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3 of the Top Issues Disrupting the Fintech Industry in 2020

3 of the Top Issues Disrupting the Fintech Industry in 2020

Banks and financial institutions have been among the slowest companies to adopt new technologies and trends. However, with the advent of new technologies in the fintech industry, that is starting to change. Banks are starting to work with fintech startups and apply new trends to their own businesses—it’s the only way these companies can keep pace with a quickly changing financial climate.

As 2020 approaches, experts have their eyes on upcoming trends on the horizon poised to disrupt the banking and financial industries yet again. How will new trends shape fintech? What has the most influence on the future of the industry? Here are a few issues set to be a big influence on fintech in 2020.

Cyber Security and Privacy

In an industry highly concerned with keeping personal information secure, banks, financial institutions, and other fintech companies are always looking for improvements in cybersecurity. Preventing cyberattacks is almost impossible in this changing financial environment because of the numerous and varied ways that consumers interact with their money and investments, so it’s best for institutions to plan for a security breach and stand ready to minimize any damage and exposure of data.


In addition to investing in technology designed to help protect them from exposure to cyberattacks, banks and similar institutions have to go one step further. In order to minimize consumer risk, these institutions must communicate with each other and share advice and solutions. Education about cybersecurity is also paramount, both for employees and for the public. If consumers better understand the risks, then they can be proactive in keeping their data secure. It is impossible for banks to do all the work by themselves.

Privacy is another issue facing fintech solutions and existing financial institutions alike. The age of informed consent in finance is almost over. It’s impractical for consumers today to give consent for everything, given the enormous number of online interactions and transactions that take place every day. Privacy policies are often long and enormously complex, and most people don’t read them. This makes the concept of “informed consent” simply a fantasy.

Many companies are also offering customers the chance to “sell” their data, but the problem is that the average consumer simply has no concept of how that data might be used. With no sense of the value of their data, it’s highly unlikely that customers are getting a good deal in these transactions. It’s likely that these privacy issues will be at the forefront of fintech debates in the coming year.

Artificial Intelligence

Tally CEO and co-founder Jason Brown calls automation the third wave of the fintech industry. He’s referring to the shift into artificial intelligence (AI) and automation doing your financial planning for you. After learning your financial goals, these tools can show you exactly what to do to achieve them.

But the question remains: With all these robo-advisors helping customers with their finances, how can you be sure they have your best interests at heart? Growing accusations of bias are threatening the assimilation of AI tools into financial institutions. These concerns are also driving trends to regulate, avoid, or minimize such issues going forward. It’s unlikely these tools will disappear, however, as they are already working their way in. But certainly, the debate over AI regulation will continue.


On the other hand, financial institutions have shown great confidence in AI tools. A 2018 PricewaterhouseCoopers study confirmed that executives of these companies believe in AI tools. Around 52 percent say they are making substantial investments into the technology, and 72 percent see it as a business advantage.

Meanwhile, AI solutions in banks go well beyond the customer-facing tools that are most visible (like chatbots or robo-advisors). Banks also use AI to aid in AML and KYC procedures, helping minimize fraud and risk. The total cost savings of AI tools in banks is estimated to reach more than $447 billion by the year 2023, with most of that seen in anti-fraud measures and customer-facing applications.

Are Bank Branches Dead?

With more fintech tools entering the marketplace, the debate over the relevancy of branch offices is still raging. Though some insist that people want a human touch in their banking and financial services, others counter that this can now be achieved through fintech apps just as easily.

You no longer need to physically enter a branch for your banking needs, as just about everything can be done via mobile apps or on your home computer. Why shouldn’t you consult with a financial advisor on a mobile app via FaceTime, Skype, or other video calling technologies?

The debate is likely to continue through 2020, but the truth is that digital banking is in many ways becoming superior to traditional banking. Bank branches might not be as beneficial as some people think.