Banks will embrace new technology
Institutions are now more open to letting FinTech companies develop apps that work with their banking systems.
In 2018 UK banks will allow Open APIs (Application Programing Interfaces) for the first time. These enable app developers to come up with new products.
Start-ups like Ripple, a platform that allows transactions between banks to be quicker and cheaper, are on the rise.
Platforms that use gamification and the sharing economy will lead to the creation of services like payment and loyalty schemes that feel like games (LevelUp), and peer-to-peer currency exchange (WeSwap).
Since Bitcoin’s launch in 2009, hundreds of digital currencies have emerged, including Hayek which is based on the value of gold.
Despite an uncertain future, data-based currencies are changing the way we see money.
Even personal data could become currency: "Personal reputation is going to become a currency of our society in the next decade," according to Collaborative Lab founder Rachel Botsman.
Everyone will be an investor
Online investment management start-ups like Wealthfront and Nutmeg will make investing more accessible to lower and middle income populations.
The rise of peer-to-peer (P2P) lending, which cuts out the intermediary and matches borrowers directly with lenders, poses a significant challenge to the industry.
The P2P lending market in the UK has tripled in size in the past three years and is expected to be worth more than $1.5 billion by 2016.
Platforms such as fingerprint screening will become popular.
In 2015 RBS and Natwest became the first UK banks to introduce the technology.
In 2016 the mobile security company ‘Behaviosec’ will launch an app that can identify a smartphone user by their gestures.
Results of new regulations
We will start to see the effects of the new regulations passed in the wake of the 2008 financial crisis. These include the Dodd-Frank Act, MiFID, Solvency II and Basel III.
An increase in regulatory requirements and related compliance costs means institutions’ resources divert away from technological innovation, providing opportunities for FinTech start-ups to develop disruptive technologies.
Technology could transform the way regulation is delivered, just as much as it changes the financial services industry itself.
Dealing with cyber threats
Full digitization of the banking sector a real possibility, meaning financiers of the future will need to join forces to ward off cyber attacks.
“In the next five-to-ten years companies that can protect data and transactions will be essential, as everything moves online,” according to Andrew Darly, Financial Director at Fincap.
Watch for companies like Intercede, where technology is used to block hackers from accessing banking and personal information.