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The FinTech year ahead: What to expect in 2018

What will the FinTech year ahead hold? What do industry insiders predict? To dive deeper into industry predictions for 2018, Holland FinTech hosted a panel discussion at our January Meetup. Data security, the GDPR, global innovations and mobile payments arose as the most important topics. 

How will the changing regulatory landscape impact on companies and investment?

Changes in processing and technology in the year ahead will be driven by the ‘perfect storm’ of regulation in 2018, said Nieuwenhuize from ING. Maurits from Rabobank Fintech Ventures agreed, saying the actionable phase of innovation is still in development and the market is ‘ripe for disruption’.

Is it still attractive to invest in fintech?

Companies that solve problems posed by regulation will be of great interest to VCs in the year ahead. Van Mill from Peak Capital answered that companies which are tech-orientated and not limited by regulatory boundaries are very attractive.

Furthermore, software as a solution (SaaS) models are attractive because most startups are instead acting at a consultancy level. In the near future, the consultancy level aims to hand-hold companies through new implementation of 2018 regulation. The year ahead will hold opportunities to transition to SaaS solutions.

What are investors looking out for in the year ahead, aside from the much discussed regtech and security areas?

With a comedic touch, Nieuwenhuize from ING answered Don’s questions simply: ‘security.’ To extend beyond this popular theme, Nieuwenhuize identified interest in personal finance solutions, instant lending and neobanks. He predicted that new developments from 2017 will this year become more actionable, provoking a shake up.

Will European customers accept uses of data like those in the US? 

Lancee from Rabobank discussed uses of transaction data in US where influences can be identified by access to market data. However, the panel agreed that Europe’s understanding of data security is quite different; Don commented, ‘the European perspective thinks differently about privacy than the US market.’

With the introduction of the GDPR this year, it is arguably the right time for companies to challenge the tech giants like Google. Why? Because embracing GDPR compliance can increase the little guy’s competitive advantage while incumbents are slower to change processes.

Territorial reach of the GDPR:

The GDPR applies to any company which processes the data of an EU citizen. The GDPR expands the EU’s territorial reach. This is positive according to Nigel Parker, Partner at Allen & Overy, because ‘the expanded territorial reach of the GDPR will offer a more balanced treatment between EU and non-EU data controllers.’ By establishing the highest standard of data protection globally, and imposing these standard on any company which works within their jurisdiction, the European Union can take a leading position on data protection policy.

What innovations or trends will take hold in 2018?

Nieuwenhuize from ING talked about innovation in Asia coming to Europe. ‘In Asia, the rate of change seems to be faster than anywhere else.’

Privacy and security cultures differ between Asia and Europe. As a result, there are some barriers when transplanting Asian innovations into the European market. Nieuwenhuize mentioned how companies in China can have access to all consumer data when building a credit profile. An example is that extensive phone calls at 3 o’clock in the morning may decrease your credit rating. This results in significantly reduced data privacy in comparison to Europe.

Mobile payments in Asia are more advanced than in Europe. Asia seems to have ‘leapfrogged debit cards’said Nieuwenhuize. Many users have jumped straight from cash to mobile payments. Valdis Dombrovskis, Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union said of the PSD2: “This legislation … will promote the development of innovative online and mobile payments, which will benefit the economy and growth.

How comfortable are European consumers with mobile payments?

In Europe, the use of mobile payments is growing: AndroidPay and ApplePay are used more widely in Europe than in the United States. An example of increasing acceptance, Sweden-based mobile payment company iZettle raised $150 million in funding last year. 

Another sign that European consumers are becoming more comfortable with mobile payments is the appearance in 2017 of China’s major online payment platforms, Alipay and WeChat Pay. The mobile payment culture is catching. 

The title of the panel discussion was: ‘The FinTech year ahead: What to expect in 2018.’ We would like to thank our panel members, Johan van Mill from Peak Capital, Maurice Lancee, Investment Associate at FinTech Ventures Rabobank, Jan Willem Nieuwenhuize, Managing Director at ING Ventures and Denis Joannides, Founder of Onegini.

For more information on our wonderful January Meetup, have a look at Event Recap: January Meetup FinTech. The event also launched our partnership with Money 20/20 for their three-day conference in June.

By Grace Appleford, Research Analyst at Holland FinTech.

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