Think Well, Think Different: Predictions And Resolutions For Fintech In 2020

Think Well, Think Different is a series of columns devoted to discussing trends in fintech, both from the consumer and founder points of view. Click here for previous columns. 

The days and weeks surrounding New Year’s are filled with a deluge of articles recapping the previous year, predicting the trends for the next, and offering resolutions on how to change. Allow me to try my hand at what’s in store for fintech in 2020. 

First, the predictions.

In these moments, I have a recurring segment from an old ESPN radio show called Mike & Mike In The Morning called “Predictions Sure To Go Wrong.” Nevertheless, it is a fun exercise and, in its best form, can push your company to think bigger this coming year.  Here’s what I’m expecting on the fintech, regulatory, and big data fronts this year:

Fintech

The fintech blessing is also its curse. Financial services, starved for innovation for so long, has become as oversaturated as the craft beer scene. The only difference is craft beers tend to be local or regional whereas fintech reaches everywhere. We have not seen credit unions or community banks fill the hyperlocal void, and so as a result there’s a new fintech company for each “problem” in financial services. The problem of oversaturation is happening for investors and consumers alike.  

Consumers interested in managing their money, investments and activity have dozens of apps to cover all their personal finance needs, from accounts to budgeting to credit. I believe in 2020 consumers will begin to align their perks and preferences. All consumer finance is slowly aligning with the credit card industry, in which there are plenty of options but consumers select the one or two cards that provide the specific rewards they prefer (such as airline miles, travel, cashback. etc.). There’s no reason more consumer platforms won’t soon to follow suit and join the rewards structure.

Scrutiny, Regulatory Or Otherwise

The biggest regulatory risks to tech companies generally, and fintech specifically, are algorithms that target specific customers or make an offer of credit or access to other offers without human review.  High-value products like debt consolidation refinances and mortgages will begin contending with innovative credit models and the scrutiny to come with it.

For example, pressure is mounting on many lenders to defend existing algorithms, particularly credit approvals, and move toward more forgiving models. In short, there is pressure to move away from the traditional FICO score, which is entrenched in consumer credit today. Unsecured or on-demand credit has moved (slowly) away from FICO, but overall we have not seen true disruption yet. As predictive data improves, expect to see alternative predictors of risk. 

Is 2020 the year? Probably not. The proof will be the performance data from the unsecured and auto lending of the past few years. Until those loans are tested or the data becomes available, there will still be platforms moving to proprietary or alternative credit models.

Big Data

Speaking of regulatory scrutiny, Big Tech remains squarely in the crosshairs of politicians and journalists alike. The missteps of the last year create a higher expectation for tech companies moving into financial services. Consumer finance has become so closely aligned with consumer products and digitization of the consumer experience, it is not surprising trusted tech platforms are evaluating moving into consumers’ wallets. 

2019 brought us the Apple Card powered by Marcus by Goldman Sachs. Speculation abounds about what impact if any Google’s bank accounts and Facebook’s cryptocurrency will have on consumer finance in 2020, and how traditional providers like Wells Fargo and Chase and nontraditional competitors like Amazon will respond. 

To Trust Or Not To Trust

Another threat to traditional providers is consumer trust. Beyond questions of privacy and cybersecurity, consumers are leaving banks and other establishment companies based on service levels and offers alone. With 2020 being an election year, this could become a talking point among the candidates.  

And now, for some New Year’s Resolutions I’m making for 2020. Whereas predictions are relatively interesting to most people, my personal resolutions are kind of like my fantasy football team – no one really cares except me.  So instead of listing my own or commenting on the most predictable resolutions, I’d like to suggest one simple one that can improve our personal and professional interactions.

Ask Better Questions.

It might seem abstract, but I’ll suggest a specific, immediate application. Eliminate small talk at work and at home. Resolve to have deep, real, human conversations. Next time you’re at a party, count how many times you have one of these exchanges:

“How’s it going?” “Fine.”

or 

“How’s work?” “Same.”

or

“What’s up?” “Not much.”

Not unreasonable questions especially given our long tradition of social norms.  The problem is two-fold. These questions allow the other person to immediately fall into their prerecorded, passive responses.

The questions are also open-ended and even if you get a real response, it will be however the other person wants to respond.

Better questions get better answers.

To keep it simple, let’s focus on 2 questions. This year’s resolution will be to deploy two new questions to head-off passive small talk and try for deeper interactions. 

1. “What’s your story?”

“What’s your story?” is still open-ended and is friendly enough to wade into deeper conversations in a non-confrontational way. “What’s your story?” is entry level, but good stuff.

1. “What would you title this chapter in your life?” 

Now we’re getting somewhere.  Clearly more personal, but in a way that creates some conversation.  The answer can go in a variety of directions. Focusing on the premise of the question and wordsmithing a response.  Focusing on the existing moment in time and providing some real perspective into their life. Focusing on life as stages and reflecting overall about transitions between life’s phases.  

Generally, it sparks a fun but interesting discussion. Be ready for the volley back too, because most people will ask you the same question.  And that’s a good thing because the bottom line is that life is too short and too fascinating to waste on “How’s it going?”

Resolve to connect, learn something new about someone else and train yourself to ask deeper questions.

Happy New Year and continued success in 2020.