We are squarely in the middle of the Digital Age, and technological disruption and innovation are no longer surprises anymore. In fact, they come in all shapes and sizes. Whether it is bringing eLearning to the education sector or automated workflows in business, everyone benefits from these innovations. Despite this, we are yet to experience radical disruptions in the financial industry. FinTech, or financial technology, is only just beginning to introduce innovative solutions for businesses and financial intermediaries.
FinTech is often confused with an application or software, but it is actually a collective term for technological trends. FinTech solutions facilitate banking, help consumers track payments, invoices, and receipts. In short, it is poised to change the way people foot their bills, make investments, and acquire loans for personal or professional use.
FinTech also has immense promise to introduce new revenue streams. For instance, with payment gateways, entrepreneurs are now able to take payments digitally from anywhere at any time. It is hard to say whether FinTech will take over the world but what is clear is that this industry will continue to evolve. This means that now is the right time to jump in and keep pace with upcoming evolutions in the FinTech world.
Equipping yourself with the skills and knowledge about FinTech can offer you a significant advantage in the professional sphere. As Generation X retires and hands over the reins of business leadership to Millennials, the way business is conducted will change. Trend-spotters will continue to replace people resting on their laurels, so it is in your best interest to change your mindset and visualize how FinTech can benefit your life. In addition to looking out for trends, it is also wise to enroll in some online short courses to get clarity on the FinTech landscape. These courses would equip you to tackle fresh perspectives and enable you to plan ahead in terms of staying relevant and employable in the current landscape.
If you are still unsure about FinTech, have a look below. Here are five trends and predictions of FinTech in 2021.
1. Open Banking
Open banking is amongst one of the most revolutionizing technology, bringing FinTech and banks together. It enables data networking across institutions with top-notch security protocols. After all, open banking is directly related to the second payment services directive.’ It encourages banks to collect and release their data in a secure and standardized form. Similarly, it regulates data sharing amongst customers, closing doors for fraudulent payments and theft.
According to Allied market research, open banking’s market size will likely expand to $49.15 billion by 2026. Every financial institute, including commercial banks, will need FinTech, and emerging from this demand, open banking would introduce the concept of transparency. Customers will receive a consolidated view of their financial accounts while companies will have better access to banking products.
2. Blockchain Technologies
Nowadays, many companies are making payments digitally, but they have to incur hefty transactional charges when transferring money. However, blockchain technologies are changing payment protocols in the FinTech industry. It offers decentralized finance which means that there won’t be any involvement of financial intermediaries or banks. It is introducing peer-to-peer (P2P) financial forums, where companies can send and receive payments across different channels without any additional charges.
Besides providing convenience, blockchain technologies are increasing customer trust in FinTech. It stores data in a series of immutable blocks, allowing companies to track all transactions with their complete lifecycle. Precisely, it offers an opportunity to create secure financial products and bring more innovation to the finance sector. After all, this decentralized system has the potential to disrupt industries and make operations more transparent and efficient.
3. Innovative Payment Solutions
Many people are looking forward to innovative payment solutions that can streamline their online shopping experience. Although cash on delivery seems feasible, most buyers prefer paying by their debit and credit card. According to the business recorder, more than 50% of customers pay through cards instead of using cash and Fintech is currently opening multiple doors to cashless transactions. Below we will discuss some of the different payment innovations in the FinTech industry:
- Mobile Wallets: Almost every smartphone has a mobile wallet. It is a payment service where people can receive and send money via mobile devices. The wallets are connected to digital banking applications, helping you manage money readily.
- Credit Card Payments: When it comes to online purchasing, websites offer consumers a built-in option to make payments through their credit or debit card. They have to enter the card number, and then the amount automatically gets deducted from their bank accounts.
- Digital Currencies: Cryptocurrencies have always been in the limelight, but with lower interest rates, their popularity is growing each passing day. Central banks are also finding ways to issue national digital currencies that people will use to make purchases online.
These new payment innovations improve accessibility for customers while businesses enjoy a seamless flow of money. In the coming years, we are likely to witness more innovations in FinTech’s payment solutions.
4. Robotic Process Automation (RPA)
Almost everyone thought of robots taking over the world, and soon, we would witness bots managing the finance sector. Robotic process automation utilizes software robots and digital servers to automate the tasks performed by humans and the financial industry is already implementing RPA to cut costs and boost organizational efficiency. Simultaneously, they are automating back-end office processes such as account maintenance and closing, loan underwriting, trial balancing, etc.
Financial institutes can also leverage RPA in mortgage lending. It can automatically process documents, conduct quality audits, and arrange credit for the customer. Subsequently, it can handle loan requests faster and improve customer satisfaction. However, it doesn’t mean routine jobs are at threat in this sector. Instead, financial professionals can take a break from all repetitive tasks and take up more customer-oriented tasks such as preparing risk portfolios for customers, and help them with investment decisions, etc.
5. Autonomous Finance
Every bank has online application processes , allowing people to make payments by tapping on the screens. These are more like FinTech apps, the fundamental building blocks for autonomous finance. Previously, it started with Robo-advisors that helped people with software-based financing and mutual funds management. Soon, it would bring automatic-saving applications such as debt management solutions.
Hence, it is likely to reshape how people manage transactions, putting forward the idea of self-driving funds. Autonomous finance would help customers make instant investment decisions since buying and selling shares will be a click away. It uses the power of Artificial Intelligence and machine learning to manage user’s money. FinTech applications have built-in algorithms that evaluate the available options and help users leverage the most beneficial ones.
Final Thoughts
The growth trends in the FinTech market seem quite lucrative. Almost every company is integrating technology to improve efficiency, and FinTech also serves a similar purpose. It streamlines payments, automates financial processes, and offers flexibility to customers with innovative payment solutions. Similarly, it provides better transparency, faster transaction processing, and improved assistance to customers. In case you are foreign to the world of FinTech, start learning the ropes to make your business thrive.
