What are the top 5 fintech trends for 2018?
The steady rise of Australia's fintech sector is showing how much technologies are impacting the financial world, with the FPA's Fintech Whitepaper last year showing more than 100 technology solutions are now available on the Australian market that have sought to automate some part of the advice process. This revolution is an answer to the financial services industry's need for technological innovation and it is changing the way major financial institutions, licensees and financial businesses operate across different verticals, holding significant implications for Australian investors, startup businesses and end consumers.
If recent regulatory developments give us a blueprint of what lies ahead then 2018 will prove to be a turning point for equity crowdfunding in Australia, giving everyday Australians the opportunity to invest like angel investors and venture capitals.
This means that mum and dad investors will be able to invest up to $10,000 in companies that are raising up to $5 million, something that was previously open to investment only for high net worth and sophisticated investors.
For startups, it means they'll have access to new avenues of funding, as investors become part-owners of the companies they invest in.
National Payments Platform (NPP)
Coming into effect from Australia Day, this $1 billion payments infrastructure will become one of the most transformative innovations to date for the Australian economy. The NPP will:
- Enable almost real-time payments to customers of other banks, reducing a lot of the friction with transactions between businesses and their customers, and between individuals.
- Enable more — and faster — innovation in financial services. The NPP is designed to allow multiple, competing products and services to operate simultaneously, this being the point of difference between its fast-payment predecessors. While the first product developed by BPay and called Osko, will launch with the NPP, more will invariably follow — many of which we can’t even imagine.
- Make the need for BSB and account number redundant. Payments will be able to be made by just knowing somebody’s email address or mobile phone number, making it much simpler, and less risky, to transfer money.
More mobile payments
Apple and Android Pay may already be here, but people are still getting used to the fact that physical cards -- and wallets -- are no longer necessary.
All that's about to change in 2018. As the Reserve Bank of Australia produces platforms such as the NPP (see above), using digital currencies via phones will become increasingly normalised, and major banks will be forced to increasingly adopt technologies that make everyday shopping more convenient for Australians.
In 2017, it was all about Bitcoin, the first virtual currency created in 2009, and blockchain, the technology that enabled the creation of Bitcoin.
This year will see the proliferation of cryptocurrency, the umbrella term for digital/virtual currency under which Bitcoin falls. As Bitcoin goes mainstream (you can buy it at your local shopping centre from an ATM these days) more Australians will learn, and become comfortable with, investing in cryptocurrency.
In fact, cryptocurrencies pose such a threat to mainstream banks (they are decentralised, which means that users can make payments without involving the banks that most economies and government financial models are built on) thanks banks such as the Bank of England and Bank of Israel are now talking about creating their virtual currencies.
The rise of digital banks (neobanks)
With the Federal Government in support of all deposit-taking industries to call themselves "banks" (as opposed to only those with more than $50 million in capital) fintech's evolution is limitless.
Neobanks such as Xinja, Australia's first 100% digital soon-to-be bank, are banks designed to provide all retail banking products such as transaction accounts and mortgages via a smartphone app.
This is part of the steady evolution/ disruption of fintechs, which, in the past, were seen as competitors to the banking system. From 2018, we'll see greater partnerships between banks and fintech startups as both see the value of working together to help offer a greater suite of more innovative services to customers.