At this time of year, it’s only natural to contemplate the events of the past 12 months and hone in your visions and goals for the next 12. At BBVA Open Platform, we’ve had a year full of milestones and team successes. We released the new 3.0 version of our platform, ran a beta program with amazing companies and officially launched in the market with seven clients live in production and more to come over the next few months. It’s been a monumental year for us, but we know we’re not the only ones. Below is a recap of some of the biggest fintech, banking and payments trends and events of 2018, along with insight from our experts on what to look forward to in 2019.
The Top Trends of 2018
- Payments Get Faster
With initiatives such as Real-Time Payments in the US and Faster Payment Systems in the UK, faster payments are getting even faster. As detailed in this Pymnts.com article, in the US, “same-day ACH is ubiquitous and there are proposals to increase the number of settlement windows to include weekends and holidays. Faster payments using debit cards and technology platforms are depositing money into consumers’ bank accounts in real time, while enabling new use cases like the deposit of loan proceeds, insurance claims, airline voucher payments, and instant payroll for gig and wage earners, as well as SMB merchants.”
We expect this momentum to continue as we approach the 2020 Real-Time Payments deadline and consumers continue to demand and expect simpler, more immediate ways to move money and make payments.
- Bank APIs Have the Biggest Year Yet
PSD2 came into effect on January 13th, 2018, launching bank APIs and access to data into the public dialogue. Innopay reported on the status of the 2018 Open Banking landscape (see our summary here and the full report here). One of the points highlighted is that most bank APIs provide read functionality, rather than write functionality. This makes sense, given PSD2’s focus on giving consumers better access to their own data. Innopay reports that 26% of banks offer POST functionality, specifically POST to enable payments. As we progress from Open Banking,characterized by access to data, to Marketplace Banking, characterized by access to functionality, we expect to see a much larger percentage of banks offering POST capabilities. This will be a trend to look out for in 2019.
- Fintech Funding
2018 was a record shattering year for fintech investment. Credit Karma, Ant Financial, WorldPay and iZettle topped the charts, along with Plaid who came in strong in December with a $250 million round from Kleiner Perkins. We covered this in our most recent post, but in case you missed it, fintech investment in the first half of 2018 added up to $57.9 billion across 875 deals. Behemoth investments to be aware of:
- $14 billion round raised by Ant Financial
- $12.8 billion acquisition of WorldPay by Vantiv
- $2.2 billion purchase of iZettle by PayPal
- In the US, investment poured into late stage, mature fintech companies in multiple $100 million+ mega rounds, including:
- $500 million raised by Credit Karma
- $540 million raised by Oscar in two rounds
- $120 million raised by Lemonade
What to Look Out For in 2019
We asked our team of experts which trends they believe will be important in 2019 and why.
Open Banking and Payments
Susan French – Head of Product
- Innovation-focused banks (like BBVA) will continue to accelerate their march toward Banking as a Service, Open API-based platforms and solutions for payments. Adoption and integration of BaaS platforms will grow among both Fintechs (where it is strongest now) and more traditional enterprises (where the major upside opportunities lie). Mainstream banks are noticing the trend and will also pick up the pace of their initiatives (witness Wells Fargo, Citi, DBS) but it will still be years before the biggest banks will provide a full-spectrum open banking suite.
- The US will begin catching up with the rest of the world on its real time payments infrastructure. We’ll see the continued roll out of TCH’s Real Time Payments network (albeit more slowly than they think), Visa and Mastercard continue to aggressively promote card-based push payments and consumers increasingly warm to near real time P2P networks (like Zelle, Square Cash, Apple Cash, Venmo and others).
- The US will accelerate its adoption of contactless payments (both card-based and mobile) as the big banks are announcing their intent to issue contactless cards and the contactless-enabled POS acceptance infrastructure is growing and stabilizing.
Regulation and Compliance
Ryan Hodge – Director, Client Risk and Onboarding
FinCEN’s Customer Due Diligence Rule will continue to impact Customer Due Diligence and beneficial ownership requirements. With the initial passage of the rule, regulatory guidance was that institutions would be given the benefit of a doubt as it was being implemented, but that period is likely going to come to an end. As with any new regulation, it will evolve over time, based on examiner focus and feedback.
As always, reach out to share your comments and ideas. We love hearing from you. Cheers to a fantastic 2018 and an even more successful and exciting 2019!
— Open Platform Team