According to a Juniper Research forecast, revenue generated by fintech companies will skyrocket from approximately $263 billion in 2019 to $638 billion by 2024. There has been a stampede of fintech unicorns with companies such as Revolut and Checkout.com now worth over $1 billion. But with a brand-new decade now in full swing, how will the industry flourish and where will fintech investing move in 2020 and beyond? Let’s take a closer look.
London’s lead will be challenged by continental Europe
London’s fintech space is booming. $2 billion was raised in funding last year alone and with city-based challenger banks such as Monzo securing nine-figure deals from foreign investors, it’s clear the capital is at the forefront of the fintech movement. That said; London’s lead looks set to be challenged by continental Europe throughout 2020 and beyond.
Fintech is Europe’s largest investment category representing 20% of all global investments. Companies raised more than $9 billion in 2019 and this looks set to continue with many experts predicting European fintech investments to be ramped up throughout the year. Hussein Kanji, partner at Hoxton Ventures, for instance, believes 2020 will be the year US venture pours more money into Europe. Indeed, Europe is believed to be on the brink of a VC funding boost from which fintech companies will benefit. The amount of money going into European fintech is predicted to grow from $9 billion to $12 billion which is 3 to 5 times the amount raised just five years ago.
UK-based fintech firms are also planning to raise funds to facilitate a European expansion. One such firm includes social impacts investment platform Tickr which aims to raise between £3 and £5 million.
Fintechs will invest in the user experience
Fintechs have already heavily invested in making simple tasks less daunting for end users. For example, it’s now easier than ever to open a bank account online, send money to friends, apply for a loan, open a trading account and plan for retirement using a host of handy apps. But as consumers expect more, the customer experience will be the competitive battlefield for fintechs – and that requires investment. Mature fintechs will need to start looking at the bigger picture and how they can deliver multi-purpose financial products to address consumer needs.
Investment in machine learning and AI technology will therefore become a top priority for fintech companies as they seek to provide a seamless, personalised, omnichannel experience with the help of big data. In 2020 and beyond, we’re also likely to see more marketplace banks and a host of super apps which allow third-party developers to integrate mini programs inside the main product in order to reduce the number of app downloads a consumer actually needs to make. Cross-industry partnerships will become increasingly popular as fintechs aim to meet the demands of connected customers. Essentially, investments ploughed into mature fintechs will be used to expand core offerings and promote additional products, all neatly wrapped