Top fintech trends changing the finance world in 2022 and beyond
Technology has always been a crucial part of the financial world, whether it’s the launch of credit cards back in the 1950s or introduction of ATMs, online trading software, personal financing apps, online transactions, etc.
Now the time has come when fintech moves past the basic amenities of online payments and takes everything under process ranging from credit risks to running hedge funds with the help of machine learning algorithms, data science, and blockchain.
Today, if you pull out any statistics on the growth of fintech, you will find 2020 as the pinnacle year of the finance industry. It’s the peak time to embrace Fintech space as its net worth is expected to cross USD 305.7 billion by 2023.
With several market players investing more in fintech to strengthen their services, delivery, and IT, they are introducing new trends in the market. These new trends are helping financial industries to become more customer-centric and get more things done in less time using disruptive technologies.
Let’s take a brief look at what these disruptive technologies are and which trends they are bringing in 2020.
1. Big data and AI to deliver hyper-personalization
The reason why online streaming services know you more than your friends and family is that it uses artificial intelligence algorithms to make sense of your data.
With the invention of big data, companies can easily manage and process massive amounts of data. Fintech companies are no exception. They are leveraging big data to understand their customers based on their online behavior, browsing history, likes and dislikes, app usage, credit repayment history, personal preferences, and more.
Big data combined with Artificial Intelligence (AI) enhances user experience and helps financial industries to deliver better services via personalization. It is the AI that helps industries make proper sense of what the data is telling and how to put it to good use for customers. The days are near when big data and AI help financial industries offer one-on-one services to users and boost their overall banking experience.
2. Blockchain paving the way for smarter and safer operation
Financial institutions are always in a lookout for higher security and safety measures. From the day Blockchain came into existence, their security concerns are put to rest. Blockchain offers everything the fintech industry could ask for in terms of optimum security and customers’ data safety.
Blockchain is basically digital information (called “block”) stored in a public database (called “chain”). For example, if you purchased from Amazon, your purchase information like the name is “Block” and to store it with other public information is “chain”. The security takes place when Amazon stores your purchase details without any identification information. Instead, it uses a unique signature like a username. This way your true identity remains hidden from hackers.
Frauds and stealing identities have always been plaguing concerns for the fintech industry as they cause the loss of billions of dollars to companies each year. By putting Blockchain on guard for data, companies and customers can enjoy smarter and safer online transactions. Moreover, customers’ trust will increase for the brands implementing blockchain.
3. Chatbots increases customer-interaction
Chatbots are AI-powered bots that conduct chat with customers and answer their common queries. Or guide them to the end solution. They get access to the internet and are designed to fetch specific information based on the question asked. You must have interacted with a chatbot a hundred times by now. For example, you land on a new website and a pop-up immediately offers help or asks questions. Many Facebook messengers include chatbots from brands you recently interacted with.
Chatbots are quick to respond and have the potential to take customers down the sales funnel. Since finance is an industry where customers have tons of questions before they make decisions, chatbots are quick and efficient to resolve their queries in minutes. They can even connect the potential lead with a real human on a moment’s notice.
Chatbots also save time for executives who answer multiple times for the same questions coming from different customers.
Looking at the ability to close more deals because of quick answers and more interactions, chatbot usage will soar in the financial industry.
4. Robotic process automation (RPA) saves time from repetitive tasks
Reducing steps between customers and final payment are extremely important for financial industries. The fewer hassles there are, the more consumers will be willing to sign the deal. That’s why it’s necessary to adopt automation to take care of repetitive tasks and reach the final step quickly before the consumer changes their mind.
Furthermore, today’s automation is not limited to performing tasks only. They observe what everybody is doing and suggest how to automate certain tasks or entire processes to speed the things up. It includes risk assessment, data analysis, reporting, and security checks.
5. Innovation in payment methods
Online payments trend is prevailing like never before. Anything consumers want to buy or sell, they first think of “whether it is possible to make it online”. The time has come when the financial industry goes beyond online payments and figures out more ways to simplify the procedure.
For example, imagine a future when you enter the shopping complex, purchase items, put them in a basket, and walk out of the door without billing. When you reach your vehicle, you receive a message saying the payment is done.
Technologies like smart sensors and IoT devices are making it possible. Big brands like Amazon Go and Alibaba have already integrated this system. In upcoming years, you will see a stage where you don’t have to worry about making payments. It will turn all automatic.
6. Smart contracts with smart signatures
Smart contracts are contracts taking place online in a safe and secure environment. Let’s say consumers apply for the loan and submit documents online. An agent verifies all documents and now the final sign from the customer required. Two parties involved, the loan taker and the loan giver, sign the contract online using digital signatures. And the process is complete within hours.
Talking about security, these contracts encrypt into cryptographic code, making the contract extremely robust for security purposes.
7. Digital-only banking world
Digital-only banks are growing in numbers from the moment digital payments took place online. These banks majorly rely on virtual global payments and person-to-person transfers without charging any transaction fees. Some of the banks give access to buy and exchange Bitcoin, Ethereum, and other cryptocurrencies. Seeing the growing usage of online payments, data predicts that the personal visit to physical bank branches will be reduced by 36% in 2022.
The Fintech industry is happy to take everything online and adopt advanced technology, but cybersecurity concerns are hindering their growth. As the majority of data is available online, the percentage of cybercrimes is increasing day by day. There were 3 million identity thefts in 2018 alone. Hence, the protection of data at each step of technology innovation is necessary, emphasizing the investment in cybersecurity solutions to prevent online thefts and cyber attacks.
9. Tokenization of assets
Tokenization is the process of converting rights to an asset into a digital token. Suppose there is a $200,000 land available for sale. Tokenization transforms this land into 2,00,000 tokens. When you buy 10,000, you are buying 5% ownership of the asset. Buy all 2,00,000 tokens and the land is yours. Of course, you are not a legal owner but the blockchain is a public ledger ensuring nobody erases your ownership even if it is not registered under government-run registry.
Not only tokenization changes the way we invest, but it also allows small buyers to be a part of assets with small investments. Cheaper transactions and increased liquidity are some of the great benefits of tokenization.
Crowdfunding is a quick way to raise small investments for startups and businesses. Nowadays, everybody has a new idea taking the comfort of people to another level in any way. Previously, startups were struggling to generate enough money to make their idea come reality. But now, crowdfunding made it a piece of cake only if you have a good enough idea.
One of the top examples of crowdfunding success is Oculus V.R., an American virtual reality software, and hardware company crowdfunded by Kickstarter in 2012. The company successfully raised ten times its real goal after which Facebook acquired it in 2014.
11. Video-based customer identification process
India is the first country to initiate a video-based customer identification process as an alternative to verify customers’ identity without the need for in-person visits to physical branches. In India, the process is called video-based KYC. It reduces the number of physical visits and increases customer base as it allows customers to perform all actions on finger-tips from the comfort of their home.
So, these are the top financial technology trends you must check out or if possible adopt them in 2020 itself. If you intend to launch a fintech app, you must consider all these trends and ask your developers how many of them you could include in your app to increase personalized experience and revenue as well.
If you have more queries on how to step in the fintech world, contact here and allow us to guide you further in the right direction.