2017 Fintech Futurism Predictions

Happy 2017! After all that holiday chocolate, aren't we all in the mood to prognosticate? Here are my top 3 predictions for the year to come. And be sure to check out more detailed thoughts in each of the themes below.

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1. Revival of Cryptocurrency. 10 countries will have issued central-bank backed cryptocurrencies, and Americans will still not understand why that's important. And a multi-billion dollar enterprise will finally try to use the public Bitcoin blockchain as an application layer. 
2. What Roboadvisors? Almost all roboadvice assets will be (by %) at Vanguard, Schwab, and Bank of America. Every large firm in the wealth management business will have gone digital. And we will see a large tech firm unexpectedly acquire an Acorns or Digit, and totally scare everyone that they're getting into finance.
3. APIs Everywhere but Disappointing. In a watershed moment, every single large retail and corporate bank will have a Developer portal with open API keys. However, most of those APIs will do nothing other than pull information. Actionable APIs will be too expensive to use, but Venture Capital firms will overfund companies that tell a story about how to tap into them.

Digital Wealth Management (Roboadvice)

• Angel and small Series-A funding into B2C roboadvisors will be pretty much $0. Series B funding into digital wealth management companies more broadly will be a little more than half that of 2016.
• One digital wealth company from the second generation, like Acorns, Stash or Digit, will get bought for a ridiculous amount by an unlikely and surprising bidder.
•  Almost all roboadvice assets will be (by %) at Vanguard, Schwab, and Bank of America.
• Everyone will start saying "artificial intelligence" instead of "roboadvice" but none of the business fundamental will have changed.

 Blockchain and Digital Ledgers

• Bitcoin, the technology and not the $ value of the digital currency, will be relevant again, and will see at least one multi-billion dollar company leverage its public blockchain
• Big banks will try to patent troll their vertical solutions on top of the open source projects (Hyperledger, etc.) and will feel a sense of false confidence. It will be the year of lawsuits between the incumbent and startups communities, and open source will win.
•  A blockhain-based production ready system, in either trading or money movement, will replace the legacy tech stack of a multi-billion dollar firm. It will actually increase costs in that year, and observers will draw the wrong conclusions even though the firm is more competitive in the long run.

Artificial Intelligence

• Intel and AMD will keep making hardware chips optimizing for neural networks, and will drive the execution speed of image recognition and similar tasks to be 10x faster than what we have today
• Real time video face recognition and editing will become a consumer toy. The first instance of someone releasing a viral video impersonating a politician using face-overlay and voice-replacement technology will get a massive negative backlash from conservative thinkers
•  A political movement against unemployment caused by self-driving cars, chatbots, and other AI products will rise, but it won't be able to articulate its concerns in a way our political system understands or can address

Neobanks & Challenger Banks

• Incumbent banks will wake up and come down extremely hard on challengers and neobanks. They will fight them on mobile apps, chatbots, instant payments, and user experience. You won't be able to tell apart the website designs of new and old firms. 
• Startups will try to do everything to become financial supermarkets. Expect to see lending, payments, banking, data aggregation and insurance combined in an attempt to grab at least some consumer attention. Regardless, neobanks will struggle getting to any scale beyond 10,000 early adopters.

 Financial APIs & Banks as a Service

• In a watershed moment, every single large retail and corporate bank will have a Developer portal with open API keys. However, most of those APIs will do nothing other than pull information. Actionable APIs will be too expensive to use, but Venture Capital firms will overfund companies that tell a story about how to tap into them.
• BBVA and Santander will retain their position as marketing leaders of a BaaS offering, and we will start to see apps using their infrastructure.
• Someone will write a malicious app that crashes one of the API stores, generating tons of press and cyber security premiums.

 Chatbots, Conversational Interfaces

• Virtual assistants will start to appear in business locations, from banking branches to shopping experiences. People in customer service from a major brand will be laid off.
•  Amazon Echo, Google Siri and Google Home will start a nuclear war over the connected smart home. Like with its other products (Kindle, Fire), Amazon will lose its lead, especially as self-driving cars develop their own AI assistants. 
•  Facebook will get into the hardware business through an acquisition, and Messenger/Whatsapp will gain a physical form

 Democratization, Regulation and Crowds

• As consumer protection is rolled back, equity and real estate crowdfunding experience major scams that lead to a public backlash.
• Crowdfunding technology ends up creating asymmetric benefits for those already in power (think about who can really use Syndicate investing on Angellist, stock earning estimates from Estimize, or invest in Numerai's crowdfunded AI hedge fund). Income inequality becomes sharper despite equality of access to cheap investments.

 Bitcoin & Cryptocurrency

• 10 countries will have issued central-bank backed cryptocurrencies, and Americans will still not understand why that's important
• Another massive Initial Coin Offering like that of the DAO, over $50 million, will get people's heads shaking again. This one won't get hacked. Traditional Venture Capital firms will have invested 10% of the amount.

 Insurtech

• Venture investment will continue to pour in, increasing by over 50% globally.
• There will be a major exit at a price point comfortably above $100 million to a legacy insurance company
•  A scandal, either on the underwriting or regulatory side, like the licensing issue with Zenefits, will hit an insurtech startup and lead to renewed finger-wagging

 Generational Shifts

• Generation Z will become a bigger buzzword than Millennials. Banks will wonder whether then Snapchat generation even knows if banks exist.
• Valuations in the Gig economy (AirBnB, Uber, Task Rabbit) will crater, due to poor exit opportunities in the public markets and a churning contractor force dissatisfied with the lack of stability and benefits

Attention Economy

• Snapchat holds on to its lead with younger demographics by understanding its customers better than anyone else, resulting in a flashy public exit that leads to multiple new businesses being started in the Los Angeles ecosystem, many of them in VR film
• One of Google, Apple, Facebook, Microsoft and Amazon will get into financial services in a way that makes financial incumbents extremely anxious, and will create public outcry. Financials will fail to understand why the tech firms are pursuing what seems like a dead end, but is really a way to engage with users and get more data

 Virtual and Augmented Reality

• Millions of virtual reality headsets will hit homes across the United States, leading to an explosion of VR apps powered by Valve's Steam store, Playstation, and Google. 
•  A multi-billion dollar investment firm will open a virtual reality branch with live customer service, potentially on Google Earth or another VR world
• Payments in VR will go live in Asia first, and will set the default behavior for the rest of us to follow. Credit card networks will open VR incubators or invest in VR companies.
• Augmented Reality will still be mostly unknown to consumers, but will see multi-million dollar contracts between enterprise clients

 Internet of Things & Wearables (IoT)

• Unsexy businesses in the "old economy" of manufacturing physical objects will position themselves as technology companies that generate terabytes of proprietary data. Hedge funds and other investors gladly pay for that data, repeating the experience of expert networks.
• Self-driving cars continue to beat performance expectations and end up in production-mode on roads all across the world, leading to unemployment and outrage. Governments, trying to stem the bleeding, file lawsuits against tech companies for breaking regulations. It doesn't work.

Singularity

• Human addiction to technology will reach a new height. People will spend more than 12 hours a day on their screens.
•  The cost of sequencing the genome for an anonymous consumer falls to $25. Genome data can be made available between services via API.
•  3D printed organs will be implanted into human patients successfully.
•  Scientists will claim they have simulated a full rat brain, which will become easier due to newly available hardware. There will be no implication in the physical world from this discovery.

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