In 2020 we shall see tech incumbents, start-ups and giants adapt to a new phase in the fintech evolution, which will increase demand for comprehensive, standalone fintech insurance.
2019 has seen the fintech industry continue to grow at a rapid pace. Several UK challenger banks have secured record levels of funding, with a view to expanding their operations across international borders. But, what’s next on the fintech horizon?
With open banking tipped to become mainstream in 2020 we can expect to see an array of new fintechs, including data aggregators and payment initiation service providers, seeking to claim their own spot in the financial services market. They will be joined by the tech giants, looking to play an increasingly prominent role in this market.
Time will tell whether Facebook realises its audacious plans to launch its own cryptocurrency, Libra. Even if Libra does not take the lead (as a result of the privacy and regulatory concerns it faces) global support is growing for cryptocurrencies.
Regardless, 2020 will be a big year for the technology that sits behind cryptocurrencies. As fintechs look to the wider use of distributed ledger technology blockchain is likely to find a home in financial services, beyond the crypto world. Other innovative technologies, such as artificial intelligence and robotics process automation, are also now past the point of ‘hype’ and serious use cases are emerging.
As we enter a new decade, we can therefore expect to see global regulators focussing in on this sector. How well the fintechs are mitigating their own risks is likely to be of primary concern.
One thing for certain is that demand for comprehensive stand-alone fintech insurance, comprising traditional crime/civil liability, D&O, cyber and tech E&O coverage, is only set to rise.
Read the rest of our insurance predictions here.