Fintechs, or “Financial Technology” companies have redefined banking through their rapid innovations in digital services. In fact, according to PwC’s 2019 Consumer Digital Banking Survey, 46% of consumers exclusively use online channels for banking. That’s no surprise, though, since fintech services include digital options for checking account balance, updating account information, making payments and even applying for credit. Here are some of the Fintech trends that are already changing banking.
- Rise of digital lending
Instant loan apps and online peer-to-peer lending platforms are on the rise. They’re gaining in popularity due to their ease of use and the speed at which they approve the loans. Consumers can now apply for loans and get them sanctioned from the comfort of their homes. This makes digital lending one of the most popular trends seen with the rise of Fintech companies.
- Popularity of cloud-native solutions
We’re past the stage of cloud computing taking industries by storm. But now, they’re making their presence felt in more direct consumer-facing enterprises as well, with businesses across the world, including the fintech sector, recognising the advantages of shifting their applications to the cloud. Going cloud-native enables banks to save on the money they would otherwise spend on dedicated on-premise hardware and software. The modular, shared approach of the cloud increases efficiency in operations and allows banks to leverage the cloud’s cognitive processing and storage technologies to build deeper connections with their clients.
- The rise of Machine Learning and AI
Artificial Intelligence and Machine Learning are everywhere now. From simple mobile applications to complex predictive analysis, AI’s use is spread across industries, and Fintech is no exception. In fact, according to a report by Markets and Markets, the market size of AI in Fintech has been predicted to grow at a Compound Annual Growth Rate (CAGR) of 40.4% between 2016 and 2022. Services such as AI-powered chatbots for 24/7 customer support, data-driven insights into consumer behaviour, and AI-powered tools to predict issues in the financial landscape indicate a seamless synergy between AI and financial services.
Fintech service providers have managed to successfully leverage data analytics, machine learning and artificial intelligence to provide personalise solutions for individual consumers and businesses. Such solutions, tailored to the needs of individual customers, often help businesses make positive financial decisions.
- Rise of the Blockchain
The concept of the Blockchain is not a new one. It was invented more than a decade ago, with the first of the digital currency, or cryptocurrency, being Bitcoin. However, the technology has only gained popularity in the past few years. Several cryptocurrencies have risen in competition to Bitcoin and the blockchain technology has found numerous uses across industries. Blockchain banking solutions are still a novel concept, but the transparency and security they offer are an undeniable advantage.
- Near-zero use of physical money
A fairly easy trend to anticipate — cashless transactions have become increasingly popular in the past few years. From evolved markets like the US where 75% of consumers use digital wallets to India, where 22% of all payments were made through UPI, the world is rapidly adapting to a digital payments ecosystem. With this has come a decrease in the use of cash as a payment method. With smartphones and the internet becoming increasingly accessible to the public, this trend is only expected to rise.
- Digital-only banks
The rise of digitisation leading to the concept of bank visits diminishing, is another fairly obvious trend. But the fintech sector has taken this a step further, through digital-only banks, or neobanks, which provide banking facilities exclusively online. From signing up for a new account by merely uploading the required documents to processing all transactions digitally, neobanking promises a simple and convenient solution for next-gen customers. And the world is loving it.
- The voice revolution
With IoT adoption on an upward trajectory and home assistants in an increasing number of households, voice-based search is becoming more and more popular. According to Google’s statistics, 20% of all searches in the Google App are now conducted by voice. The banking sector is moving quickly on this trend. An increasing number of banking institutions are adopting voice search to help customers easily access banking services and communicate their requirements, while also providing better encryption.
- Significance of cybersecurity
With digitisation pervading every aspect of our lives, cybercrimes are more prevalent than ever. From fraud and identity theft to money laundering and espionage, threats to privacy and security are rampant in the digital world. The fntech sector needs to pay close attention on this front. EY’s 2019 Global Fintech Adoption Index reports that 71% of Fintech adopters have concerns about security, but a majority of them still prefer digital products. This has naturally led to cybersecurity becoming a top priority, and justifably so.
- Disruption of traditional payroll process
An overwhelming majority of salaried employees struggle from paycheck to paycheck, with 59% of consumers doing this in the US alone. Consequently, serious financial issues result, especially for people who are forced to depend on payday loans or borrow from predatory lenders who charge exorbitant interest rates. However, with some assistance from the fintech sector, several businesses are now moving away from the traditional approaches to payroll, to a more flexible approach, where employees can pick a date to receive their salaries, or tap into their earnings before payday.
- Higher transparency for customers
With traditional banking, customers didn’t have much leverage in negotiations because they didn’t know what the financial institution they were dealing with knew. The transparency offered was quite limited. But fintech strtups are leveraging technologies like AI and the Blockchain to increase transparency for consumers. The Blockchain promises complete transparency in its transactions due to its inherent decentralised nature. Companies are also leveraging AI chatbots to keep customers informed and make transactions more transparent.
With exceedingly efficient, and exciting rounds of evolution in financial technology, fintech companies are being able to deliver on superior innovations to serve customers. Blockchain technology, cloud computing, AI and Machine Learning seem to be prevalent in most innovations undertaken. With all the disruptive changes they’ve brought to the world of financial services, fintech companies promise to make an even bigger impact this coming decade.