Fintech Challenges to Conquer in the Year 2020
In the rapidly evolving world of fintech, 2020 promises a focus on digital innovation, convenience, financial inclusion, and regulatory evolution. Here are key insights based on recent data and analysis:
### B2C FinTech Trends and Predictions
The B2C sector is witnessing several significant fintech trends. Small ticket loans, offering quick, paperless loans for first-time borrowers, are gaining traction. This model provides instant loan disbursal and improved loan tracking through digital processes, with a predicted growth in demand due to its actionable value for customers.
Decentralized finance (DeFi) lending platforms, using blockchain for peer-to-peer lending without intermediaries, are another emerging trend. Benefits include lower costs, trust from blockchain transparency, competitive interest rates for lenders, and global accessibility for anyone with a crypto wallet.
Buy Now, Pay Later (BNPL) is reshaping consumer credit, with a forecasted Compound Annual Growth Rate (CAGR) of 23.6%. This model appeals to younger and sub-prime customers by offering soft credit checks and zero-interest installment plans. Despite regulatory oversight tightening, BNPL is embedding more income verification and dynamic underwriting, enhancing the consumer purchasing experience.
Digital wallets and instant payments are also on the rise, with consumer adoption of digital wallets like PayPal, Apple Pay, and AliPay driving instant and transparent payment expectations. Mobile payments dominate, with 73% of transactions on mobile devices, pushing merchants to optimize cross-device shopping experiences.
### B2B FinTech Trends and Predictions
The B2B sector is experiencing a surge in fintech innovation. Cross-border payments, enhanced by AI and blockchain, are expected to grow rapidly due to their potential to cut costs and reduce processing times, facilitating smoother international transactions. Regulatory harmonization like PSD3 in Europe and the G20 Roadmap will further reduce payment frictions and costs.
Growing enterprise adoption of fintech is another trend. Over 80% of financial institutions see FinTech as a competitive risk and are incorporating FinTech innovations into their strategies. The B2B e-commerce market is projected to grow at a 19.3% CAGR through 2030, driven by digital payments and integrated financial services.
### Summary Table: FinTech Trends in B2B vs B2C
| Aspect | B2C Sector | B2B Sector | |----------------------------|-----------------------------------------------|-----------------------------------------------| | Key Models | Small Ticket Loans, DeFi Lending, BNPL | Cross-border payments, integrated payment systems | | Growth Drivers | Convenience, credit access, digital wallets | Cost reduction, instant payments, compliance | | Technology Focus | Blockchain, mobile payments, dynamic underwriting | AI, blockchain, regulatory harmonization | | Regulatory Impact | Increasing oversight on credit products | Harmonized frameworks like PSD3, G20 roadmap | | Market Outlook | Strong growth in consumer credit, mobile payments | Rapid growth in enterprise payments, fintech adoption |
Infrastructure companies that provide card issuing, regulatory compliance, money movement, servicing, collections, and more are seen as exciting investment opportunities. The use of alternative data in credit underwriting has implications for consumers and companies, as five federal regulatory agencies recently issued a joint statement on the topic.
In the housing sector, there is a 7.2 million unit deficit of affordable housing in the US. In 2020, there is an opportunity for companies to explore tech-enabled ways to deliver housing units at scale, as startups are attempting to reverse the trend through software in the housing market. The Terner Center for Housing Innovation launched its Housing Lab in September, receiving more than 150 applications, indicating a high interest in lowering the cost of housing.
The rise of fintech requires complex infrastructure, and companies will seek out specialized services to support it. Angela Strange, another general partner at the website, believes that this trend will continue. Seema Amble, a partner at the website, focuses on investments in B2B software and fintech. In 2020, fintech is expected to allow workers to spend less time on manual busywork and more time interpreting real-time data, using those insights to drive new business.
- In the rapidly evolving fintech industry, infrastructure companies that offer services such as card issuing, regulatory compliance, money movement, and collections are seen as exciting investment opportunities.
- The rise of fintech has implications for both consumers and companies, especially in the realm of credit underwriting, where the use of alternative data is gaining traction. Five federal regulatory agencies recently issued a joint statement on this topic.
- In the housing sector, there is a significant deficit of affordable housing in the US, and in 2020, there is an opportunity for companies to explore tech-enabled solutions to deliver housing units at scale. This trend is indicated by the high number of applications received by the Terner Center for Housing Innovation's Housing Lab.
