Once, to see a movie, you had to go to a cinema, head to your local video shop, or hope that a broadcaster was screening something you might want to watch. Nowadays, whether you like Hitchcock, docu-dramas or binge-watching House of Cards, Netflix has you covered. As the TV critic James Poniewozik wrote in the New York Times, Netflix is “breathtakingly broad and microscopically niche at the same time”.
In 2019, financial services will reach a similar tipping point. What used to be a clunky, one-size-fits-all approach to things such as borrowing, insurance and investing will become simpler, cheaper, more personal and within reach of a wider range of consumers. Many of the fintech businesses that have blossomed in the past decade will come of age next year. That means they won’t just be mimicking and improving on what the banks did – in the same way Netflix didn’t simply build a better movie rental company. Rather, we’ll start to see proof of the fact fintech is changing every aspect of our financial lives, just as Netflix fundamentally reshaped what and how we watch.
There are plenty of signs that this transformation is already taking place. Several fintech businesses have recently gone public, with some approaching the valuations of the biggest banks. The new crop of companies that sprung up in the wake of the 2008 financial crisis were built from scratch by talented twenty-somethings, and have already earned the trust of millions of customers.
They’re making a real impact in areas people care about: giving small businesses access to crucial loans, as well as helping consumers save, invest more wisely and get better value from their health and motor insurance. By 2019, control over their personal financial future will be within reach of more people than ever before.
In the US, for example, companies such as Robinhood, Acorns, Wealthfront and Fundrise have all made it cheaper and easier for ordinary people to invest in areas such as real-estate, currencies and shares. That’s particularly important for millennials, who came of age at a time when faith in the financial sector was at a low ebb. In 2013, only one in three millennials in the US said they owned stocks – a skittishness that’s not surprising, given their exposure to global finance was overshadowed by the biggest crash since the Depression of the 1930s.
Read more: This is how Netflix's secret recommendation system works
But these numbers are finally starting to rise, with a recent Gallup survey putting the proportion of people under 35 in the US with money in the stock market at closer to 40 per cent. In 2019, we think that the growing awareness of fintech offerings could see up to half of US millennials investing in stocks, and participating in the wealth which that creates.
Meanwhile, we can also expect to see old, staid banks desperately trying to attract our attention with new initiatives. In 2019, the legacy players will start to make serious investments, instead of just setting up incubators and hubs, where they merely tinker with innovation at the fringes. Take JP Morgan, which recently launched “Finn”, a smartphone-only bank account for young adults; or “Canvas”, a platform created by Citi that lets customers beta-test and co-create new products and services.
You can expect to see the old guard close more and more physical branches, and compensate with shiny new digital offerings. But all this is likely to do is bring more people online, where the more nimble, newer players can out-compete.
2019 will also experience finance achieving an ever-wider global footprint while becoming more and more tailored. In the past, companies had to offer a wide range of services in a single geography, similar to the way broadcasters would select shows to appeal to the widest possible audience.
More and more, though, fintech businesses will endeavour to win over customers by doing one thing really well, in as many places as possible – just as streamed content can now cater to extraordinarily specific preferences. Fintech is often talked about as a revolution. But actually it is more a democratisation and personalisation of financial services that will raise standards across the board. And in 2019 that will spell good news for everybody.
Samir Desai is a co-founder and CEO of Funding Circle. Neil Rimer is a partner at Index Ventures
This article was originally published by WIRED UK
