Predicting in an unpredictable world...what's in store for 2017 in the fintech space.
Another year ends...another one begins. 2016 will be remembered as the year where there was massive investment capital ploughed into the fintech space. However the majority of investors will look to 2017 with gleaming eyes, hoping and waiting to see whether their investment will yield a return, or whether it will be more R&D money sunk in the quest of uncovering the next unicorn.
There are many who are predicting that 2017 will see much accelerated growth in AI, FinTech, InsureTech, HealthTech, IoT, 3D printing, drones, wearables, platforms, apps and blockchain. Last year saw many companies focus themselves on one of the fields, this year however will see them build integration strategies to merge various fields of fintech into one, consolidated platform.
So in what field will some of the main changes occur in 2017? Here are four areas where disruption will intensify in order to keep both incumbents and startup's ahead of their competitors.
Apps
When you think of any large organization nowadays and how they do business, the first thing you might think of is - "let me check their app, play around on it, see what they have, and contact them through it". Apps are the logical place to drive the platformication concept I wrote about in an early post. For example last year Mercer partnered with digital healthcare service babylon to launch Mercer Harmonise. This platform pulls together all the records of a user - health, financial, and insurance data. It them allows the user to contact medical professionals via video call or text, and track key organ functions and cholesterol levels. Imagine the impact this will have in the InsureTech space.
Automated claim/complaint handling and chat bots
Chat bots have the potential to really disrupt the value chain, especially in the financial services game. Automated claims, complaint and even a form of "robo-advise" can be dispensed with the use of chat bots. Many of you will have seen banks move in this space, as branch networks start to feel the effect of fewer feet through the door. Other touch points include insurers who are using bots to process claims and query resolutions. I recently engaged with bot for my holiday in Thailand; booking a reservation at a restaurant in Bangkok. This space transcends the line between man and machine, it will be very hard to determine whether you are talking to a real person or a chat bot with millions of simulations to process your query. Companies with omin-channel distribution touch points will be na?ve to leave this technology out of their digital strategy.
Blockchain
2016's it word. Everywhere you looked people were talking about blockchain, the wizardry underpinning virtual currency Bitcoin. It allows a digital record of transactions to be created, stored, and then shared across a network. It can also be used effectively in peer to peer insurance, money transfer, asset purchase, music downloads and even for marriages. All this data held about you can be used to personalize the service you get and the price you pay. As I mentioned earlier, the blockchain return on investment will be where most investors will be focusing on in 2017.
Incubators and accelerators
However, in the past few years there has been a lot of discussion around a possible “accelerator bubble,” from authors at Bloomberg to TechCrunch. Lots of this skepticism revolves around the viability of the accelerator/incubator model. The worrisome signs commonly cited include: lack of series "A" funding, too few high growth companies (with good enough RoE), and high failure rates of companies (due to poor adoption or failure to bring into the business as usual model). Regardless of the worrisome signs, the absolute number of accelerators continues to increase by around 30 per year worldwide. In South Africa we have AlphaCode which is backed by RMB, Discovery and MMI to name a few, which is seen as the biggest incubator locally.
Put together, the trends listed above have the potential to really disrupt the way we do business in all areas of financial services. One thing is clear, predicting what the future landscape could look like is a daunting prospect, but one I am really excited about being a part of.