For a long time, the financial sector was regarded as a highly technical, highly regulated industry dominated by giant banks that resist disruption. But companies like PayPal shook things up and now finance is riding an entrepreneurial wave. Few sectors are moving and changing as quickly as the FinTech industry.
At Xpenditure we are ambitious enough to say we want to disrupt the finance sector even more. As a consequence, we have to be aware of all major evolutions and trends in FinTech.
Currently, we perceive 4 major shifts that will change FinTech in the years to come. Be prepared.
1. Software with a Service
Default, Software-as-a-Service companies have emphasized the software component, but their clients will expect more from them. In the coming years, successful SaaS will need to start focusing on the service part as well, which they can do at low cost thanks to the strong core software applications.
We are already doing this with a number of clients at Xpenditure and we call it “Software-with-a-Service”. These are clients that previously benefited from the efficiency Xpenditure brought them and that are happy to outsource the associated administration that still exists alongside tools like this.
In our case this is, for example, the need to control the expenses, to reimburse employees, …
Expense management is the ultimate example of non-core business processes that more companies are beginning to outsource.
Mobile SaaS solutions such as Xpenditures are evolving more and more thus becoming more than just a service: they are developing into the entire (mobile) expense department.
2. FinTech Apps will Become More Transactional
Solutions that address a real problem area will remain the ripest for opportunity.
Given mobile devices have become so ubiquitous, and applications are beginning to mature, FinTech applications will increasingly become more transactional rather than simply passive reporting tools with limited functionality.
Transactional innovations meet their users’ needs immediately, often with very transparent benefits over incumbent business models. Once the innovation was the credit card; now it’s PayPal, Stripe and other payment solutions.
However, non-payment apps can also be transactional: think about expenses that are immediately reimbursed, or payroll and benefits apps…
3. Apps will have to Talk to Each Other
Ensuring different apps talk to each other is increasingly important.
For example, as e-receipts grow in popularity, the ability to seamlessly integrate these with expense management apps as the receipts are generated represents an opportunity where the user can completely remove themselves from the process.
The need for apps that can communicate with each other explains the rapid expansion of the use of Application Programming Interfaces (APIs) - bits of code that allow digital applications and services to communicate with one another.
Like in the 1990s when any enterprise, large or small, without a website was not seen as legitimate, the same holds true today for companies that fail to take advantage of APIs.
In the coming years, the API economy will be crucial for FinTech.
4. Actionable Insights
A lot of FinTech, at least partly, gains actionable insights from transactional data.
For instance, insights generated could include past and predicted cashflows, but one problem is that a lot of data is being generated from disparate sources.
A key next phase will be further development in terms of generating actionable insights by marrying data from different sources. Finding the right data in the vast amount of information that is provided by every system is hard these days.
Sometimes there is just too much data, so context will become very important when looking at "actionable data".