What’s in store for financial services in 2019?

2019 is already in full swing and the festive break has fast become a distant memory. While the year is still young, PrePay Solutions, Europe’s leading digital banking and payments provider, forecasts what 2019 might have in store for the world of financial services and fintech.

Blurred lines between challenger banks and major banks

Challenger banks are acquiring banking licenses and starting to provide the same types of services and functionalities as major banks (both in the B2B and B2C spaces). With the likes of Monese offering banking without boundaries, Challenger banks will be ready to rival the traditional banks during what is set to be a turbulent 2019. Conversely, more established institutions are investing in digital-first projects to give them a competitive challenger bank edge in the market. However, the differentiation between these two types of institutions will still be there, and the banks that continue to succeed will be those that play to their strengths.

Challenger banks will acquire more of the B2B market

Recent success stories such as Monzo and Starling have increased awareness of the capabilities of challenger banks. Consumers now have more trust in alternative banking methods to meet their needs, and in 2019 we will see this bleed into the B2B space. Solutions provided by the likes of Tide, Countingup and Coconut will gain traction by demonstrating how banking can be augmented by other functionalities, particularly those needed by small businesses, such as book keeping or tax returns.

The ecosystem of financial services will become more rounded

We’re starting to see different types of service providers partner to offer more comprehensive banking packages – for example, short term and smaller value lenders partnering with challenger banks to reach a wider audience. We will see much more of this in the coming year, creating mobile, dynamic, reactive offerings that are larger than the sum of their parts.

Ethical banking will increasingly become a differentiator

Monese is focusing on the 140 million people in Europe who do not have a bank account, Monzo is helping people without addresses secure a bank account, and MoneeMint has secured funding to provide services to underserved communities. Ethical banking will become a differentiator for more socially-conscious customers, and traditional banking institutions will struggle to offer credibility in this space compared to newer banks.

The attack on travel cash

Consumers are still quite traditional when it comes to using money abroad, with many travellers preferring to take cash on holiday. However, this behaviour is steadily changing, with 14 per cent of individuals using prepaid cards in 2017 – a 6 per cent increase from 2016. We believe that cashless currency solutions will become even more popular with holidaymakers in 2019. Offering the option to add funds to card throughout the year ahead of a holiday will allow Britons to better budget for the best holiday experience. As such, the convenience, security and better rates will become more obvious and appealing to all.

B2B growth in retail will continue to be strong

According to figures from UKGCVA the sector grew by 10.99% last year, with a significant rise in B2B sales which grew impressively by 18.26%. We can largely attribute this spike to an increase in self-gifting with thanks to innovative campaigns such as “#Gift Better.”

Likewise, alongside online purchases there was a strong move towards personal gifting in 2018 – from travel to entertainment and experience days. Playing a big role in increasing brand engagement, consumers are placing more emphasis on “creating moments” and “making memories” than ever before. Social media influencers and celebrity brand ambassadors are a big part of this as their product and service endorsements, promotion of latest trends and shared experiences continue to flood social media feeds. Throughout 2019 we expect to see these popular online B2B and consumer trends continue.

More fast-paced evolution in mobile and the cloud

It’s difficult to know exactly which new paytech and fintech solutions will emerge over the next twelve months. But it’s probably a safe bet to predict that cloud-based solutions providing cost-effective, easy to implement capabilities to small and medium-sized financial providers will be successful. Similarly, the increasing importance of mobile in this space will beget exciting innovations we probably cannot even conceive of yet.

No one knows exactly what the future holds. But to stay relevant and competitive in 2019, businesses must stay on top of the fluctuating trends and conditions in financial services. The companies that will thrive in the next twelve months will be those, like PrePay Solutions, that are aware of how the market is changing and nimble enough to capitalise on those changes.