2016 Fintech Predictions: from open banking to the dawn of mobile commerce
We asked a panel of financial technology (Fintech) experts how they expect our world will change next year.
Our world is rapidly changing in dramatic and unexpected ways. With 2016 rapidly approaching we’re doing our own bit of future-gazing, looking at the worlds of business, finance and culture, and how these will all soon change and evolve.
The world of finance impacts every aspect of our lives, from paying for the latest iPhone to saving up for a house. We sat down with the CEOs, CTOs and executives from our favourite leading financial technology (Fintech) businesses changing the way we manage our money.
Here’s what they are expecting to change in 2016:
Jonas is the chief technology officer atMondo, one of a group of mobile challenger banks launching in 2016 and hoping to revolutionise traditional banking with a smartphone app.
“Open banking APIs will unlock the enormous value of banking data… shaking up the financial industry more than we can currently imagine”
In 2016, challenger banks will be amongst the first to leverage open APIs to unlock the enormous value of banking data. This trend will shake up the financial industry more than we can currently imagine, enabling new business models and product integrations.
For example, if one of our customers wants to put money into saving or needs a short term loan, we could have third party lenders such as Funding Circle, Zopa or even legacy banks bid against an API for the loan or investment. Some people would call this the “marketplace bank” or “bank as a platform”.
In a digital world, customers shouldn’t even need to hand in paper copies of bank statements to apply for a loan or to prove their identity to a third party anymore! The EU Parliament just adopted a directive called PSD2, which expects all banks to develop such third party APIs by 2017.
James is the head of UK growth at Stripe, a business looking to make online payments easier for retailers and recently valued at $5 billion.
“Mobile commerce has been talked about for years, I think 2016 will be when this channel finally comes to fruition.”
While 60% of overall browsing time is now spent on mobile, it’s only responsible for just 15% of ecommerce sales. There’s clearly a disconnect here preventing mobile spending from catching up with mobile browsing.
I believe that disconnect exists because businesses have had to deal with outdated payments infrastructure for years. This prevents them from building the right consumer buying experiences on mobile.
In 2016, as software continues to “eat the world”, the technologies that businesses use will become more important. Building on legacy payment infrastructure will become increasingly risky. The companies that build on commerce infrastructure rooted in software will benefit from a growing competitive advantage, especially on mobile.
Mobile commerce has been talked about for years, I think 2016 will be when this channel finally comes to fruition.
Daniel is the founder and CEO of Property Partner, a crowdfunding platform for investing in buy-to-let property which isopening up property investments to anyone with as little as £50.
“The traditional buy-to-let sector will shrink in 2016 as many landlords decide the sums no longer add up.”
Back in the spring the Chancellor started pulling out the plug on buy-to-let with his Budget changes to mortgage interest tax relief. Osborne then turned the taps off with his Autumn statement stamp duty hike. Now the Bank of England looks set to wade in by further tightening buy-to-let mortgage lending criteria, and from March, the Financial Conduct Authority will start regulating the sector to comply with the EU’s Mortgage Credit Directive.
It’s all conspiring to make life very tricky for those small-time landlords who bought into the buy-to-let dream in recent years – borrowing heavily with little equity. I think the traditional buy-to-let sector will shrink in 2016 as many landlords decide the sums no longer add up.
So if there is to be a buy-to-let sell off, who fills the gap? It won’t be big institutions, who value residential property mainly on its income generating capability.
Property Partner is helping to bridge the gap, channeling the right investment into the sector, funding good quality residential accommodation available now, and bringing professional standards to the buy-to-let market.
Nick is the CEO of Nutmeg, a so-called robo advisor which invests your ISA or pension savings with a tailored investment portfolio all via an online portal.
“Every person – not just the wealthy – deserves access to the best financial advice, at a fair price”
Investment advice that is delivered human to human is just too costly for the mass market customer to access and generally overpriced for high net worth customers, except those with the most complicated needs.
Every person – not just the wealthy – deserves access to the best investment proposition and financial advice, at a fair price, any time of day or night.
We’ll also see a proliferation of innovative investment products, prompted by the success of crowdfunding (e.g.CrowdCube), peer to peer (e.g. Ratesetter and Funding Circle), fractional investing in fixed assets (e.g. property partner).
Hopefully we will see public sector intervention to improve customer education around these alternatives, so people can safely assess what they are and how much to allocate to them.