By Pierre-Antoine Dusoulier, Founder and CEO, iBanFirst

As the New Year begins, it is important to look at the emerging trends in fintech, banking and finance for 2020 in order to help financial institutions prepare for upcoming challenges and developments within the industry.

Foreign exchange payments and currency hedging

Foreign exchange payments continue to be essential for businesses of all sizes, yet the cost of doing so is currently substantial, making businesses disproportionately affected. High upfront fees for making international payments are just part of the problem, with hidden costs absorbed into the exchange rates, it is even more difficult for small businesses to understand exactly how much they are being charged.

Currency exchange costs come in other forms too.Organisations of all sizes engaged in transactions in foreign currencies continue to be exposed to currency risk. This has a significant impact on commercial margins, and is particularly risky for small businesses because their banks are less likely to offer currency hedging solutions.

In 2020, as more currency exchange solutions emerge, traditional banks will be forced to move transparency of foreign exchange costs and the availability of currency hedging options up in their priorities. Banks will increasingly realise the importance of providing cost-effective, clear and efficient international payments to businesses of all sizes.

Additionally, fintech institutions will continue to excel in their offerings during 2020, helping UK businesses to build fruitful relationships all over the world, open up new markets, find new customers and suppliers, and partner with the biggest innovators in their fields.

 Intensification of regulation

2020 will see regulation continue to be top of the agenda within the banking and finance industry, helping to protect customer data while driving greater access to more competitive product offerings.

The introduction of PSD2 earlier this year saw the acceleration ofOpen Banking, opening up APIs to third parties. This has created a revolution in product offering and more choice for customers who require FX payments. Thanks to this facilitated data contribution, fintech’s will keep their internal data infrastructures running at full capacity. In addition to the best customer knowledge, the entire marketing apparatus and service offer will be transformed for the best.

As the industry gets up to speed with compliance around PSD2, it will also need to prepare for the upcoming PSD3 regulation. PSD3 will eliminate fragmentation by providing a concrete specification of API services, directory services and infrastructure, placing customer security at the heart of the customer experience.

The impact of Brexit

Moving into 2020 and with the results of the recent election, the Brexit date looms causing great uncertainty throughout the fintech, banking and finance industry. As the UK plan to leave the EU on the 31^st January 2020 many institutions are unsure of what this means for the industry.

Since the 2016 referendum, the pound has lost 6% of its value against the euro, resulting in many institutional traders holding a broadly negative sentiment towards the British currency.Despite the economic sentiment being slightly more positive in the eurozone when compared to the UK, traders are reluctant to believe there will be a quick resolution to the political process. Therefore, we see financial institutions increasingly looking to protect themselves against the risk of further depreciation of the pound.

The risks associated with exchange rates will continue to be a prominent issue, resulting in more movement towards the use of real-time exchange rates, as well as more competitive and transparent foreign exchange costs.

Evolving challenges facing CFOs

As the digital era continues to have a dramatic impact on businesses’ financial operations, a knock-on effect is seen emerging within the role of the CFO. With the rise and introduction of emerging technologies, for example artificial intelligence, Internet of Things (IoT), cloud-based architecture, and blockchain, the role of the CFO has evolved to recognise these new developments and establish how they can benefit the business from a strategic point-of-view.

In 2020, along with the continual challenges due to emerging technology, CFOs will be facing the likes of big data, with the need to understand tools that will help analyse data efficiently. The role of a CFO will develop to fulfil duties such as ensuring cybersecurity throughout the company, compliance with regulatory frameworks, the security of financial data, and navigating fluctuating exchange rates.

 In order to become future fit for 2020, next-generation financial services will provide helpful assistance to CFOs, enabling them to excel in their job role. New technologies offering greater visibility of financial processes across the business will bring peace of mind, allowing them to focus on what is important as their role continues to evolve and mould into a more strategic one.