The financial industry has been one of the most versatile segments in the globe today with iconic innovations driving it to what it is. With a growth rate of six percent, the global finance industry is estimated to be well above 13.1 trillion dollars. Unlike the old days where major institutions drove changes to the financial service industry, new players are starting to get a share of the global pie, and rightly so because they are ready to risk it all. Over time, we have witnessed advancements in technology which have improved customer relations while also boosting transactions between clients. Nonetheless, the industry is continually changing, and 2019 is expected to create more innovations to expand the financial market. Here are some trending innovations in the financial market.
Artificial intelligence
One exciting innovation that is expected to shake the financial service industry is the use of Artificial Intelligence. Over time, machine learning has become an integral part of the technological system where it uses algorithms to identify patterns and then deduce expectations. For the first time, financial institutions can merge all their data, both internal and external. This allows them to build a predictive pattern among their clients, hence allowing them to forecast the future. The use of this data by AI is expected to enhance efficiency and customer service.
Digital currencies
A waste, a revolution, the future; these are some of the terms that have been used to define digital currencies. Howbeit, what do we expect of crypto-currencies this 2019? Having witnessed a shaky period among the few years; cryptos are slowly becoming stable. FinTech outlines 2019 to witness major institutions entering the market which will boost crypto-currency growth. Although several companies have been hit with bankruptcy due to regulation, tighter regulations are expected as institutions try to stabilize the market and hopefully legitimize the sector. However, the digital market is a volatile industry and having a precedent for the future is tough. While some may describe it as the next big thing from the internet, it is still in its infancy. Nonetheless, while all angles might be a possible reality, in truth they are just “ifs.” With all media and social platforms talking about it, we can only be hopeful of a positive impact.
Wealth management
Wealth management has been one of the most profitable aspects of all financial institutions globally. Driven by a pragmatic macroeconomic approach, vigorous stock market achievement and transaction-based fees; wealth management companies have gained an exceptional performance. Given the demand of scale, secular demand and brand equities; Deloitte expects wealth management to continue driving growth among banking institutions. It is further estimated that in two years, wealth management growth rate will be at four percent. With most of the profit coming from a high net worth segment, low service costs and asset growths from digital markets are expected to add more to the profits.
Payment modernization
Payment innovations continue to disrupt the traditional way of paying for services or goods. Innovations from startups to significant institutions continue to reshape the payment industry while also providing intensive competition to banking institutions. For instance, Pay-pal currently has more than 250 million active users which are more than any single bank. Amazon-Go and Apple-pay are continuously intensifying competition by increasing their customer base daily. Equivalently, China is exhibiting the same trend with Ali-pay and Tencent setting large digital transactions. With clients loving the simple nature of having control of their accounts at the comfort of their home, payment companies are expected to continue growing. Card issuers will find it hard maintaining an avid customer base as more payment volume continues.
To continue competing where there is a low margin; institutions have to adapt. Regulations are constantly changing, and institutions have to innovate to stay afloat and possibly navigate the competitive market. Financial institutions must anticipate client needs and adapt in ways that will prioritize their clients.
