This year marked a watershed moment for the fintech industry. The distinction between fintechs and incumbents began to blur significantly, as the latter started actively investing in, acquiring, and collaborating with their fintech rivals to support their own digital transformations. We saw considerable scaling in older corners of the fintech ecosystem, especially among neobanks in Europe, while new and emergent areas — including blockchain and distributed ledger technology (DLT) more broadly — have come to the fore. Meanwhile, an onslaught of regulation brought new challenges to the industry that it will continue to grapple with into the year ahead. Based on these developments, our proprietary research, and the trends we’ve seen intensifying as we head into the new year, here are our top five predictions for fintech in 2019:

1. We will see a number UK marketplace lenders shut down as regulations tighten. Marketplace lenders in the UK will likely face a particularly difficult year in 2019. The Financial Conduct Authority (FCA) published a proposal on regulatory changes earlier this year that would limit those who can invest in marketplace lending platforms to certified sophisticated, or high-net-worth investors, and restrict their investments to less than 10% of their net assets. There's been some uncertainty in the UK marketplace lending space recently, with Lendy reaching out to the FCA with news that one of its biggest borrowers had threatened to sue the company, for example. Such issues are likely what prompted the FCA to take action, which, unsurprisingly, has been met with push back from the industry. As the FCA enforces these rule changes in 2019, we will likely see a number of players in the UK struggling to find investors, and some will be forced to shut down. This would track a similar trend we saw in China this year, with many marketplace lenders defaulting after the country tightened its regulation of the sector. However, this is likely to be good for the market overall, as it will weed out players that lack sustainable business models or employ questionable tactics, providing more legitimacy for the space.

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