By most accounts, half of the worlds population will be digital natives by 2020 an entire generation. That means a significant (and rising) proportion of financial services customers around the globe will have grown up with a mobile phone and/or an internet connection. They never lived in the analogue world, and their financial services experiences shouldnt force them to relive pneumatic tubes and paper checkbook registers. Their experiences in one part of their lives: touch payments will make them impatient of legacy technology in other parts of their lives. So the impact of new financial services models will continue to be felt in adjacent industries such as health, insurance, education and real estate. The emergence of products and services covering different aspects of a consumers needs across these industries will accelerate in 2019 and beyond.
Think about real estate. There are a number of deep shifts in the property market that mean 2019 will be the year that marked the transformation of the place of the estate agent. This will have consequences for the way in which property transactions and management takes place from now on and it will shift the speed of the PropTech sector from evolution to revolution.
Technology is one of the key drivers for change. Platforms are key to the life of the estate agent and gradually platforms are becoming the estate agents. High profile problems with raising funds through crowd sourcing that characterised the end of 2018 have been seized on by Estate Agent publications as proof of the end of the platform bubble. The example of Emmov is the most often used to suggest that the wave of Proptech innovation has crashed against the limitations of peoples appetite for change and for investment in change. However, the detail suggests something rather different. Weaker start-ups are failing and will continue to do so in 2019. But those that breakthrough will continue to take market share from the traditional estate agents. For example Purplebricks saw an 18% rise in searchers through google in 2018. We will see widespread closures of estate agent offices as these are merged into a small number of larger offices with fewer staff. As so often, technological innovation costs jobs in the transition period. The role of the estate agent may also be significantly changed by the report of Property Agents Working Group, set to appear in late 2019. This group was set up to advise the government on a new regulatory approach to letting, managing and estate agents in line with the governments responses to its calls for evidence on Protecting consumers in the letting and managing agent market and Improving the home buying and selling process. For the potential new entrants to the space and others watching the regulatory environment, perhaps the most interesting areas the group were tasked to look at were if a system of minimum entry requirements and continuing professional development for letting, managing and estate agents was needed and whether other fees and charges, which affect both leaseholders and freeholders are justified or should be capped or banned.
One of the most important disruptive impacts of Fintech on banking has been to force banks to reimagine their interactions with customers so that their values become part of the equation. It is less about going to see the bank manager and much more about taking a journey together. The insurance industry has begun to adapt some of this flexibility in their approach and values based presentation. For example, Brightpeak Financial, a division of Thrivent Financial for Lutherans, engages customers in a much broader conversation than a transactional focus on the insurance products that it sells. On a website structured around the categories of Live, Work, and Learn, it offers content that speaks to customers direct concerns, from organic produce to marital stress to summer holidays. The site meets customers in the spaces where they already reside and speaks to the value of its products from this orientation. They then present their Disability Insurance as being specifically targeted to stay-at-home parents and carers.
In education, Fintech innovation is developing students financial wellbeing by changing the way they pay for classes and structure student loans. China is developing these kinds of flexible services faster than anywhere else. Superlink plus which helps the huge number of Chinese students who study abroad is partnering with ChinaPay, to streamline tuition payments. We understand that by putting together the education resources and also the Superlinkplus platform, with the very mature ready-for-use tech and financial background of UnionPay, this could actually offer students and universities great and very efficient solutions for tuition fee payment, says Shi Yi, vice president at Superlinkplus. Other platforms are transforming the application process and incorporating smart payment technology into that process as well. With increases in the amount of money that Chinese citizens are allowed to transfer abroad each year, other providers are creating services for students studying overseas to get their fees paid and their allowances sent. The key is to ensure that the Chinese government knows exactly what the money is used for. myMoney has been developed to ensure that the payments are made smoothly and that every transaction conforms with government regulations.
Ultimately, businesses in all sectors need to remain up to speed in the modern age. Financial services have an opportunity to take a lead in digitising its business model, and by doing so opens the way for many other industries. This can benefit both the financial service industry itself, by ensuring that customers are retained and services are easily delivered, and in an age of connectivity, other industries can boost themselves knowing there is a digital infrastructure in place to underpin them.
Nadeem Shaikh, the former CEO of Anthemis, is a Fintech visionary and thoughts leader
