To quote Niels Bohr: ‘Prediction is very difficult, especially about the future’. That said, when scaling companies such as Thought Machine are setting out multi-year plans, they rely upon making such assumptions and forecasts. With this in mind, we have crowd-sourced our own experts’ predictions on subjects related to fintech: innovation in product design, market ‘coopetition’, and regulators embracing the cloud.
Prediction #1: “Financial products will become more holistic as traditional product lines blur”
Thomas Bentley, Sales Director for Thought Machine
There has never been more choice both on the high street and on your mobile device for banking services.
However as the industry faces a whole new wave of competitors, consumers are able to experiment with different banks, products and features on demand at zero cost. Most of us now operate with multiple accounts - for example a current account with Monzo, a savings account with Lloyds and a borderless account with TransferWise.
Competition is good for innovation. But, having multiple accounts will become both messy and tiresome to manage. As banks start to benefit from more flexible product engineering tools in 2020 and beyond, they will b e able to build customisable and holistic products so customers - including myself - won’t need multiple accounts and payment devices to manage their money.
Prediction #2: “The financial ecosystem will finally come together to address the biggest challenges in the sector”
Alexa Fernandez, Industry Relations Director for Thought Machine
The ecosystem is growing and becoming more aggregated with innovative new fintechs and major technology players who will provide an important lifeline to banks. However, in the past, there has been a lingering distrust between banks, big tech and fintechs which has stifled collaboration. Now there is a realisation that it is almost impossible for any single player to solve the real big problems, like legacy technology.
2020 will herald an era of coopetition - otherwise known as collaborative competition - as there is an awareness that each player needs, and more importantly benefits, from one another.
Prediction #3: “2020 will be the year regulators embrace cloud-native technology”
Diego Comas, Tech Lead Manager - Security Engineering for Thought Machine
Banks widely accept that they need to move away from their legacy systems which stifle their ability to compete in a crowded market. And migrating to the cloud is no longer feared as an alternative, as it enables innovation, enhances security and reduces cost.
Despite this, there is a need to close the gap between regulation and innovation. Regulators ambiguity around compliance in the cloud has slowed down adoption. As new tools emerge offering banks ways to quickly and easily evidence compliance, regulators will be embracing cloud-native technology in 2020. In the age of GDPR and open banking, cloud technology enables banks to enhance security of customers data, while also offering the agility needed to process data in real-time.
Prediction #4: “Established banks will launch digital greenfield banks to compete in a mobile-first world”
Paul Taylor, CEO and Founder for Thought Machine
Incumbent banks with legacy systems can either sit on the sideline or respond to the threat posed by challenger banks who are gaining momentum. And if they want to respond they will need to quickly as the challengers are reaching millions of customers by delivering faster, better and cheaper mobile products.
In 2020, we will see the established players launching greenfield digital banks built entirely on a separate cloud-native technology to enable innovation necessary to fight back.