data-driven personalization

Despite the accelerating fintech trends related to cutting-edge technologies, they can still be difficult to implement and might not always meet the market demand. This can result in increased lead times and validation life cycle. Notably, some of the world’s leading fintech startups succeeded and won the trust of millions of customers only by introducing data-driven processes, tailoring personalized offers, and continuously testing user behavior and preferences.

Fintech partnerships

The number of fintech partnerships is growing rapidly as the majority of global financial service providers believe they could lose a substantial market share to innovation-driven startups. Hence, financial institutions are looking for ways to transform everything – from core operations and products to front-end and back-end processes. This results in an increasing amount of bank/fintech partnerships and market acquisitions.