Fintech is the use of technology to create new financial structures using apps, APIs and analytics.

It’s hard to believe that fintech, as we know it, is barely ten years old. Prior to 2008 there wasn’t even an app store. In 2020, investment in fintech is set to top $30 billion and the established institutions of the financial world are falling over themselves to partner with fintech start-ups. The disruption to the financial world is not technological, that’s the enabling mechanism, it’s structural. Robotics, AI, blockchain will all make a huge impact in the years to come but they will be facilitators, ushering in profound innovations in the way we manage our money.

PSD2 legislation will drive fintech innovation in Europe
This legislation, which allows vendors and Account Information Service Providers to access data directly from the account of the customer, without the use of a third- party service such as PayPal, will affect banking in the entire European Economic Area, not just the EU. Customers will get faster, cheaper, more flexible banking and it will accelerate the pace of fintech innovation. US based fintech which is non-compliant with PSD2 may suffer, opening the door to European based companies such as Soldo.

If you want to see the future of finance, look to China first and then India
Eight of the world’s leading fintech unicorns (a privately owned start-up company valued at over $1billion) are Chinese. Chinese fintech leads the world by pretty much any measure you care to apply. For example, 69% of Chinese consumers are digitally active, compared with 42% in the UK and the adoption rate for fintech by Chinese consumers is 87% compared with 71% in the UK. The growth of fintech in China is partly down to numbers: China has 800 million internet users, 98.6 % using mobile. And partly down to money: the Chinese e-commerce market is worth $740 billion. Recently, China has reduced its funding for fintech start-ups and introduced more stringent legislation, designed to tackle its increasingly serious fraud problem. Meanwhile, India has now increased its funding of fintech start-ups to the extent that its level of funding now exceeds that of China. Watch this space.

Mobile wallets will become less of a novelty
It’s predicted that by the end of 2020, mobile wallets, such as Apple Pay, Samsung Pay and Google Pay will be used by around 760 million people world- wide. Generation Z want payments to be instant, invisible and free and they don’t have any nostalgic affection for suit ruining coins and wallets.

The inexorable rise of digital only banking
This new breed of digital banks, with some offering global payments, a contactless Mastercard with no transaction fees and the chance to buy and exchange cryptocurrencies, is said to be the way forward. It’s true that you can no longer storm down to your local branch to complain if something goes wrong, but the generation who are happiest with mobile wallets don’t have the time for that sort of thing anyway.