The rise of Fintech disruption
Fintech, coming from the combination of the words Finance and Technology, represents the collision of two worlds, marking the evolution of the use of technology in financial services.
A financial services company is a business or company which manages, invests, exchanges, or holds money on behalf of clients. Technology companies enable our communication, facilitate our social interaction, provide entertainment, help us get around and shape our buying habits. In Fintech, financial services and technology are locked in a firm embrace, and with this union we can expect both disruption and synergies.
With the advances of financial technology (fintech), the landscape of financial services is being reshaped globally. Financial technology companies or Fintech companies are driving innovation in many ways consumer financial services are delivered. The past decade has already seen a rapid technology-driven innovation in consumer financial services such as payments, new methods of expenditure, online borrowings and loans if we want to buy a home, car, education or general spending, decentralized finance,digital investments, retirement plannings and also insurance services.
With the after effects of the COVID19 pandemic, a significant pressure was enforced on the financial sector. Solving the challenges has fostered technological upgrading and improvement in the world in an unpredictable scope. However for many technology companies, expansion into financial services has offered not only the prospect of new revenue streams but a valuable window into a consumer’s interests and behaviors.
Therefore it is important to have an idea and brace ourselves for more radical transformations currently in the works in the financial industry. Let’s look at the 3 Fintech Trends and predictions according to experts.
The looming Digital-only banking concept
A majority of consumers were concerned about the digitization of financial institutions because technology is not known to be 100% reliable. But after the pandemic digital payments had grabbed all the attention and digital banking became the new normal in the season. The world was quick to notice when banks existed in the virtual world and offered services like P2P transfer, contactless Mastercard with free transaction fees, and global payments. More and more businesses are following the lead and offering interesting online services.
The biggest convenience in digital banking is that users can accumulate and manage all of their account data, operations, transactions, expenses in one single platform. Another advantage is that an application helps them monitor costs and keep to a budget, which contributes to increased savings.
The biggest benefit for financial companies is that by gaining access to this data, they can conduct a deeper analysis of the financial habits and behavior and provide users with more customized products and personalized offers that best meet their needs. Additionally, the open banking concept brings significant profitability, in particular, increasing customer engagement and retention.
Artificial Intelligence AI: The Gold for financial institutions
The hype surrounding artificial intelligence (AI) applications in fintech is intense, but to date few standalone use cases have been scaled and monetized. Rather, more advanced modeling techniques, such as machine learning, supplementing traditional analytics are being seen in fintech. While AI holds great potential, it is likely to be more of an evolution than a great leap forward into new data sources and methods.
Banks presently are going further by finetuning their AI solution strategies. This will drive the wider adoption of AI in the sector further in the future. In line with this fact, AI is projected to reduce bank operating costs by 22% around 2030. The path to this outlook is not straightforward, however. However, just like the rest of global employers, banks are staring at a short supply of professionals skilled in everything AI.
Fintech Blockchain and Cryptocurrency
Blockchain has become significant in fintech as it speeds up the transactions between banks through secure and dedicated servers. Blockchain can monitor transactions in a fraction of the time.
By using this technology businesses can build smart contracts based on any type of business or transaction. With its speed, global reach and with its low processing fees, blockchain remains on the path of totally changing the face of financial transactions worldwide.
Sector wise, surveys have found that the highest distribution of blockchain market value, the banking industry rules with a 29.7% share, followed by process manufacturing (11.4%), discrete manufacturing (10.9%), and professional services (6.6%) (According to the International Data Corporation, 2020). Analysis also suggests that 2025 will be the tipping point when blockchain technologies will be adopted at scale across economies worldwide. In 2020, more developments are anticipated to go into the cryptocurrency blockchain to make it better suited for fintech. Most of the research is expected to be conducted in this sector to fully implement it to the financial industry on a larger scale.