At the end of 2015, bobsguide invited a series of industry experts to share their predictions for the fintech sector leading up to 2016. Here is a round-up of how those predictions played out over the year.
We predicted: Cyber crime will be on the rise
Reality: Cyber crime was one of the biggest fraud issues for 2016
According to a report by PwC Global, cyber crime is now the second most reported crime, with 32 per cent of organisations affected, and a further 34 per cent believed to be affected in the next two years. Results of a survey of approximately 50 organisations said they had suffered losses over $5 million; of these, nearly a third reported cyber crime related losses in excess of $100 million.
2016 saw a sharp increase in businesses, banks and firms affected by cyber crime. The issue went beyond business, also rearing its head in politics, as US presidential candidate Hilary Clinton’s emails were leaked in the run up to the election.
Firms understand that consumers will either gain or lose affinity based on consumer trust. Banks need to integrate their systems and work with technology companies to protect their databases from possible breaches.
But even as new technology is created with the intention of increasing security, attackers are now also finding new ways to infiltrate systems and steal confidential information which will have an adverse impact on large industry players.
We predicted: Advances in integrating blockchain in 2016
Reality: Blockchain saw several advances in the fintech market
The fundamental aspect of blockchain is that it requires a relatively simple technological set-up. It provides a secure way of processing payments as each block contains information on the previous transaction, making fraudulent transactions virtually impossible. It seems that blockchain has a steady future ahead, as banks are making big bets on the platform and will invest an estimated $400 million into the technology, according to Quartz.
In reference to blockchain’s relevance to treasury, Anis Rahal, CEO, TreasuryXpress, told bobsguide earlier this year: “When it will arrive is yet to be seen as there is uncertainty is around the regulations. There is also still too much ambiguity on how corporate treasurers will be able to monetise it."
In our increasingly connected world, technology is inextricably linked with our everyday lives. The way we process payments has already had a greater push towards being digitalised so it makes sense that blockchain’s technology will play a greater role in payments technology in the coming years.
However, although blockchain technology has many advantages, such as trustless exchange and transparency in transactions, there is one key regulatory issue. Regulators need to determine whether blockchain applications would need to register under the existing regulations, according to Forbes.
We predicted: Device payments will increase dramatically
Reality: Three times more Europeans are making mobile payments than in 2015
A recent report by Visa Europe shows that the number of Europeans regularly using a mobile device for payments has tripled since 2015 (54 per cent vs 18 per cent).
With the likes of Apple Pay and Android Pay, and the ability to track every transaction on your mobile phone or tablet, saw a sharp increase in consumers shifting to digital banking. As well as the increase in usage of devices, contactless device payments have taken a front seat in the way we process payments.
We predicted: Banking will reside in the cloud
Reality: There have been steady movements towards banking moving to the cloud
Earlier this year we highlighted that cloud-based model lets smaller banks take advantage of fintech innovation. Cloud computing capacity allows small banks, often using financial technology that are developed by others, compete with big established banks with the use of mobile and data services.
However, according to Philip Pettinato, chief technology officer at Reval, “cloud has definitely gone through its hype cycle, where there are now many different applications of cloud technology that are proven to add tremendous value”.
We predicted: 2016 will be a busy year for financial services regulation and legislation
Reality: The European Union has posed the biggest changes and challenges in regulations
With the UK choosing to exit the EU in June, there has been a level of uncertainty on the topic of regulations and legislation with businesses, banks and companies.
UK chancellor Philip Hammond said earlier this week that politicians have acknowledged a transition deal would be helpful to avoid the trauma of a sudden change in trading, customs and regulations the day after the UK leaves the EU.