20 Feb Fintech trends for 2020 around the world
In 2020, fintech has moved on from disruptive tech into the mainstream. The sector is in a new phase of evolution, as it begins to operate at scale in several countries around the world. And while fintech used to cater to specific, need by need cases, it’s now integral to research and development across the entire financial services sector.
Fintech serves every demographic across a much wider playing field than ever before. The majority of successful fintech companies are expanding past the borders of their own country, and into new geographical regions that are less regulated, such as Africa. This is my area of interest, and my focus for fintech investment and support, but I also make sure I’m on top of global trends in this sector.
Fintech trends for 2020 region by region
Funding to venture capitalist backed fintech businesses continues to break records. A report from Deloitte finds that despite fewer start-ups launching in 2019, investment remains robust. In this blog I’m going to examine some of the fintech trends for 2020, region by region, starting with Africa and the Middle East.
Africa and the Middle East fintech trend: payment platforms
According to the World Bank, more than 340 million adults living in Sub-Saharan Africa have no bank account. More and more people are getting access to the Internet via mobile devices. And Fintech startups are leveraging the constantly increasing mobile penetration in the region to skip traditional banking applications and processes.
Africa’s major fintech trend to keep an eye on in 2020 is payment platforms, where users don’t need traditional bank accounts, credit cards or minimum balances. We’ll see more start-ups offering mobile wallets and platforms for payment processing, all looking ahead to the possibility of a cashless future for the continent. An example of the next level payments platform can be seen with OPay. Based in Nigeria, it’s a one-stop platform accessed by any mobile device, and it offers payments, transport, grocery delivery, food delivery and loads of other everyday services.
North America fintech trend: Banking as a Service (BaaS)
An emerging set of start-ups in the US are offering suites of programming functions that companies can bundle within their own offerings to build banking products. In effect, fintech start-ups are offering products that allow any company to be a fintech company. For example, a San Francisco-based start-up called Bond connects banks with companies that want to offer financial services. Another start-up based in New York called Sure offers insurance tech products to insurance partners and retailers so they can integrate them within their own apps or offerings.
Currently there is no comprehensive US Government regulation covering this emerging layer of financial services. This isn’t stopping major investors ploughing backing into fintech start-ups, including Goldman Sachs, Insight Partners and Canaan Partners.
Europe fintech trend: established fintechs branching out to new continents
Regulations in Europe, from Open Banking to PSD2, have been positive for fintech start-ups. This is why Europe is an established fintech hotspot, with many companies moving far beyond start-up status.
Emergent fintech start-ups are now moving out of Europe, and they have their sights set on consumers in other regions, such as North America. For example, challenger bank N26 provides more than 3.5 million customers in its native Germany with mobile banking solutions. And in August 2019, N26 partnered with Axos Bank and launched in the US.
Similarly, Monzo, a challenger bank in the UK, is planning to land more customers in the US to add to its 2 million existing ones. In June 2019, it partnered with Sutton Bank and expanded into North America. Despite very different regulatory stances in Europe and North America, European fintech will continue to do well out of the comprehensive, flexible regulations. It’s a model that other regions should replicate, as it has proven to work.
Asia-Pacific trend: successful start-ups chase the ‘super-app’ model
Southeast Asia has a population of more than 600 million people. Within this is an ever increasing middle-class, with money to spend and access to the Internet and mobile platforms. All of which makes SE Asia incredibly fertile for fintech start ups looking to scale innovative financial services.
Indonesia has the biggest Internet economy in the region, having grown to $40 billion. Some start-ups are working to become the next ‘super-app’ based on China’s WeChat and Alipay. These both found huge markets in areas that are nothing to do with financial services – WeChat in social media and Alipay in ecommerce site Alibaba. But both have expanded to provide financial services to businesses and individuals. And this is the model being emulated by SE Asian start-ups.
An example is Go-Jek in Indonesia. An Uber like ride-hailing app, has expanded from a straight delivery and transportation company int payments with a mobile wallet called Go-Pay.
It’ll be fascinating to see how these fintech trends play out throughout 2020, and into the next decade.