FinTech is among the industries that managed to withstand harsh economic conditions entailed by the COVID pandemic. Moreover, acceleration of the FinTech growth is meant to boost companies and organizations inside the industry through attracting new clients and establishing a wider service range. In the article, we are discussing the key trends in Fintech, their major benefits, and forecasts for the year to come.
Adoption of Cloud Solutions
Implementation of cloud technologies is considered a must in the current FinTech development pace. Owing to their transparency, cloud-based solutions accelerate the development as well as maintenance processes. Having this bridge ensures higher efficiency of the services provided, hence, an increase in the number of customers.
So why do cloud-based solutions become such a drill in FinTech?
Financial institutions do not overspend on maintenance of the equipment, as cloud service providers take care of that. They ensure high-level security and provide 24/7 support. Meanwhile, FinTech organizations pay more attention to their core operations and strategies.
Cybersecurity & Biometrics
Along with the technology spreading across industries, the matter of cybersecurity has become a top priority for service providers. Companies utilize various methods of preventing their customers’ information leaks or loss, including but not limited to
- Data encryption
- Regularly updated backups
- Data pseudonymization
- Multiple-factor authentication
- Controlled access
- Data erasure in case of a system breach
To increase the level of cybersecurity for the institutions and customers, Fintech market players add biometrics as it’s proved to be among the most reliable ways of data protection. To authenticate and get access to the info, the applications require face or fingerprint recognition technology. Biometrics is a security solution that is rather impossible to breach or bypass.
Today, when the number of smartphone users is growing, so is the demand for technology. Not only biometrics is safer, but it also allows protecting the data on your actual credit or debit card, as you no longer have to pull it out to pay.
With the pandemic hitting the world, the use of contactless payment systems became more common. You just use your phone and verify the payment with your face or fingerprint scan. No need to remember PINs to all of the cards.
Moreover, a lot of banking institutions are moving toward digital or virtual cards. Such a trend has several major benefits:
- Increased security through biometrics payment verification
- Reduced risk of losing a card (unless a user loses their smartphone, which is still protected by biometrics authentication)
- Fewer bureaucracies when getting or renewing a card,
- Cost-saving for banks (no need to produce and maintain plastic cards, which is also great for the environment, isn’t it?)
- Simplified and time-saving finance management process: all you need is a smartphone or a PC.
Mobile Banking and Online-Only Banks
With financial organizations switching to the adoption of more digital innovations in their operations like advanced mobile banking applications, some banks prefer operating in an online world without opening offices across countries.
Based on Statista’s worldwide FinTech market outlook, the total transaction value in the digital payments segment amounted to $4.1 trillion in 2019 and is predicted to reach $6.7 trillion in 2021 and $10.7 trillion by 2025.
Since COVID started and people were forced to stay at home, issues regarding payments and bank visits quickly arose. In 2019 the financial sector encountered mind-blowing transformations that were long-awaited yet slowly implemented. The demand for convenient solutions for remote management of personal finances and online payments became urgent. The emergence of online-only or digital banks has increased the level of competition in an already competitive market and brought multiple advantages to the customers:
- Access to the data anytime and anywhere
- Full automation of all the payment processes
- Improved data security
- Customer-oriented solutions for better user experience
- The use of the most recent technological advancements
With their focus on security and improved service, banking institutions are becoming more customer-oriented. Implementation of mobile banking solutions is also beneficial as they cut costs on labor yet manage to speed up the transaction processing mechanism. Additionally, digital banks have to keep up with the latest tech updates to provide the best service to their clientele and withstand the fierce competition in the market.
Robotic Process Automation
Robotic Process Automation or RPA is applied in FinTech to create more opportunities for financial institutions and their clients. To automate the financial management procedures for their customers, FinTech organizations utilize the best AI-powered solutions. These serve as a foundation for automating the internal operations of these organizations.
RPA has shown significant value in performing recurring tasks, especially in large amounts. These include account opening, KYC (Know Your Customer) procedure, clients requests processing, payment execution, data input, and more.
According to recent research, the RPA market is expected to grow to over $13 billion by 2030 as to $1.23 billion in 2020.
When first introduced, Blockchain technology was claimed to fully transform the tech world as we knew it. Among the main advantages of using blockchain is that the whole ecosystem can be established through accelerated transparent transactions, for example.
Moreover, you are in full charge of your finances by getting a digital wallet — the number of their users is constantly growing. The statistics for this are quite impressive.
Cryptocurrency holders have the sole right to access their digital assets, thus, no bank can use their money for their own purposes. Blockchain technology is viewed as certain freedom and people are not obliged to inform anyone regarding their financial activity, like withdrawal or investment, etc. This is how FinTech may benefit as well: give people direct access to their assets without any mediators.
2021 has been the year of revival for many industries as well as the year of significant growth and transformation. The way financial institutions are handling business questions will never go back to how it has been by 2019. Such drastic changes have given impetus to adopt solutions that are focusing on customer satisfaction. A growing number of organizations are becoming more flexible and innovative to provide a greater user experience.
The future of FinTech is expected to be very prominent as the market players are seeking more advanced solutions to stand out in this competitive and ambitious environment.