Major fintech trends to watch

WILL CHANGE THE WAY WE LIVE AND HOW WE CONDUCT BUSINESS

Technology is set to change the South African financial services landscape at a pace that may surprise even the most hardcore nonbeliever. This will be the year of the digital bank, globally and locally. In South Africa, we will see Discovery Bank and CBA Tyme – both digital banks – start up. Financing the SME sector – a prime driver of employment – is a challenge. Interesting funding models such as invoice and discount financing and digital lending models will gain traction. Companies like Merchant Capital and Lula Lend will continue to grow locally. In 2017, we will embrace Bitcoin. I think banks will soon abandon blockchain to move back to Bitcoin – the largest and original blockchain application. This will be aided by increased instability in governments. It is still far from becoming mainstream, but I expect to see more of Bitcoin locally. Check out local companies like Luno (BitX). A lot is said about big data, but just having it has little purpose without analysis. Advanced data analytics will continue as a major trend. Institutions are beginning to understand they need to work with start-ups like Isazi Consulting and Emerge Analytics.

Advanced data analytics is used for credit scoring and insurance risk selection, but we will see more applications. Partnerships are an important aspect of fintech expansion. We will see more successful partnerships between large institutions and smaller fintechs. In 2015, many partnerships were formed around payment technology. Locally, we have seen the rapid development of mobile phone payment solutions such as SnapScan, Zapper and Wicode.

We won’t be ditching our cards any time soon, but smartphone apps linked to our cards will change the nature of card usage. Price comparison websites will gain traction. They are huge in the UK, but not really anywhere else.

Local consumers are becoming aware of the lack of transparency around banking charges and interest rates. They will rely on technology for answers.

While AlphaCode is supporting more financial comparison online services its member Fincheck, stands out in terms of user numbers, sector partnerships, products and regulatory endorsements. New-age real estate advisers such as Leadhome and Propertyfox are upending the real estate market with their nontraditional fee and commission structures. These platforms could do more, like adding mortgage origination or robo-advisers. And yes, not all role-players in the fintech space will be human! We will see robo-advisers become a mainstream product.

A surprising number of institutions already have this in advanced planning stages. It won’t disrupt the industry, but will become a new distribution channel.

Dominique Collett is a senior investment executive at Rand Merchant Investments and the head of AlphaCode

Picture: Bloomberg HELPING HAND. A computer-controlled bed robot, called Viking, helps an elderly patient in a Japanese hospital turn over to prevent bed sores. Technology will come increasingly to the fore in 2017, experts say.