At SIS FinTech Strategy Consulting, we examine the global trends impacting the future of FinTech and Financial Services. Here are the top trends to watch in 2020.
1. Digital Payments
FinTech is no longer a US story. FinTech funding is now larger in Asia than in the North America and Europe.
China is the best digital currency model in the world. Cash has largely disappeared from China. WeChat and Ali pay are $5.5 trillion dollars. Because China leapfrogged credit cards… never caught on. It is a cashless society. There’s no interchange. You built a proprietary system. Two payment systems where everybody uses. China is allowing massive growth with limited oversight. Over 3 years, there has been massive adoption. The only mechanism to dissuade corruption without $50k without approval, yearly cap. If you want to move a lot of money around, you’ll need to get approval.
In the US you have Visa, American Express or Mastercard, which are the transaction holders. In China, Tencent and Alibaba are the entire stack. In the US, we have 500 apps. In China, there are far fewer apps. Customers go to 1 or 2 apps, and do everything in there.
FinTech innovation is happening in South East Asia. In India, there’s PayTM which is using public funds. Thailand got started earlier on digital payments earlier, but never achieved what China has done. A lot of it is cultural in Thailand, where people pay bills via 7/11 stores.
2. Customer Centricity
Customer centricity is a huge trend. Banks are now more than ever subject to competition from rising FinTech start ups and technology companies.
Banking is the third most visited type of app, after Social Media and Weather. Surveys show a vast majority of millennials believe online banking is better than going into the bank.
Surprisingly, large national banks are more customer centric, followed by regional banks, followed by overall, followed up by credit union and community bank.
Customer Centricity no longer means knowing your name at the local bank. What matters to more customers now is that the App works. Smaller financial institutions may suffer as a result of revolutionary changes in customer needs. Fewer people care about human interaction. So massive shifts are occurring from Credit Unions to the top large national bank.