This is a guest blog post by Devie Mohan, a Marketing Strategy and Research Consultant for FinTech firms. Previously, she was Global Head of Marketing for SunTec. She is based in London and can be reached on Twitter. The FinTech industry has never garnered more attention than in 2014. This year saw large investment from banks into FinTech firms of all sizes, nine-figure funding rounds and several new incubator programs. You could announce you are a FinTech consultant and your friends and family would almost “get” what you were talking about. Continuing Focus on the Disintermediation of Banks In October, a VentureBeat and Yodlee Interactive webinar talked about how fast traditional banking services are being disintermediated. 2014 has been the year of marketplace lending, payments disintermediation, app-based financial planning and equity crowdfunding. Disruptors like Square, Boku, Stripe and Funding Circle received large-scale investment from multiple investors. Veterans like Dublin-based Currency Fair, with its marketplace for exchanging currencies and sending funds anywhere in the world, and Berlin-based Mambu, which enables financial institutions to offer loan and savings offerings on the fly, established themselves further this year. Kreditech, which took credit-score-based analysis to the mainstream, received over $50m funding in 2014. Stripe, which provides APIs to make online payments smooth, obtained over $150m funding in just 2014. Everyone in the industry is ready to finance disintermediation, and the “FinTech-Uber” is clearly not far away. The Merging of Industries I met a FinTech expert recently who had spent his entire career in the telecom industry, working with operators, OSS suppliers and mobile phone firms. I was slightly taken aback that he had never worked in the financial services industry – but that was precisely why he had the mindset for payments innovation! Although some telecom service providers and banks are constantly fending each other off in the fight for consumer wallet share (for e.g. in Kenya), innovation in one sector is feeding into the trends in the other. They are no longer separate industries, but part of the technology industry that has taken over the responsibilities of innovation and customer experience. This is more visible in less-banked markets, where banks, telecom operators and mobile money services (for example, Equity Bank and m-Pesa or Orange and BNP Paribas in Africa) but is now a key trend in highly-banked and highly-networked countries (for example, Telekom Austria launching the A1 Bank). Transaction Data becoming Bigger and Better The importance of obtaining as much data as you can on your consumer cannot be stressed enough – to be the Google of the FinTech world, you need to leverage the most valuable, insightful and actionable data you can get from the mass population. For example, Yodlee Interactive provides APIs to access the most robust financial account and transactional data for innovative online applications. With these APIs, you have the data power of millions of consumers and more than 750 organizations around the globe. A recent webinar highlights how dependent technological innovation is on the availability of good quality data. Both BillGuard, a firm that uses big-data-powered analytics (that too, crowdsourced!) to handle billing errors, and WeCash, a Chinese firm with a big-data credit assessment platform, got more funding and visibility this year. The market for using this transaction data to price the end-customer evolved drastically in 2014, thanks to the immediate need for customer retention and operational efficiency in an industry of rising acquisition costs. Most of the banks in the world are today looking at technology from firms like SunTec and Zafin to conceptualize, create and provide value-based offerings that make sense to the individual end-customer. The Basics Being Laid for Omnichannel Payments Even though banking has been talking about omnichannel payments for several years now, very few steps have been taken to make all its channels consistent. 2014 has helped lay some of the groundwork for the next few years to make a substantial difference in the way customer experience across channels is handled. Zooz, that creates a personalized user experience for retail, and MX, that already provides consistency and contextual offers to VISA, Moven, FirstData, etc. have both emerged as key players in 2014. But we are just scratching the surface on omnichannel customer experience. The focus in the past three years have been on making ATM machines sleeker and smarter – the focus in the coming years will be on eliminating the need for ATMs altogether. Finding Innovation under Regulatory Pressure FinTech is perfectly poised to create innovation, along with disruption, in the highly-regulated financial services industry. FCA (Financial Conduct Authority) in the UK has recognized this, establishing Project Innovate to encourage innovation outside the regulated sector. Banks, struggling with decades-old legacy platforms and infrastructure, are also reaching out to fund innovation via FinTech firms – just like BBVA acquiring Simple, which focused on transforming consumer behavior in banking. Companies like Epiphyte have products with compliance capabilities built-in, to deal with ever-changing regulatory requirements from regional regulators. It is interesting to note that there are several products with focus on regulatory issues, in the list of 50 Best FinTech Innovators created by AWI, KPMG Australia and FSC, including Yodlee at a strong position. Cryptocurrencies Conquering the World You cannot attend an industry event or open Twitter without talk of Bitcoin and Ripple popping up everywhere. SIBOS/Innotribe discussions proved how little we all know about the potential impact of Bitcoins; mainstream service providers like AirBnB are exploring Bitcoin-based payments; and a Massachusetts startup launched Bitcoin ATMs. However, the roadblocks are numerous – apart from banks being wary of transactions involving virtual currencies, regulators and tax authorities still do not know how to handle them. We are left to wonder – what happens next? One thing is for sure – FinTech has seen a boom in 2014. According to AWI Ventures, global FinTech financing has grown from less than $930 million in 2008 to over 1.04 billion in the month of October 2014 alone, and it was seen that 20 companies raised $275 million just in the first week of September. The banks are taking notice and FinTech firms realize that there is a partnership involved – banks have the capability to provide data sets and APIs, which product developers can use to drive innovation. The banks are relying on the agility of the technology providers to drive them forward – without being made obsolete in the process. It is, perhaps, the best ecosystem for creativity and innovation since the IBM-Microsoft-Apple era. What do you think are going to be the biggest trends affecting FinTech in 2015? Please access our 2 minute survey here. In the spirit of the holiday season, Yodlee Interactive is offering a $100 Apple store gift card for one participant of the survey. Complete the survey by January 15th for your chance to win! The findings of the survey will be announced in our next blog post in early 2015.