And again, the New Year weekends came to an end — that so called time “after the holidays” had arrived, and with it new plans for the business season. We start the year with an assessment of the main trends in financial technologies and services for the next year. Last year I already published similar material, so this year I will start by deciding which of my talking points turned out to be the most correct.
Firstly, I talked about a constant growth of mobile banks and everything related to mobile payments. There are several mobile banks were launched in Ukraine in 2019 (their design is suspiciously similar to the first one, but let’s not talk about it), many banking players updated their applications, and those who didn’t make it — they announced it’s launch in 2020. It was a really good time for the financial application developers: banks were ready to give money for the implementation of many things that would help them win some points in a highly competitive market.
Secondly, the legislative changes. The regulator’s policy regarding cashless hasn’t changed. In practice, this is expressed differently, but the general course was nevertheless observed. During the year, we saw two more international payment systems from Ukraine (one of them is IPS “LEO”), and the state bank successfully integrated with Union Pay International. All this says that working legally is becoming easier.
All this has material prerequisites. For example, the money transfer market steadily grew in 2019, and it was the growth inside the country. I know this, because our LEO international payment system has appeared in the top seven in terms of transfers. There are more translation services — both new and individual unique solutions within banks, simplifying, for example, transfers from popular EU countries (Poland) to Ukraine.
Card Product Digitalization
If 2019 was the year of active smartphonization of payment habits, then 2020 will work intensively, not extensively. In other words, the possibilities of payments through digital wallets will increase, which will finally make smartphone the basic payment tool in Ukraine. The very concept of “bank card” will be more associated with a digital card in a smartphone than in physical “plastic”. You won’t lose or break a card in a smartphone, you don’t have to look for it in your wallet / bag / backpack, etc. We already saw the first decisions in 2019, and now this trend will be strengthened.
A smartphone as a basic tool inevitably entails a radical simplification of payment chains. Payment in 1–2 taps, without the need for data entry, with intuitive interfaces — this is not something revolutionary or prohibitively new, but the necessary functionality of any modern financial application. Demand for repackaging this for a wide range of consumer needs, from buying products to refueling and paying in public transport. Security is already largely ensured by the tokenization of payments in Apple Pay and Google Pay, I won’t dwell on it in detail.
Search for new value user propositions
Competition in the fintech market is growing every year — especially for card products. Small and medium-sized banks, which don’t have the resources of the current leaders, have a need to survive and develop in these conditions. The most reasonable approach is to combine a traditional bank with a fintech-team, which is commonly called the “disruptor”, in order to create a new product. From the bank — the emission of a bank cards and a credit line, from the outsourse team — a technical solution and competent design expertise. Several banks can invest in such project at once, due to which the budgets for the level of service and advertising will grow and commissions for the users will drop.