Any fintech vendor that prides itself on innovation must always track and monitor trends in its space to prepare for what is coming next.
At Advicent, my colleagues and I also closely monitor trends in the broader tech space as we have found that consumer expectations ultimately drive forward progress in industry segments such as fintech.
Before we begin with our 2018 outlook on the industry, we should properly define the fintech industry as well as the two emerging subcategories — micro-niches if you will — that fit within the fintech industry: wealthtech and regtech.
FinTech, quite simply, is the industry name for any technology that affects or drives the financial services market.
FinTech is very broad as it covers all business-to-business and business-to-consumer technologies such as banking solutions, merchant processing, lending, personal financial management, and financial planning technologies, amongst others.
WealthTech is a category within fintech that specifically covers any technology that influences wealth management: robo advisors, asset management, self-directed planning tools, and back office technology that industry professionals would use.
RegTech is another category within the fintech industry that covers all regulation technology utilized in the financial services space – think internal compliance as well as government regulation.
With these narrower technology segments in mind, here are a few thoughts on what we might experience in our industry throughout the next year.
1. Regulation is just beginning.
The Department of Labor fiduciary rule was just the beginning of additional regulatory constraints we can expect in our space in 2018 and beyond.
Technology has fundamentally changed how people interact with businesses and with their own wealth, while regulation has failed to keep up.
We are going to witness greater scrutiny on our space in terms of transparency, consumer protections, and how companies should interact with prospects and customers.
2. Technology will continue to converge.
We are in the third wave of the internet – the Internet of Things – and this will drive user expectations around how fintech should interact with other technologies.
In short, expect that interactivity between technologies will continue to evolve, allowing for a more seamless transfer of data – driven by what consumers want.
We are most certainly seeing this already with account aggregation and the proliferation of application program interfaces, or APIs; expect more of this in 2018 as more technologies emerge to facilitate this interactivity.
3. Roles will be blurred.
Financial decisions – including transactions – that already occur today will only accelerate in 2018 and beyond.
In our financial advice space specifically, we will see the roles of the client and advisor blur more than ever before.
Hybrid advice, the emerging trend of how advice will be delivered – primarily through technology – points out the fact that now clients can initiate transactions or other financial decisions that directly influence a financial plan.
4. Enterprise companies will get in the game.
Typical enterprise-sized institutions are slower to react to market forces, and innovation is not their strong suit.
Over the past few years, we have heard about banks and other institutions adding robo advisors to their offerings, but for the most part, it is still a rarity.
We anticipate that many enterprise institutions will introduce fintech solutions to bolster their services offered, and we expect these to be unique to their value proposition, rather than out-of-the-box solutions.
5. Non-industry brands join in the fun.
This is a bolder prediction.
We anticipate that 2018 will be the year where large, recognizable brands will begin moving into the fintech space.
There are plenty of viable options out there, however this type of activity will really force more companies to think and behave differently.
Incumbents will need to innovate faster, move more nimbly, and truly have a consumer-first mindset.
Overall, we will continue to witness dynamic changes in our space, driven by the large opportunity to disrupt.
Furthermore, the consumers of fintech will continue to expect, if not demand, that our industry evolves as rapidly other industries (think online shopping, music streaming, ride sharing, etc.).
What is exciting about this? We will always be on the precipice of new developments in fintech, wealthtech and regtech.
Anthony Stich is the Chief Operating Officer at Advicent, a provider of SaaS technology solutions for the financial services industry.