Here are a couple of key trends the fintech industry will likely see in 2017, particularly in emerging markets.
1. India will see a fintech boom, following in China's footsteps
If India follows China's innovation pattern, we will likely see successful businesses in the following categories:
Looking beyond India, the next big opportunity for fintech companies is surely in Africa, with the primary focus on the large markets of South Africa, Nigeria, and Egypt, which account for about half of the continent's economy. That said, it is unlikely we will see rapid growth and mass market adoption similar to China and India in this region in 2017, because the above-mentioned enablers are not in place yet. However, the situation is slowly starting to change. Governments are making financial inclusion a key priority, and big banks are finally partnering with fintech companies after years of very passive reception.
2. Growth in fintech will drive innovation in regtech
The Financial Conduct Authority (FCA), a regulatory body in the United Kingdom, describes RegTech as the "adoption of new technologies to facilitate the delivery of regulatory requirements."
The dependence of fintech companies on regtech services is clear: Fintech companies constantly need to improve and automate regulatory and other compliance processes as well as streamline customer onboarding and monitoring. The first wave of regtech companies has certainly helped companies in the US and Europe to become more efficient and reduce costs, but I would argue that there is a much bigger opportunity in India, Nigeria, or Egypt, where fintech companies desperately need these tools to operate. How do you identify Nigerian customers when adoption of the National Identity Card is still sparse? How do you score the risk of a loan to an Egyptian customer in the absence of an official scoring mechanism? At the same time, regtech companies cannot build these tools and models without rich datasets, which have to come from fintech and other financial institutions. This really creates a case for a broad partnership between fintech, regtech, and potentially even governments to back such a large undertaking.
