The concept of FinTech goes well beyond new companies and startups influencing the way payments work around the world. There are various other determining factors that will shape the way we pay in the future, and none of these trends should be ignored. Some of these trends will influence the payments industry throughout 2016, and FInTech companies are advised to keep an eye on these particular aspects.
Regulation, Proposals, and Innovation Affect Payments Industry
There are three main categories to keep in mind for any company active in the world of finance: current proposals, existing regulation, and how it will affect future innovation. Most FinTech solutions rely on being granted access to someone’s bank account as a third-party service provider. It goes without saying this type of business activity needs to be discussed further, as there are a lot of questions surrounding this proposal that need to be answered.
Should this service ever come to fruition in a mainstream capacity, it would allow for many new innovations in the payments industry. Using a mobile device or smart card to access a bank account – without going through the bank’s application itself – would be a great foundation for new products and services.
At the same type, the Payment Systems Regulator is starting to make its presence known, especially in the United Kingdom. Providing better core payments services and products in the UK market is of major interest to FinTech companies, but the PSR has started to limit the number of workshops and studies exploring these boundaries.
As a result, consumers can expect a major battle between the banks – who want to remain in control at all costs – as well as third-party payment processors and suppliers. In the end, it will come down to which party is held responsible for any fraudulent charges in the end. This responsibility could very well shift from banks to other players in the FinTech industry.
All of the above will have an impact on the rate of innovation in the payments sector as well. This term is being used very loosely right now, as innovation seems to be the new buzzword when it comes to addressing the financial sector. However, various startups and companies in the FinTech field are preparing to offer their products and services to the general public throughout 2016.
Personal finance might not be the first sector to be disrupted by future payments innovation, despite popular belief. Corporate payments is a sector where things need to be made far more efficient and transparent in the near future. There is a lot of focus on this market by both FinTech startups and established players in the financial industry.
Don’t Discount The [New] Banks
As mentioned earlier, banks will not relinquish their power without a fight. Assuming the banks can improve their customer relationships, there is a good chance these traditional financial institutions will remain in firm control of the payments sector for quite some time. Binding those customers to one particular bank will be the challenge ahead, though, as most bankers are horrible in the sales department.
Last but not least, there is a new breed of banks which started to emerge at the end of 2015. Challenger banks, as this trend is aptly called, will offer targeted banking services and products to a specific user base. Not everyone on this planet has a growing need for fancy banking services, as the bank account itself is of the utmost importance to most consumers.
Unlike their established counterparts, challenger banks are primarily focusing on community, rather than selling as many products as they possibly can. As a result, the number of community=focused financial service providers will start to increase during 2016, and that trend will continue for the years to come.
What are your thoughts on the future of payments? Will banks remain in control, or will FinTech players emerge? Let us know in the comments below!
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