Many hundreds of predictions have been put forward by industry specialists. We have reviewed these and have chosen the five Fintech predictions 2019 we feel have the potential to create the biggest impact on the fintech industry and featuring trends likely to be most significant.
The introduction of technology to financial services has created an industry that is overflowing with opportunity, potential and disruption. It has become a hotbed for investment and a hub for M&A activity. In 2018, this was reflected through astonishing growth, with over 1,700 fintech deals being closed for a combined value of $40 billion.
This growth is expected to continue unbridled in 2019. Forecasts predict a staggering compound annual growth rate of 74.16% between 2019 and 2025.
Driven by mass consumer tech adoption, unprecedented investment and supportive regulation, fintech companies are at the start of an upward trajectory that is set to really take off in 2019.
Fintech predictions 2019
1. Fintechs will look to expand their business offering.
Payment companies are entering new markets and scaling fast and expanding into other verticals. With so many competitors in this area already, if fintechs want to increase their market share, it is essential that they focus on expanding their businesses beyond initial use cases and move into other verticals, for example credit and digital banking. Partnerships offer the ability to diversify without such considerable R&D spend, so we should see more of that, too.
2. The rise of fintech in Southeast Asia.
In 2018, fintech deals and funding in Southeast Asia reached record highs, growing 143%. Investment is pouring into the region – for example, Momo, a Vietnam-based payments company received $100 million in its Series C round funding at the start of 2019. The sparsity of existing payment infrastructure across Southeast Asia leaves room for fintechs to swoop in and take hold of currently underserved populations. Due to mass consumer adoption of technology, Southeast Asia is a market that is perfectly ripe for disruption.
3. Regulation: a double-edged sword.
In 2019, it’s likely that we will see regulators becoming more emboldened. Regulation will be vital both to stamp down on bad actors and create a supportive environment for innovation, for example lowering barriers for start-ups looking to enter new markets. It’s likely we’ll also see start-ups recruiting in-house regulatory teams to effectively manage and take advantage of regulatory nuances.
4. European banks challenging the challengers.
Competition between traditional banks and new challenger banks is nothing new, but the stand-off will show no sign of abating in 2019. Banking is a local business. To date, there is no global bank with more than a 1% market share. Challenger banks have the potential to change this. Their digital abilities pose a real threat to established banks, and as they aim for a global audience, traditional banks will need to improve their digital capabilities in order to compete.
5. Delays to IPOs as a result of fintech mega-rounds.
2018 started with 25 unicorns valued at $75.9 billion. Despite huge amounts of investment, only three of these unicorns went public – GreenSky, Adyen and Funding Circle. As more players enter the fintech market, it’s likely that ongoing record fintech mega-rounds will continue to delay IPOs. With such high level of funding available from private investment, the urgency to go public has reduced. In 2019, it’s likely we will see fintechs waiting even longer to IPO.
All in all, 2019 is shaping up to be an enormously exciting year for the fintech sector. As the industry continues to evolve, we will be watching keenly to see which trends prove the most disruptive and transformative.