Many are predicting that 2016 will be the year of digital and mobile initiatives in the financial world. To keep this trend going, fintech will have to take precedence over legacy approaches to doing business.

Exciting trends are emerging in the future of fintech, showing promise throughout 2016 and beyond. According to a report by the International Trade Administration, an office within the U.S. Department of Commerce, fintech adoption rates have grown exponentially in recent years and there’s no sign of a slow down anytime soon. The study showed that technological advances are touching every part of the traditional financial industry with payment services at 17.6 percent of the fintech market, savings and investments taking up 16.7 percent and insurance at 7.7 percent of the market share.

Much of this push is from consumers who are increasingly utilizing mobile devices and other digital technology to research products and make purchases. Although there are several change-driving factors that seem to be fairly universal over the next year, the path toward technological innovation will take some unique turns within each area of financial services.

Focus on Open APIs

Application program interfaces are the foundation of evolution-oriented digital solutions. An open API makes it possible for a single application to be developed and adapted into exactly what individual users need, creating customizable programs and systems that can grow with the company without spending resources on in-house R&D. This concept is especially important in financial services, with newcomers and established players alike constantly looking to provide low-cost, high-impact solutions for an increasingly demanding — yet but budget-savvy — consumer base.

Wearables

The wearables market is surging, and it’s not just disrupting the healthcare field. Wearable fintech, such as smartwatches, are gaining popularity due, in large part, to technological advances that have made it possible to conduct real financial business on these tiny devices. Consumers are gaining the ability to make payments, transfer money and even manage their investments all from their wrists.

Over the past couple of years, however, there have been concerns regarding the security and privacy of the data that’s available through these devices, which are easily misplaced and have become a valuable target for thieves. Interestingly enough, the very nature of wearables has them poised to resolve this issue on their own by using biometric markers such as voice and facial recognition, fingerprints, heart rates and other highly-personal, unfalsifiable verification measures.

Payment Services

There is a transition underway from a cash economy to one based in digital funds. Mobile wallet applications from PayPal, Apple, Android and Samsung will be standard features on future smartphones, and merchants have been updating their point-of-sale systems to accept the expanding number of mobile purchasing options, such as proximity payment technology.

Changes in payment services are also being driven by an increase in the dollar amount of digital transactions. Since their inception, mobile and other digital payment options have generally been used for small purchases, often $20 or less. Within the last year, however, these alternatives have become more mainstream, with transactions ranging from $20 to $100 representing nearly half of all mobile payment transactions. What’s more, experts are predicting this number to grow to 64 percent by 2018.

Banking and Investments

Banks and investment firms are often some of the last to adopt new opportunities. Part of the reason is that many of these institutions have been around for decades and what they’re doing has been working. The other part is the outdated technology that runs this area of the industry. Sending money between entities can take days as the numbers have to be checked and double-checked numerous times throughout the journey. There’s little transparency, so senders and receivers can never be exactly sure where the funds are. In addition, there are often hefty transfer fees involved, especially in overseas transactions.

Blockchain, the record-keeping technology behind Bitcoin, has simplified the process of transferring and tracking digital funds. The ledgers of all involved parties are open, albeit anonymized and not revealed to either the sender or receiver, so there’s no need to keep running checks to make sure the funds are there. This innovation has cut the time from initiation to clearance significantly, with most transactions completing instantaneously. In 2016, banks and investment companies are expected to start embracing this technology more, allowing them to serve their customers better and moving banking processes into the fintech future.

Insurance Services

Insurance companies are among some of consumers’ least favorite organizations. Their products are necessary, but many are unhappy with the value of the services provided as compared to the costs, especially when it comes to mobile and digital offerings. “Insurtech” newcomers are filling these satisfaction gaps with more precise risk analysis, highly customized products and the ability to compare prices and services from a number of providers on a single interface. Startup insurance companies such as Lemonade are even experimenting with crowd-sourced coverage.

Many are predicting that 2016 will be the year of digital and mobile initiatives in the financial world. To keep this trend going, fintech will have to take precedence over legacy approaches to doing business. Companies must be able to create a seamless customer experiences across every channel and simplify their purchase paths to make it as easy as possible for customers to purchase, regardless of how they’re interacting with the organization.