The fintech industry is projected to experience a steady growth in global transaction value, from $14.27 trillion in 2013 to around $24 trillion in 2027. Fintech has accomplished what traditional banking methods couldn’t for a long time. The financial technology adaptation has been unstoppable since the Covid-19 pandemic, which saw the masses rely on online transactions. The economic lockdown couldn’t allow people to access financial institutions physically, so they hopped to digital payments. Even after the pandemic died, they have continued to use online services.
The number of people using smartphones also continues to grow across continents, which means fintech usage will keep growing. Accessing banking services such as credit applications, money transfers, deposits, and withdrawals in the palm of your hand has been made possible with an adaptation of technology solutions such as smart contract audit services in banking. Several tech trends have redefined how the banking industry delivers its services.
Top 8 Tech Trends That Are Redefining the Fintech Universe
Below is a list of Fintech trends that you would like your business to benefit from in 2024 and beyond:
When the Corona pandemic hit, banking institutions had to go back to the drawing board to stay in business after movements were restricted. Video banking increased the pace during the pandemic as an alternative to physical consultations. The video banking strategy is almost like the physical experience because consumers engage finance representatives face-to-face via smartphones, computers, or tablets. The Interactive Teller Machine kiosk is the primary video conferencing tool used to facilitate video banking. Video banking is a win-win situation for users and financial institutions. For example, fintechs can serve more customers quickly and build consumer trust, while users can access banking services anywhere at their convenience.
Smart contracts are blockchain-based self-executing programs that bind agreements between involved parties without the need for intermediaries. Crypto traders were the first beneficiaries of smart contracts, but fintech companies have also adapted it to streamline their banking operations. Using smart contracts, financial services providers can vet loan applicants digitally and approve or reject loan applications depending on how they have automated the eligibility. Users can know in a short time if they qualify for loans or not and seek alternatives. Fintechs and users save time and cost through transaction automation that does away with paperwork.
Every technological advancement in the finance sector has a cyber security concern to match with. However, biometric security has taken identification in fintech a notch higher by authenticating users through facial, retina, and fingerprint scanning. Biometric technology is becoming rampant because most users forget their passwords and pins. Again, passwords can be hacked through phishing and other system infiltrating approaches. When using biometric security to identify users, hackers cannot access financial information because they don’t have your biometric ID credentials.
If you have experienced VR gaming, imagine a similar experience accessing financial services. VR and AR technologies have stormed the financial sector to provide consumers with a real-time assessment of financial products, enabling them to make guided investment decisions. VR allows users to immerse into the metaverse world of banking using VR goggles. The realistic view of the financial world through VR and AR continues to attract more customers as it is also a proven way of fighting fraud. Fintech startups and SMBs can leverage this trend to win customers and stay ahead of the competition. VR and AR implementation and maintenance may prove challenging, but businesses that have dared to incorporate them into their daily operations are reaping huge benefits, such as increased customer satisfaction.
Buy Now Pay Later (BNPL)
Startup businesses can leverage BNPL to attract new customers and build a loyal customer base. This Fintech trend enables consumers to pay for an acquired item in installments over an agreed period. The retailer receives payment from the BNPL provider, and you are left to sort the BNPL provider in an arranged payment plan. The BNPL service is made available at the checkout or point of sale with Klarna, Laybuy, and Affirm among the companies that have embraced this trend. More consumers are inclined to use BNPL because of its flexibility in payments and the fact that most are interest-free. The trend emerged during the Corona Pandemic when most consumers gravitated toward online shopping.
Artificial Intelligence and Machine Learning
Al and Ml have helped businesses establish long-term connections with their consumers through personalisation. Businesses dealing with large data can utilize artificial intelligence and machine learning to study consumer behavior and provide tailored services. Fintechs can also benefit from accurate analytics and market insights extracted from Al and Ml, enabling owners to improve customer experience based on the findings and recommendations. Al and Ml are also integral in fighting fraud because of their strange activity-detecting mechanisms. These technology trends help streamline Fintech operations efficiently and accurately and cut costs that would have been spent hiring an extra task force.
The emergence of regulators proves that the Fintech industry has experienced tremendous global growth prompting governments to establish legal frameworks to control its activities. Some of the regulators you may have encountered include OCC, SEC, FDIC, and FINRA. All regulations aim at creating a safe and fraud-free business environment because companies that care about their credibility will operate within the prevailing legal requirements. The regulations are bound to increase as innovations keep emerging in the Fintech industry.
Technological innovations and advancements have been game changers in all aspects of finance; money borrowing, international cash transfers, insurance, retirement saving, and anything else within the finance bracket. The trends have made banking seamless and, more importantly, helped significantly mitigate fraud which has been a menace in the sector for a long time. Fintech companies remain obligated and committed to consistently improving digital banking because of the ever-evolving consumer needs. Startups and small and medium businesses have hugely benefited from the highlighted trends, and you could become a success story by jumping on the wagon.