Financial technology in the 21st century is an exciting mix of traditional and cutting-edge innovations. EY states that out of a survey of 27,000 consumers, up to 96 per cent of them indicated that they knew at least one fintech transfer or payments service.

The most innovative fintech companies around the world are now banks. Companies such as JP Morgan Chase and Bank of America are investing in innovations that will help them retain existing customers and gain new ones.

On the other end of the spectrum, smaller startups are focusing on the changing mindset of business. The gig economy, coupled with the tendency of startups to focus on the long-term financial security of their employees, had opened the door for a massive amount of innovation.

Then there are the electronic wallet systems that also fall under the broad umbrella of financial technology. As 2020 starts advancing, we are likely to see a lot of trends that even the best investment apps may find difficult to predict.

1. Big banks start innovating

The consumer’s mindset has changed, and banks need to adapt to this trend to survive.

Luckily, big banks are already rising to the challenge. As Reuters reports, JP Morgan Chase has hired over 50,000 technologists in an attempt to reach and stay at the cutting edge of current technology.

Big banks are now trendsetters as well as service providers. As they start catering to the new mindset of customers, smaller banks will begin to follow suit and utilize the services they provide.

2. Companies Pay Workers Differently

In the past, it was common for employees to have a direct deposit for their entire paycheck. However, in recent years, this direction has changed drastically, as more employees start incorporating financial planning into their salaries.

Market Watch notes that a handful of companies like Earnin and Payactiv offer people affordable payday loans at a fraction of the cost of alternatives.

Even how people access their accounts is different, as most individuals prefer digital banking to walk into a branch and conducting business over the counter.

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The trend suggests that some of these startups may start cutting into the monopoly held by traditional banks by offering debit cards to access payday loans directly.

3. Artificial Intelligence making headway in fintech

Industries around the world have been indelibly influenced by artificial intelligence. Fintech is no exception, as AI and machine learning start to get onstream in process automation.

Banking is an ideal system for such a technology, although the system would require lots of prior testing to ensure that it doesn’t lead to problems for clients.

What this suggests to investors is that fintech companies with one leg in the world of AI may be likely to take off in the coming year if their technology starts making inroads into the industry.

4. Massive investment in fintech

Fintech is a growing field, and investors are not willing to get off the money train just yet. Bankrate states that the free online stock-trading system Robinhood has applied for a bank charter to expand its services.

Growth is likely to increase in the sector as more companies enter the fray, and venture capital firms simply can’t get enough of the lure of fintech in recent months.

The outlook for 2020, thanks to this trend, seems to suggest that traditional brands with their own investment capital could prove a significant threat to established banking. Recent discussions regarding social media giant Facebook’s production of a cryptocurrency is a shot across the bow signaling an urgent threat to the monopoly of traditional banks.

5. Fintechs target millennials primarily

The fintech industry has always held the millennials as their target demographic. Individuals between the ages of 23 and 38 years of age fall into this broad and diversified demographic. But what sets them apart as a fertile marketing ground is how they plan and execute their finances.

Companies such as Flyhomes and Divvy seek to help millennials become homeowners by giving them options for buying a house that shirks the traditional model. Goodly focuses on employers, allowing them to contribute to paying off their employees’ student loans.

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These trends suggest that traditional banks are going to have to work harder to wrest control of those clients from established fintech companies. The companies themselves are likely to see marked growth over the next year thanks to more consumers in their demographic wanting to utilize their services.

6. The popularity game that is finance

Fintech is simply the latest weapon in the innovation war for finance. Cutting edge technology and omnipresent high-speed internet connections have changed how people see and deal with money.

Most people in the millennial and younger bracket consider money differently, as they grew up during a global recession. Their value system is not the same as the Baby Boomers and Generation Xers.

The differences are significant since they are now the new core demographic that financial organizations need to focus on. Fintech is how they see and manage their funds, and being able to leverage it could mean the difference between counting them as clients or not.

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