The FinTech industry is on a rise and a part of our daily lives – we experience many of these FinTech transformations on the daily basis like when we withdraw money from an ATM, use virtual cards, transfer money through mobile payment, make payments via digital wallets, and many more.
When Covid-19 took the world by storm, the FinTech sector saw a huge surge in growth business quickly adapted to become contactless.
With a new urgent demand to be contactless, make customer experience seamless and retain users, all businesses have had to rapidly adopt some form of FinTech into their business development strategy.
When building a FinTech app you need to focus on matching your business objectives and the problem you are trying to solve with the right technology stack.
FinTech brands rely on certain programming languages, frameworks and databases in the development of their products or services.
- Ruby on Rails
Although these technological trends are not unheard of or particularly new in the market – they are certainly some among the significant trends that apply to FinTech software development.
According to a report by Business Insider Intelligence, around 48% of banking representatives think that Blockchain technology will have the biggest impacts on the banking sector in 2021 and beyond.
In blockchain, once data is recorded in the system, it becomes very difficult to modulate and hence remains protected. Blockchain technology is not just cutting-edge technology but also a new philosophy of decentralized finance which focuses on minimizing centralized procedure.
2. Artificial Intelligence & Machine Learning
AI has already become popular for having the most efficient client service software using some smart systems like chatbots and various businesses.
In the FinTech Sector AI can be used to tackle cyber crimes by identifying financial frauds and threats.
Furthermore, AI and ML help banking institutions record all interactions with their customers and use that to create a more seamless and personalised experience for their customers.
3. Robotic process automation (RPA)
Robotic process automation can be defined as the process automation technology which utilizes software robots or digital workers to automate the tasks which are usually performed by humans.
Financial institutions can adopt RPA digital workers to automate several back-end office processes like security checks, customer onboarding, account maintenance, credit card processing and so on.
One major benefit of RPA is that the digital workers can get tasks done more efficiently and quickly thus allowing financial institutions to focus on major areas like customer service.
4. Digital-Only Banks
Digital-only banks are those banks which provide various virtual banking services like Peer to Peer transfers, international remittance, contactless MasterCard etc.
Visits to banks are going to drop 36% from 2017 to 2022 due to the rise of digital-only banks as Digital-only banks are extremely beneficial. They save customers time as the customer does not need to visit the bank physically, carry out tedious paperwork and waste no time standing in queues to see an agent.
5. Biometric Security Systems
Covid-19 has changed several aspects of life – especially how we interact with the world, it’s now contactless.
There are now several contactless payments methods (tap mode on credit/debit cards, QR codes, UPI payments etc). One of the major challenges that has risen in this financial revolution is cybercrimes.
FinTech businesses have to make security their top priority as they have data that can compromise both their business and their users trust if there is a breach of security.
Biometric security systems have emerged as a reliable and foolproof measure that takes security to the next level.
6. Neobanking 2.0
Neobanks are digital banking services without any branches, rather than being physically present in a physical location – they are completely online. They provide a range of different FinTech services all under one umbrella, making them quite popular among newer generations.
Neobanks are completely digital and data-driven decisions drive the decision-making process of a neobank.
As they use the latest AI and ML technologies to build their apps, it becomes easy to collect and analyse data on how customers behave.
A huge benefit or traction of Neobanking is – the customer has to pay a very small customer fee, as the customer fees are slashed by the fact the service provider does not have to set up a physical location.
7. Open Banking
Open banking is a revolutionizing technology that brings FinTech and banks together, permitting data networking across institutions. Open banking is reported to have generated $7.29 billion in 2018 and is expected to reach $43.15 billion by 2026.
Directly related to PSD2 (Second Payment Services Directive), it forces banks to release their data in a secure, standardized form for information to be shared more easily across a network of authorized organizations online.
8. Regulatory Technology (Reg-Tech)
It is the management of the regulatory process in the financial industry via technology. The major functions of Reg-Tech involve reporting, monitoring and compliance. Reg-Tech equips companies to use advanced software that simplify compliance processes with existing regulations and laws.
As FinTech has grown, there has been an increase in money laundering cases, fraudulent activities, cyber hacks and data breaches.
Reg-Tech with the help of Big Data and Machine Learning technology can offer crucial data on money laundering activities thus reducing the risk associated with the company’s compliance department.
Voice technology powered devices like Alexa and Google Home can do almost anything for you – from playing your favourite song to searching for any information for you.
Voice assistants can be used as support agents – VA’s can help by providing basic data on the user account or card balance, replying to FAQ’s, setting up recurring payments, categorizing calls and directing customers to the right places.
Furthermore, the customer’s voice can be used as biometric data to authorize payments, which is also known as so-called voice payments.
10. Acceleration In Financial Inclusion
Almost 1.7 billion people in the world are unbanked and don’t have access to the banking facilities.
With high mobile user penetration, FinTech startups can dive into the opportunity to innovate FinTech solutions that will improve financial inclusion.
The financial services industry is rapidly growing. The trends we have explored are just a few that are gaining momentum and popularity. The FinTech sector is evolving faster and faster with new cutting edge technologies and innovative business models to increase global reach to financial services.