Fintech Development Trends are ever-changing and to keep yourself updated with these essentials. One of the most renowned words – Fintech, is a blend of “Finance” and “Technology.” Here are Fintech development trends that you must know about.
Fintech defines any organization that uses technology to either automate or improve the financial process along with any other services related to it.
Fintech shows the acceptance of people for on-demand finance instead of the traditional slow-paced methods involved with financial management and transactions.
With the blooming of Fintech throughout the world and it’s better and secure ways, financial and banking services have become faster and more incredible than it was before.
From the preceding several years, there have been many new implementations and innovations on the way Financial Technology must work.
It has brought a new Finvolution and by the end of 2020, there will be different approaches and trends of fintech that will blow every person’s mind away.
FinTech Development Trends And Their Effects
You will want to know about these trends and how they are about to affect the way you currently deal with finance. All the latest trends of Fintech will be beneficial for you, no matter how you are involved with it.
A blockchain in FinTech offers a more comprehensive, accessible, and secured network for businesses, reduced costs, and efficient service/processes.
Over the years, security and transparency have also increased because Blockchain is a decentralized system. When finance is involved with blockchain, any organization can assure security while saving the cost.
Apart from that, it can also increase the speed of transactional processes amidst banks because of their protected and dedicated servers.
Blockchain will be a great approach for financial institutions as it will provide data integrity and allow full transaction history for the customers as well.
Read Also: Blockchain – A Platform for IoT Solutions
2. AI Adoption
Just like all the other industries, fintech has also concluded AI or Artificial Intelligence in its working.
AI when introduced or adopted by the financial industry can eliminate the cost of operating from banks, credit unions, loans association, and many other financial units.
The AI-based systems when implanted helps in the collection and analysis of data so that an investor can make a better decision on their investment.
Loan providers also use the AI system so that they can offer their services with less to no risk in returns. The AI used by creditors evaluates the applicant’s financial health.
3. Regulatory Technologies
RegTech manages the regulatory processes of the financial industry using technologies such as Big Data, Artificial Intelligence, Machine Learning, Cloud Computing, etc.
As the businesses spend a higher amount of money, they need to acquire the reporting, monitoring, along with compliance that is regularly upgraded by the government.
With the help of RegTech, all the financial institutions can secure themselves from the constant updates in the system because of the changes made in the regulations and laws by the government.
Some of the RegTech offerings that you can easily find anywhere are:
- KYC (Know Your Customer) Solutions
- Risk Management Solutions
- Data Management Solutions
- AML (Anti-Money Laundering) Solutions
- Trade Monitoring Solutions
- Records Management Solutions
- Tax Management Solutions
- Reporting Solutions
- Quantitative Analysis Solutions
- Regulatory Change Management Solutions
Read Also: Challenges of Adopting AI in Businesses
4. New Payment Methods
When you will look back just one or two decades prior to today, you will find that the payment and transactional methods were as limited as swiping a credit card or signing a check.
Recently, there is a sudden growth in the ways to process a transaction and make a payment which is also the trendiest in the FinTech industry.
These advanced payment methods have helped the users in easy transfer of funds from an account to another with just a few touch of their fingers.
Having accessibility to the mobile wallet or other banking or payment applications has become more convenient for all users. Moreover, by the end of 2020, almost every individual will have access to the contactless cards derived by various banks.
5. Online Banks
Online Banks or Digital Banks are the new initiatives towards Financial Technologies. Let’s think about banks that are only virtually available and do not have physical existence yet the customers get global payment methods.
Also, there are numerous benefits from the virtual banks as neither anyone will have to deal with the different temper of bank teller nor have to wait in lines for completing a transaction.
On the other hand, already existing banks can extend their reach to the area where they haven’t constructed a building yet and save all the hectic and costs effortlessly. However, customers must proceed carefully before opting for any virtual bank.
6. Big Data and FinTech
FinTech Companies use structured as well as unstructured data which is collectively known as Big Data to divide customers, identify frauds to manage any risk factor with ease. These companies evaluate the big data and add certain algorithms to them to make necessary decisions.
By the utilization of Big Data in Fintech, one can easily predict the fraudsters that any human eye can’t.
Analysis of big data assists in understanding the behavior and usual buying habits of the customers and any fintech corporation can detect suspicious behavior of the users that tends to be dangerous for the entire operation of their business.
7. Identification From Biometric
With the continuous growth of mobile banking, one of the major concerns that customers face is the security of their data as well as money. That’s when the Biometric
Identification comes in action for any Fintech Company as it assures the security of the transactions from different customer authentication methods while preventing any kind of fraud.
If you are using any payment application from your phone then you knew that without providing either your fingerprint or password transaction cannot be processed.
Similarly, there will be more such methods in the upcoming years where almost everyone will be using biometric payment methods.
8. RPA or Robotic Process Automation
The addition of RPA in a FinTech institution is quickly becoming the main center of attention. It not only improves the timely value but is also reducing human errors while enhancing the efficiency and accuracy of the transaction, record maintaining, performing queries, or calculations.
Soon every bank or financial unit will indulge themselves in it. So be ready for the most required and amazing transformation to come sooner than later with more opportunities for a better business to financial institutions.
9. Fintech Cyber Security and Stability
Customers were really worried about the protection of their sensitive personal information when it comes to FinTech as technologies have never been reliable and bring a lot of threats like money laundering or identity thefts.
Majorly cybercriminals focus on small banking firms as they might not have invested in the security which means that by the end of 2020 FinTech organizations will be taught about cyberattacks and its survival.
There will be more security and stability on the customer’s personal information and funds.
10. Converge on Unserved
Based on the reports by the World Bank, around 1.7 billion people around the world have never been a part of the financial system. Many have never had a bank account of their own because 26% of people find it expensive, 30% were never influenced by the bank need, and the rest 46% do not have money.
The main focus of financial leaders is in this unserved area. Instead of focusing on the already established area, fintech startups are trying to focus on the new area and finding creative ways to reach more customers.
11. Low Use of Physical Money
Another important trend that indicates the more use of fintech is fall in the use of physical money.
Starting from 2016, around the world either people started using payment wallets or net banking or the merchants have declined any cash payment.
In 2020, the percentage of low use of cash has accelerated and the contactless payment has become one of the greatest trends. Also, with the ongoing pandemic and social distancing practices, it has become common for the people to use cards and payment wallets for purchasing as they don’t want to come in contact with others.
12. Inclusion of Voice Search
According to stats, around 50% of the world population will use voice search in 2020. It is enough reason that fintech will transform the banking and financial sector with voice search.
The voice search in the fintech industry will offer methods to encrypt and support communication with voice assistants and will also guide customers to easily access banking services. It also reduces the need for physical customer executives to help customers with their problems and will help financial institutions to save up to $3 billion dollars3 billion dollars.
The innovations for payment such as online banking and mobile wallets help in moving past the borders financially while allowing users to shop or make payments throughout the globe efficiently.
What are the Insights on Fintech Trends?
Customers have admired the complete idea of all-time access to finance. It can be said that Fintech or financial technology is a hot topic nowadays.
Additionally, the traditional institutions of finance are enhancing their investment in Fintech to provide better and efficient services.
FinTech is on its way to bring transformative changes with the flexibility and agility they offer. So let’s get to some of the major insights on FinTech Trends.
1. Growing Blockchain benefits
With the elimination of central intermediaries for the fund transfers, Blockchain enables peer-to-peer or decentralized transactions.
These transactions are not only limited to funds but also includes the transfer of vehicles and home as well. It is removing all those steps to authentications on transfer before the settlement which can take up to 2-3 days.
The Blockchain method helps the customers in making transactions faster and the settlement to take place within a few seconds.
2. Technology Implementation
Excitement can be felt among both customers and financial institutions with Fintech and other upcoming innovative technologies. But, with innovation comes numerous transformations to previous architecture and the implementation challenges which will eventually get removed.
A benefit that financial institutions will achieve with the use of financial technology is the ability to save billions of dollars. Apart from that, the tech implementation of finance helps in fraud reduction.
FinTech is being used by the banking industry with Business to Business (B2B) and Business to Client (B2C) financial transactions as well. Because of the B2B, businesses are now able to easily acquire loans and other financial services.
With B2C comes the ability to pay anywhere anytime to the businesses. These payments can be made via apps like Google Pay, PayPal, Apple Pay, and many others.
3. Financial Firms Indulging in Fintech
Those days are gone, where customers used to visit banks for their needs. Whether one wants to open a bank account, transfer money, or want to stop a check payment — customers can do it either while being in their comfort zone.
Financial firms like banks are extremely indulging with fintech to improve the overall banking process. Some of the key changes that FinTech has brought are:
- Innovation & Entrepreneurship
- Opportunities for Financial Inclusion
- Increase in NBFCs
- Easier KYC process
- Better Wealth Management
- New Banking Models
- Improve in Loan Approval & Distribution
- Secure Transactions
4. Rising Interest of Regulators
Several regulators are slowly taking leads and showing interest in the Financial Technologies to foster better innovation.
The regulators are testing scenarios to identify the ways in which technology can be intensified. It will also help them to solve problems in transfers.
The FinTech Investment has been increased in the past few years by 500%. Along with that, there has been a paradigm shift in the scale and scope of financial services.
There are factors that can be improved by the regulators. But, they are waiting for the players in the Fintech industry to figure it out. Besides, they are trying to figure out the way in which innovation can become more risk-free.
Many are in the observer pace as there’s no guidance in this industry yet.
5. Fintech: A Marathon
Investment in FinTech is expected to reach a whole new level by 2022, i.e., from $127.66 billion to $309.95 billion. This growth is going to give an annual hike of 24.8%. There has been an incredible amount of hike in this industry.
A large number of people have realized that Fintech is not some short term race. It will not come and go within a matter of time. FinTech is a marathon where they have to run for the long-term to achieve their goals. Additionally, there’s nothing stopping this industry from the tremendous growth in the upcoming years.
Creative FinTech Trends Are Offering Complete Business Solutions
With huge banks and card organizations out of the market, Fintechs are offering help to organizations with installments and consistency. Here are a few of the zones in which fintech companies are offering assistance for startups and other businesses, like:
- Business Checking Accounts
- Online Banking
- Business Invoicing
- Escrow services
- Money Transfer
- Taxation Transmittal
- Shopping Cart Integration
- Patient/consumer retail
- Full Cash Management services
- Track N Trace
- Inventory Management
- 360 closed-loop risk/compliance management
The entire FinTech industry is continuously growing. But, with the changes comes challenges from internet banking. To keep customers and companies safe, finding the right solution for them is important.
With the trends, this brilliant combination of Finance and Technology will dominate the world for a long time. It will make the transactions easier, give high-end security, and settlement faster.
FinTech will also offer efficient loan approval, instant KYC, and personalized offers to the customers.
With so many advantages and ongoing trends, one needs to always ensure to protect the customer’s data & reduce the chances of fraud.
The innovations for payment such as online banking and mobile wallets help in moving past the borders financially. It also allows users to shop or make payments throughout the globe efficiently.
Image Credit: bongkarn; Pexels