The Year in FinTech: 2018 Predictions

After looking through FinTech trends in 2017 and the trajectory they portend for 2018, I offer three predictions for FinTech in 2018.

  1. A major central bank will issue a cryptocurrency. I believe it will be the Bank of England. For one, the U.K.’s central bank has been studying cryptocurrencies for some time. Secondly, the Financial Conduct Authority (FCA) is widely regarded as the most innovative regulatory agency in the world and does more to encourage FinTech than most. Lastly, the threat that Brexit poses to London’s position as a financial center seems more pronounced than ever. Nothing pushes innovation forward like a crisis.
  2. Identity will become the first “killer app” of blockchain technology. There have been too many major credit and breaches in the United States over the years, and they only get worse. Blockchain technology seems perfectly suited to put identity information under the control of individuals and even enable individuals without a credit history to establish a verifiable financial and personal identity. This is probably a longer time horizon t2018, and legacy forces will weigh against change, but identity theft is reaching crisis proportions.
  3. Banks will continue at a steady pace toward digital systems. As faster payment systems come online in the United States, the risks of immediate settlement will spur investments in security. Smart banks will invest in software that improves customer experience, buying systems and expertise from FinTech firms. Absent a crisis and in an easing U.S. regulatory environment, experiments will reign. New business use cases, like legalized cannabis and cryptocurrency trading, may spur banking innovation, especially where state banking regulators take action.