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Turning disruptions into opportunities: the fintech trends 2019 (part I)

Release date: 28 Jan 2019 | Eurex Exchange, Eurex Clearing

Turning disruptions into opportunities: the fintech trends 2019 (part I)

New technologies such as artificial intelligence, machine learning and blockchain are changing the financial industry. What will we see in 2019? Which new trends will come up and which will even intensify? We have compiled the most important technology trends that experts expect to disrupt, shift and change the way we do business.

Artificial intelligence will change working conditions for the better

Even if there are many people already mourning the end of classic office jobs, the truth is that AI will have a positive effect on working conditions and the flexibility of work. Since 31 percent of all companies now assume that they will use AI in the course of next year, many time-consuming secondary activities will be taken over by AI applications in the future and relieve employees of much of the drudge.

Blockchain – still the “boss” of the fintech revolution?

Blockchain will slowly take over the traditional banking system over time. One of the reasons for this is the reduction of paperwork as it updates the digital ledger in real time while storing all records in an immutable way. Wire and transfer fees have been decreased by using bitcoin; clearing and settlement will happen instantly; loans and credit applications can be accessed on the spot, and consumers have instant access to the funds they need and to answers they require — blockchain simply is efficient.

And despite the fact that experts judge current distributed ledger Technologies and concepts to be mostly immature, poorly understood and unproven in mission-critical business operations, they advise CIOs and IT leaders to begin evaluating blockchain even if they don‘t plan to adopt the technologies in the next few years. And they seem to listen because 90 percent of major North American and European banks are already exploring blockchain for payments. According to an IBM study, it is expected that 65 percent of all banks will have adopted blockchain technology by 2019.

Digital-only banks

These banks have no physical locations and no high-street branches. Digital banks are gaining more and more popularity with millennials as they can receive services in the comfort of their homes or offices. They simply visit their bank via a website or an app. One example is the digital bank Revolut, which provides a finance app that enables both currency and cryptocurrency exchange. It also categorizes payments so that users can see their expenditures in detail.

Visits to bank branches are expected to drop 36 percent by 2022, while mobile transactions are expected to grow by 121 percent in the same period. Revolut seems to prove this since it has 2 million users already and is getting 6,000 to 8,000 new customers every day.

Cash will lose relevance

In China, millions of people already pay for most of their purchases almost exclusively via their smartphone. They mainly use apps such as WeChat Pay or AliPay for this purpose. This step towards a cashless society will be seen worldwide in the years to come because it is more and more recognized around the world that cash is not necessarily the most efficient way of paying. Already today, there are some good examples of fintech companies like N26 or Revolut that make it easier for their users to manage their finances through user-friendly online platforms. These start-ups, which were already supported in 2018 by venture capitalists and investors with significant sums of money, will continue to expand their user base in 2019, enabling more people to transfer money across borders and bank accounts.

Crypto currencies are growing up

Bitcoin has recently had its ups and downs including a veritable implosion last year after having reached a total market capitalization of over 800 billion U.S. dollars before this. However, as traditional financial institutions are likely to increase their blockchain activities, 2019 may be the year in which institutional capital finally reaches the crypto currencies.

All these trends are set to make the financial industry more efficient and convenient for customers.

How is Deutsche Börse Group using the new technologies and in which fields? Find out in part II of this article.

Sources: Dimension Data, The Economist, Bloomberg, IBM, Gartner Research 


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