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Peering into our blockchain-powered crystal ball, here are our predictions for the biggest developments in fintech in 2018.
1. New Payments Platform (NPP) rollout
Launching in February 2018, NPP is Australia’s new payments platform, which will allow money and data to move between bank accounts instantaneously.
The launch is anticipated to unleash a torrent of innovation, with the increase in transaction speed allowing streamlining of existing financial services.
Examples include super funds using the system to move SuperStream payments into real time, or the ATO could enhance its “Single touch payroll” reform allowing small business to pay PAYG withholding at the same time they pay staff, while integrating data into accounting systems.
2. Expanded fintech regulation sandbox will encourage innovation
Announced in the 2017-18 Budget, the Government plans to expand the regulatory ‘sandbox’ that was first launched in 2016, with the aim of encouraging the development and testing of new financial technology products and services.
By reducing the red-tape around crowdfunding, increasing access to credit reporting (useful for P2P lending), making financial data more easily available and making regulations on roboadvice and other new technologies more clear, the Government is doing its bit to support the design and delivery of new financial products and services that benefit consumers and businesses.
3. Bank and Fintech partnerships
A few years ago, the conventional wisdom was that fintechs and banks were two opposing forces that destined to battle each other, head to head.
A 2015 McKinsey warns banks face a wipeout in some financial services – predicting that the rise of digital disruptors could strip 60% of earnings from areas such as credit cards and car loans.
Clearly, that hasn’t happened and, at the moment, it doesn’t look like it ever will.
Instead, we’re seeing that partnerships are win-win for both start-ups and the more established players. Their roles aren’t adversarial – they’re complementary.
Ultimately, combining the innovation of fintechs with the scale of established institutions accelerates the development and delivery of better financial services for customers.
4. Mainstream adoption of blockchain
While Bitcoin is grabbing the headlines with its seemingly inexorable rise (at the time of writing!), there are other uses of blockchain that are also demonstrating the usefulness of the technology and the extent of its adoption.
In late November, a $2.6 million grant from the Smart Cities and Suburbs program was awarded to a project partly run by Power Ledger – the first Australian company to list itself on a digital currency exchange. This energy tech start-up made history in October 2017 with Australia’s first initial coin offering through the Ethereum cryptocurrency network after raising $18.9 million in capital in the lead up to its launch.
The company has used blockchain to create a digital emissions trading scheme in Fremantle, WA that it hopes will expand elsewhere.
The awarding of a Federal Government grant to a company that not only uses the blockchain, but has also financed itself through an ICO, is a clear indicator that blockchain technology is moving towards the mainstream.
5. Frictionless transactions
While it may have launched in Aus with more of a whimper than a bang, Amazon’s investment in technology continues to make it easier for people to spend money.
It’s currently gearing up to trial ‘Amazon Go’ in the US, its new retail concept, which aims to make shopping as friction-free as possible. Customers use their mobile phone to check into a shop when they enter, pick up what they want to buy and then walk straight out. Check out the video below to see it in action.