From the use of ATMs and credit cards in the 1950s to the huge adoption of digital banking and the recent use of cryptocurrencies, the time has seen a speedy evolution in the way we interact with financial institutions, especially in the last decade. Pandemic has proved the ice on the cake to accelerate digital adoption globally. With consumers locked down in their homes and adopting online shopping on a large scale, contactless payments became a new norm of the time. It would not be wrong to say that the pandemic has altered the way we navigate our finances.
Experts are also forecasting that maybe cash is soon going to be a thing of the past. As the cash system is predicted to be ended soon, FinTech is slowly making its way into the market. The Global Fintech Market is forecasted to increase at a CAGR of around 20% in the next four years. According to Globe Newswire, the market value of FinTech is anticipated to grow by around $305 billion by 2025. We will check our transaction through kyt verification.
What Actually is FinTech – An Overview
A lot of industry experts also highlighted the fact that FinTech has the capacity to manage finance more easily. Financial technology (FinTech) reflects the process of integrating technology into financial services. It is used to boost the use and delivery of financial services to consumers. It is a fast-growing technology that deploys technology to better financial dealings. FinTech is a huge industry that delivers both businesses and customers in a lot of ways. Fintech serves a lot of industries ranging from insurance to mobile banking to crypto and investment applications.
Evolution of FinTech
Just because businesses are adopting it now does mean it is a brand new concept. Although the phrase is used more these days, the idea dates decades back. Fintech recently has modified from just being linked with scrappy startups to becoming a significant aspect of legacy financial institutions.
Pandemic has given a major push to make Fintech as popular as it is today.
Top 5 Trends in Fintech
- Mobile Banking – Cashless Transactions
The fintech industry hugely incorporates a big portion of mobile banking. Customers now seek to access banking services on their mobile phones. With the surge in digital-first banks, almost all the banks and financial institutions are headed towards digital banking. The pandemic-stricken economy has pushed cashless transactions to a higher level, delivering additional opportunities for digital-wallet providers. The report from ACI Worldwide, real-time transactions have increased upto 41% over the last year. Automated transactions not only assist businesses to enhance transaction limits, but they also help the companies in information collection. The data collected can then be deployed to create new services. Consequently, new revenue streams are developed, big data offers are delivered, and cost-effective corporate setups are built.
- Blockchain Technology
Unlike the legacy chassis, which is exclusive to each organization, the new one comes with a built-in settlement, account opening, digital scarcity, and trading. Millions and billions are spent by crypto investors to deliver data protection and cybersecurity, and hundreds of open-source developers improve the software for all the customers on regular basis. While the recent markets are still obsessing over the financials speculation of Bitcoin, the programmable blockchain networks like Ethereum are enhancing the data privacy standards and primitives to develop an efficient finance industry.
The initial implementations of this new idea of finance have already started in banking, online investing, lending, and asset management. This system can show us how established financial institutions could adopt innovations and reshape their businesses.
While businesses are trying their best to make insurance an independent industry, however, it still comes under the umbrella of FinTech. Insurance companies incorporated technology later in time, therefore, FinTech businesses are coming together to automate operations and enhance coverage. The insurance business is experiencing a lot of innovation, from wearables to mobile car insurance for health insurance. Insurance companies verify the documents of customers through document verification.
The fintech industry falls liable to creating trust and customer engagement as more individuals join this board. Communication is considered the best and most significant factor to achieve this level of involvement. Communication involves providing regular updates to customers, delivering a clear picture regarding policy changes, and facilitating customers with a polite support center. Brand development can be hugely enhanced by providing transparency in communication.
- Data Aggregation
The advancement in financial API (Application Programming Interface) supported by data aggregation sites in the United States and Europe’s regulatory mandated PSD2, entitles investment and banking data to move across various stations.
Financial institutions that rent their carters, balance sheets, and licenses to tech businesses have been promoted as BaaS (bank-as-a-service). They permit distribution experience to incorporate associated financial capabilities.
This is especially taxing for traditional holders, as they are used to developing products and delivering them through sales channels. However, consumers of this age now collaborate with the finance industry as per their experience.
- Regulators are Active in FinTech
Compliance professionals across the globe are actively participating in enhancing the regulations for FinTech. Countries like Australia, Singapore, and the United Kingdom are designing ways to test scenarios and verify how the technology can be deployed to solve problems. Regulatory bodies are determining methods that can be used to enhance the process instead of just reacting to it.
The United States shows a lot of interest in blockchain and what can be done to make maximum use of it. The policymakers of the US are especially interested in FinTech and are constantly working to save the industry from facing any kind of fraud.
In a Nutshell
Nobody knew that the FinTech revolution is on the horizon and this uncertainty was further accelerated by the Pandemic. Experts forecasted that the industry is going to be booming in 2020, but it proved to be nothing more than a prediction. Deloitte noted that the coronavirus-induced economic roller coaster has pushed the industry to see new heights.
Major trends are coming in FinTech to boost the business and enforce enterprises to use it for better and safer financial dealings. Financial technology can assist companies to better facilitate their customers to deal with banks and other financial institutions. No doubt as technology is making its way into the financial industry, fraudsters are also becoming active in committing illegal activities. Howvere, regulatory bodies are also designing effective laws to protect businesses and customers from getting manipulated by imposters’ fraudulent activities.