The past 12 months proved to be another fascinating and dynamic year for financial sector technology, with huge strides made around digital channels, payments, wearables and blockchain, in a period which saw innovation and collaboration rise to the top of the industry’s agenda.

2015 certainly marked the rise of the digital-only challenger bank, with Atom the first to secure its banking licence. Headquartered in Durham and led by Metro Bank founder Anthony Thomson, the company has been busy making senior appointments, signing up tech providers and developing its digital offering, which is set to come to market in 2016. Mobile-first bank Tandem was also granted a licence by the Bank of England in December, promising to be a “decent alternative” to the traditional High Street banks with its “slick, intuitive mobile and web experience”. Other startups are hot on their heels with Starling – headed up by ex-Allied Irish Bank COO Anne Boden – setting out its stall with the regulator. Mondo – a mobile bank established by ex-Starling exec Tom Blomfield, is also preparing its testing stage.

Mobile developments were arguably the star of 2015. Banks consolidated their mobile apps, which are now accessed 9.6 million times a day, according to British Bankers’ Association. In June the BBA predicted customers would use mobile apps to check their current account balances 895 million times in 2015, compared to 427 million branch interactions. It also forecast that by 2020, customers would use their mobile to manage their current account 2.3 billion times – more than internet, branch and telephone banking put together. In the mobile payments space, the much awaited Apple Pay finally arrived in the US and on UK shores – although reports of results are still mixed. This was soon followed by the launch of Samsung Pay in South Korea in August (clocking $30 million worth of transactions in its first month) and in the US in September. Google’s Android Pay also finally cam online in the US in the same month.

But if mobile was the star of this year, maybe wearables will go stellar in 2016. Alongside Apple Pay came the Apple Watch, which saw the likes of Nationwide and Tesco update their banking apps to include balance check functionalities specifically for the device. Juniper Research estimated in November that the global number of banking apps accessed via smartwatches would reach the 10 million mark in 2017, rising to more than 100 million by 2020. Visa also announced that its cardholders in the US, Switzerland and Brazil will be able to pay contactlessly with Swatch’s new ‘pay-by-the-wrist’ Bellamy watch, when it is launched early next year.

And talk of payments is not complete without a nod to contactless, which continues its meteoric rise. Its adoption in the UK has in no small part been driven by the roll-out on Transport for London, which accounts for around one in seven contactless transactions. The upping of the contactless spend limit to £30 in September also had an effect, with figures from The UK Cards Association showing that the average contactless transaction was £7.35 that month, up by 23p on August. Overall, contactless payments accounted for 8.9 per cent of the total number of card purchases made in the UK in September. And with cards and contactless payments set to be accepted by London’s black cabs from October 2016, that proportion looks to rise further – in the capital at least. But after a slow start, contactless is also catching on in Europe. At the end of last year, there were 223 million contactless cards in issue across the continent, up 65 per cent on 2013, and representing 15 per cent of all payment cards. RBR forecast that compared to 2014, Europe would witness a nine-fold rise in the volume of contactless transactions by 2020, with nearly 700 million contactless cards in circulation in five years’ time.

It’s also been another blistering year for FinTech investment. Accenture data showed that FinTech funding in the Asia-Pacific region alone skyrocketed from $880 million in 2014 to nearly $3.5 billion in the first nine months of 2015. The latest whole-year figures revealed that investment in FinTech ventures worldwide tripled from $4.05 billion in 2013 to $12.2 billion in 2014, with Europe the fastest growing region. Much of this global investment has been concentrated in global FinTech hubs such as Silicon Valley, New York, Singapore, Sydney, Tel Aviv, Berlin, and of course, London. Recent figures gathered by London & Partners show the capital’s FinTech sector has been attracting record levels of VC investment – some $554 million in the first 10 months of this year, already surpassing 2014’s total of $487 million. A separate analysis by property consultancy CBRE also confirmed that Docklands’ Canary Wharf is now home to London’s most concentrated cluster of FinTech startups. The E14 postcode houses 13 of the 140 companies recently set up to develop and provide financial technology in London, with many of these situated at incubator space Level39. The second largest cluster is to be found on the South Bank in SE1, while the third, fourth and fifth largest clusters are within the City’s tech heartland, around Old Street’s Silicon Roundabout.

It’s no surprise that the FinTech scene is booming – the financial sector continued to be obsessed by the potential of nimble startups and disruptive technology this year. Barely a week seemed to go by without the emergence of another startup programme or accelerator space, or an FI announcing a new FinTech fund or innovation centre. 2015 saw multi-national banking group Santander and Japanese internet giant Rakuten both announce FinTech investment funds worth $100 million. Visa Collab Europe also opened its doors, while BNY Mellon unveiled its new EMEA Innovation Centre in London and Accenture built an “interactive” technology space in France. In terms of startup mentorship programmes and competitions, Accenture’s Innovation Labs continued to be inundated with applications, as did the Citi Mobile Challenge, the MasterCard Start Path programme, Startupbootcamp, the UBS Future of Finance Challenge, the SWIFT Innotribe competition, the 3D FinTech Challenge, and the Barclays Accelerator scheme, to name but a few. Internal staff didn’t miss out either, with SunGard hosting a codeathon in Barcelona FC’s Neu Camp stadium for teams of its engineers from across the globe, Singapore’s DBS Bank building hackathons into its talent development programme, and ING running a 24H-CodING hackathon in Bucharest.

One particular technology that got the industry excited this year was blockchain. While blockchain-powered digital currency Bitcoin has been given short shrift by most banks, and indeed some governments, the distributed ledger technology behind it is garnering a lot of attention about its potential. A report issued in November by Greyspark revealed that more than 30 investment banks and exchanges are already experimenting with blockchain and distributed ledger technology, and the firm predicted that usage would only grow further. The FS sector came together on the R3 initiative this year, which has seen dozens of banks join a partnership which will work to apply distributed ledger tech to financial markets. The project will see members collaborate on research, experimentation, design and engineering to help advance enterprise-scale shared ledger technology. Aforementioned Visa Europe Collab also announced in November that it would be partnering with last year’s SWIFT Innotribe winner Epiphyte on a proof of concept, to explore how Bitcoin capabilities and blockchain technology could be used to remove cost and friction from inter-country payment transfers. Meanwhile, Switzerland’s Nexuslab announced it is to host a three-month accelerator programme for European tech startups focusing on blockchain applications next year, while the Bank of England launched a university blockchain challenge, inviting students to submit their ideas about new use cases for distributed ledger technology.

Of course, there were many other areas that continued to be perennial themes in 2015. Issues with legacy systems were brought even further to the forefront, with several digital outages at major UK banks. Cloud was also firmly on the radar of most FIs, with nine in 10 banks now running at least one application in the cloud compared to just over half in 2009, according to Temenos. The massive data hack at JPMorgan – not to mention cyber attacks in other industries, such as the ones at TalkTalk at Carphone Warehouse – also grabbed many headlines and highlighted security vulnerabilities when it comes to protecting customer data en-masse. But with technologies continuing to evolve, the field of biometrics advancing, and more startups threatening to disrupt the FS market, it’s sure to be an exciting 2016.

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