There’s no doubt that the Fintech software development industry has attracted a lot of attention from consumers and investors alike. In Finance, Fintech is synonymous with convenience, innovation, and accessibility. With the enormous solutions that Fintech promises to offer, it’s no wonder venture capitalists are willing to put their money in Fintech startups.
According to recent data by KPMG, global investment in Fintech stood at $37.9 billion in the first quarter of 2019. But these figures are not surprising. The industry has been growing steadily since 2017.
Whether you’re a key player in the industry, an enthusiast, or are just wondering how Fintech can benefit you, here are the top trends in Fintech software development that you should check out:
Decentralized Systems & Blockchain
People are now moving from sharing and storing their money and valuable personal data from centralized systems (handled by some powerful institutions) to decentralized systems. Blockchain tech is the most popular decentralized system today, and it has given rise to cryptocurrency.
We’ve already seen that decentralized software applications, such as BitTorrent, have become widely popular as a means of file sharing in the software development world. When blockchain becomes a reality, especially in the financial sector, institutions will save costs, improve transparency, and ensure security (by cryptocurrency). Currently, there are about 3,400 blockchain/ cryptocurrency startups listed on AngelList.
Regtech, short for Regulatory technology, has garnered significant buzz in recent years and is set to grow in 2020. Regulation is everywhere, and businesses spend tons of money on it. As the financial industry expands to a global scale, there’s a growing need for software that can help in complying with government laws and regulations, and as a result, will reduce regulatory overheads. By leveraging RegTech, banks and other financial institutions can protect themselves from constant systems updates in a bid to comply with changing laws.
Broader AI Adoption
Fintech companies are continuously molding themselves to the ever-changing needs of their market. One way to keep up with these changes is through artificial intelligence. AI, by data and predictive analysis, is helping businesses to improve their marketing and customer handling processes. Now, Fintech companies using modern technologies such as AI, Big Data, and Predictive Intelligence, are making their services more personalized for their customers. And, they are offering services that typically took days in a matter of hours.
These innovative technologies also bring other benefits apart from guiding customers in picking the right products or services. They help to protect clients’ personal details better and secure Fintech companies’ financial assets.
Data plays a major role in Fintech. And now, data sharing with the help of APIs and AI will give rise to open banking. Open banking is a type of Fintech that allows the control of consumers’ banking/ financial information/ account by third-party applications. It will enable data and accounts networking across institutions. Many industry players predict that open banking will be an innovation that will reshape the banking sector as we know it.
A cashless transaction refers to any online or automatic operation between two individuals or businesses. A digital transaction is a type of cashless transaction that is executed and completed with no paper. Digital transactions are not only faster than transacting by traditional means but also more accurate and convenient for both parties involved.
Thousands, if not millions of digital transactions, are happening every day, and the trend will only soar in 2020. Examples of these transactions include buying products from an eCommerce store, buying concert tickets via apps, signing contracts online, etc.
Highly innovative Fintech companies are set to introduce online-only banks. In this case, a bank exists only virtually and does not have a physical branch/ premise. So, instead of bearing with long lines and excruciating paperwork in a traditional bank, users can manage all their financial needs on their computers or smartphones.
Visits to banks are forecast to drop by 36% by 2022 as mobile transactions increase by 121% in the same period. Revolut, Monese, Moven, HelloBank, and FirstDirect are some of the digital banks currently in existence and have caused quite a ripple in the market. And they are growing in numbers.
Digital-only banks are set to increase competition in the banking sector as they attract younger, internet-savvy customers looking for simpler ways to manage their finances. In 2018, Statista estimated that about 61% of Americans used digital banking. That figure will increase to 65.3% in 2022. Paying bills, resetting pins, reviewing balance, etc., all of this will be done in just a click.
As mobile banking grows, the concern for security becomes more prominent. Biometric identification technology ensures secure transactions by offering a unique customer authentication method, thus preventing fraud.
Goode Intelligence predicts that by 2023, there will be more than 579 million biometric payment cards in use globally. Additionally, more than 2.6 billion customers will be using biometric payments by 2023. Contactless payments, along with biometric tech, will become mainstream and replace traditional chip and PIN transaction system.
Rise of InsurTech
As the insurance sector demands improved customer service, InsurTech will become more popular. InsurTech improves customer experience, brings rise to new business models, and boosts the efficiency of operations. By the evaluation of people’s habits and other data, companies can make tailor-made insurance offers to their clients. With InsurTech, consumers can expect simplicity, affordability, and easy access to services. Because of these benefits, traditional insurers will be more open to forming partnerships with insurance startups.
Robotic Process Automation (RPA)
RPA implementation in banking will help automate everyday tasks such as transaction and record maintaining, making calculations, and performing queries. Robotics not only automate tasks but also increase accuracy. And if RPA doesn’t automate a process completely, it frees workers and allows them to focus on better experiences to customers.
In conclusion, these Fintech trends are set to revolutionize the finance and banking industry in the next couple of years. As customers demand better security, more convenient transactions, and personalized offers, traditional banking systems will either have to collaborate with Fintech companies or risk becoming obsolete.