Founder's Guide
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These 3 Fintech Trends Could Affect Your Startup in 2020

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Financial technology, otherwise known as fintech, has reshaped the financial services industry over the past decade. Its innovation and application have made services in the financial sector quicker, more convenient, and most importantly, significantly more secure. 

As more markets are exposed to new technologies and products, we expect 2020 to be another momentous year for the fintech industry. To understand the trends and expectations to come, here are my top three predictions for the fintech space in 2020.

  1. Cryptocurrency sees more product innovation and higher adoption
  2. CCPA keeps fintech companies at bay
  3. Artificial intelligence continues to mature

Cryptocurrency sees more product innovation and higher adoption

In the last half of this year and looking ahead into 2020, we’re seeing many fintech startups focus on building more user-friendly products. This will continue to extend into the blockchain and crypto space in the year ahead. We’re going to see companies build products that make the more niche or complicated crypto projects become more accessible to the average consumer. 

Not only will we see product innovation, but we can also anticipate more mainstream adoption of cryptocurrencies in general. We’ve seen various businesses build out either crypto assets or unique platforms that can do some very interesting things, but we haven’t quite witnessed mass adoption of cryptocurrency yet. 

Making crypto available to mainstream consumers and non-crypto enthusiasts will require building interfaces and connectivity between different protocols and products to deliver the crypto products in a way that will attract the average American, such as my retiree father in Detroit. 

An exciting project that has been focused on bringing crypto to the mainstream is Donut, a Los Angeles-based mobile app startup that allows users to more easily invest in crypto assets. According to Donut’s CEO Neel Popat, “Getting to mass adoption for cryptocurrency involves reducing the entry barriers to get started. For the average consumer going to an exchange, storing private keys and using wallet addresses is still too foreign.” On what steps need to be taken to make crypto more accessible, Neel believes that “the application layer within the ecosystem needs to be built out further to help drive meaningful user adoption at the protocol layer. By removing the complexity, we can finally start to attract new user segments and unlock the gate to the underlying protocols”

It’s hard to ascertain how much the overall market will be impacted by increased product innovation in crypto, how much activity will be in the space, and just how quickly adoption will grow. It will certainly take more than one, five, or even ten years to achieve mainstream adoption, so I anticipate seeing continuous, measured progress this year. Further, it will be intriguing to see how this progress impacts Bitcoin and whether it results in any pullback in the coming years. 

CCPA keeps fintech companies at bay

The rollout and impact of the California Consumer Privacy Act (CCPA) is one of the first things to watch in the coming year. Like the General Data Protection Regulation (GDPR), this privacy policy is putting pressure on many businesses to comply in order to avoid fines and maintain consumer trust. Fintech companies, an industry highly based on consumer trust, should have already updated their privacy policies and processes to meet CCPA requirements

In particular, the new privacy law impacts how fintech companies service and leverage data. For instance, if consumers become warier of sharing financial data, then many startups that leverage existing financial data, such as Plaid, could meet a serious headwind. Further, this could impact a number of companies, such as Robinhood to Coinbase, which have historically relied on fintech companies for account connection purposes.  

If fintech companies begin to encounter issues in using these third-party data services, or consumers push back on sharing financial data, we could see a number of fintech startups rethink their business model over the next year.

Artificial intelligence continues to mature

Another trend to watch in 2020 is how artificial intelligence will mature in the financial services industry. While we’ve seen a handful of startups move into the AI space, we have yet to see anything truly groundbreaking from leveraging AI technology in the financial services industry, with much of the innovation being mostly marginal improvements such as AI chatbots.

If we continue to invest in AI in this industry, it would be interesting to see how implementing AI will not only impact the quality of the services themselves but also change how people access and interact with financial services and products. 

We will be seeing a tipping point with AI in the coming years. Rather than becoming a novelty for fintech startups, it’s going to become a driving force for adoption. Not only will a company be able to deliver financial services in a more cost-effective manner due to reduced human involvement, through using AI it can also deliver them in a superior manner: services within 24 hours, via text, or without any human involvement.

What are your top fintech predictions for 2020? Drop us a note in the comments below and let us know what you’re keeping an eye on in the coming year.

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Mark brings a unique regulatory perspective to Atrium Fintech & Blockchain, having worked at FINRA, BigLaw, and as a financial services lobbyist. Specifically, Mark advises emerging growth companies on issues surrounding broker-dealer registration, money transmitters licensing, and investment adviser registration. Mark started his legal career at FINRA where he worked on a number of highly publicized enforcement actions. Next, Mark worked at K&L Gates in Washington D.C. representing financial services companies before the CFTC, SEC, and Congress. After leaving BigLaw, Mark led legal and compliance at a FinTech startup in San Francisco. Mark received an LL.M. in Securities and Financial Regulation from Georgetown University Law Center and J.D. from Loyola University Chicago School of Law. While completing his LL.M., Mark interned at the SEC and assisted teaching a class on Title VII of the Dodd-Frank Act to SEC Staff. Before and during law school Mark worked at the Trading Technologies International and the Chicago Stock Exchange. Licensed to practice law in Illinois. Practicing under the supervision of a California-licensed attorney. Specifically, Mark advises emerging growth companies on issues surrounding broker-dealer registration, money transmitters licensing, and investment adviser registration.

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