Future of FinTech: Will the Banks Disappear?

Bill Gates once said that, “Banking will always be needed but banks, as we know them, could easily disappear”. The coming years will show how radical this statement turns out to be, although FinTech industry is already radically changing the way financial businesses and banking transactions are performed.

In 2013, the global value of FinTech was estimated at approximately $3 billion. By 2014, FinTech firms had already quadrupled to $12 billion. By the end of 2015, that figure had risen to over $20 billion globally. 2016 showed the global FinTech landscape reaching over 1000 companies, $105 billion in funding and $867 billion in value.

As we move into 2017, FinTech disruption and influence continues to grow. Indeed, and many companies and leaders in FinTech today believe that the revolution is only a beginning of a whole new wave of what’s more to come.

There have been many predictions regarding what would be in demand in future of the FinTech market. Here are 6 trends that experts see for FinTech in the coming years.

  1. Banking automation will be set in motion: Since PayPal introduced the concept of global online payment system, large numbers of online banks and banking services have launched since then. They offer consumer efficiency, lower costs, and greater speed. Further, they make cash transactions faster and easier for customers, whether consumer or commercial, using a range of innovative technologies. In an increasing demand of global economy, online banking services will solve the problem of getting money across borders, with currency exchanges being a part of the services.
  1. Rise in Investment and trading services: The world of trading will be standardized with the commencement of robo-advisors to interpret and analyze the data of the trading companies. The individual investors can take benefit of the robo-advisor fully as it can turn big data, which has been already public, into meaningful data. No more tagging along the brokers and financial advisors, robo-advisors are swooping in with their innovative and smart ways of trading finance in the future days to come.

Artificial technology (AI) will be an integral part of big data technologies, making it more sophisticated as machines can predict the market trends and analyze the leading and lacking contemporaries in the finance business.

  1. Inconvenience for legacy software providers of banking institutions: What FinTech is doing for banking is not so much developing new products. It’s still the moving of money from one point the next. It’s still about processing loans. The difference is in the processes and the customer experiences, which are infinitely improving. The problem is that banks are overburdened by the legacy software and development, approval, implementation and training for new software can take years. Right now, FinTech is serving customers in ways that banks cannot. The real disruption in the future case scenario will be inclined to the legacy software developers who cannot supply the convenience and efficiency that FinTech can.
  1. Consumer-driven services, including the developing countries: Although the trend of digital payment has prevailed in the developed countries for decades, FinTech holds the same privileged position in these parts of the world that cell phone and Internet providers have. The FinTech start-up space has grown rapidly in Asia-Pacific. This is expected to reflect in $15 billion in revenue taken from existing financial institutions and $7 billion worth of added revenue. China is the leader in FinTech investments, accounting for nearly 50% of the investments in this space in 2015. Although Singapore, Hong Kong, and Sydney will continue to be FinTech innovation hubs in the Asia-Pacific region, analysts from major research firms expect China to be one of the leading countries in APAC for the global FinTech and Blockchain industries.
  1. New use cases of Blockchain: Often confused with cryptocurrencies like bitcoin, blockchain technology is the enabler, not the currency. The technology actually holds the key to new ways of managing identities, security, and entire networks – it could underpin the structure and future of technology as we know it. And that is why it needs to be better understood. Blockchains will also find new use cases beyond financial services.
  1. More advanced security management: With digital payment technologies and banking growing at the rates they now are, managing the security of billions of daily transactions will be a challenge indeed. Those companies that can develop solid security and collaborate with FinTech enterprises will be in high demand in the future FinTech marketplaces. The collaboration of security vendors and ICT companies with FinTech companies will improve the security and connectivity of mobile-centric financial services. Reliable security and connectivity will build consumer trust and hence allow FinTech companies to compete with established institutions. Any FinTech startup must have security as a major factor in its software development.

It is clear that the digital revolution in financial services is under way, but the impact on current banking players is not as well defined. Digital disruption has the potential to shrink the role of today’s banks, and help them create better, faster, cheaper services that make them an even more essential part of everyday life for individuals.


Sudeshna Nepal is a researcher with Frost & Sullivan. She can be reached at sudeshna.nepal@frost.com


Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at sapan.agarwal@frost.com | +603 6204 5830

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