Marchon Partners Blog The state of fintech in 2020 and beyond

We spent no small part of the decade seeing plenty of developments come to fruition in the unique segment of the financial sector known as fintech – not to mention hearing about numerous others that may not always have come to pass. But by any standard, there's no doubt that fintech carved out a real place for itself in one of the American economy's most hyper-competitive industries. 

Citing research from McKinsey and Company, a blog post by Waracle noted that the value of new investment in this financial niche is projected to be greater than $30 billion in 2020. This would seem to suggest that the momentum for fintech isn't likely to wane any time soon. That being said, the largest banks and financial services firms aren't going anywhere, so it will be important for companies in or tangential to the world of finance to closely monitor the path of fintech. It may ultimately have significant bearing not only on how your organization might need to adjust its operations, but also on your hiring and other personnel decisions. 

Startups moving into the establishment 
A considerable majority of the firms falling under the umbrella of fintech began as small and scrappy startup companies during the late 2000s and early 2010s. Some of them still fit that description, more or less, while others managed to grow significantly over the course of the most recent decade. 

Current projections seem to indicate that many of these "young" companies are poised to earn valuations that would move them further in line with the financial industry establishment: According to the Q3 2019 Global Fintech Report from CB Insights, nearly 60 fintech firms managed to reach the $1 billion threshold in terms of value before the start of 2020, with those that focus on personal loans seeing particularly significant success.

Pushback to uphold the status quo? 
Meanwhile, fintech startups that allow for free stock trading, such as Robinhood and the U.K.-based Revolut, are causing some consternation for the more established players in that line of finance, like E*Trade and Charles Schwab, according to Bloomberg. This could motivate bigger, more traditional banks and financial services firms to try and buy out (and thus absorb) or merge with startups – what one might describe as an "if you can't beat 'em, join 'em" approach – or it might inspire the heavy hitters to funnel more resources into internally developing the sort of novel money-management tools and methods that characterize fintech.

Along somewhat similar lines, Bloomberg noted that the longest-tenured fintechs are bulking up of their own accord. Examples of this include PayPal's $4 billion acquisition of Honey and the various shake-ups from Global Payments, Fidelity National and Fiserv. 

Greater developments to come 
Ultimately, the most important question to ask regarding the field of fintech is this: Will it maintain the torrid pace of innovation and expansion that caught the attention of the world throughout the past decade? Only time will tell, of course, but most of the signs currently extant would point to a "yes."

Major factors to consider regarding fintech development include the following:

• RPA and AI: According to Forbes, both robotic process automation and its more advanced cousin artificial intelligence will make major waves in this field. The former could easily make essential financial administration processes much simpler (customer onboarding, verification, compliance checks, general data analysis and reporting), while the latter is most likely to improve the personalization of fintech services in a manner that boosts the odds of customer retention. 
• "Embedded fintech": Tech companies outside of the financial sphere have already introduced a number of fintech products – examples include Apple Pay, the Apple Card, Google Pay and Amazon Cash. (Facebook may join this group eventually with Libra, though that project's nature as a cryptocurrency has raised quite a few regulatory concerns, according to CNBC.) This represents fintech's continuing assimilation into the daily lives of consumers worldwide, as TechCrunch explained. 
• Blockchain: It's no surprise that the algorithmic fuel of Bitcoin is widely projected to see more diversified applications throughout the financial world. Contract negotiations, stock trades and payments are just a few of the areas in which the decentralized ledger technology could see an increased utility.

Talent search and acquisition concerns
Taking everything detailed above into account, it's rather clear that fintech will have a significant part to play in many corners of the business world, both inside and outside of the financial services industry. Organizations affected by these developments need to prepare not only for how these trends will possibly change their day-to-day business, but also how personnel needs may be affected.

Talented though your existing staff may certainly be, complex technologies like blockchain and AI (especially the latter's most advanced iterations as machine learning platforms) require high levels of expertise. Your organization may need to invest seriously in either training for your current tech team or efforts to find the best free-agent tech talent with specializations in such systems. As a leading provider of technology staffing services, Marchon Partners can help align your business with the top-tier personnel it needs.