The Fintech industry has been growing at a rapid rate, especially with the pandemic boosting it to new heights. Over recent years, the average growth rate of the industry was at 25% making it one of the fastest-growing industries in the world. By 2022, the market size is expected to surpass $310 billion, thus showing how this industry is a hot topic to watch right now.
The pandemic shifted the rate at which digital solutions were brought into markets. There is a whole world of opportunity to explore and we are only just starting to create new innovations and improve on old ones. For anyone keeping an eye on the fintech industry, the following are the fintech trends they need to watch out for.
Financial technology trends – Artificial Intelligence
Artificial Intelligence (AI) has been changing the game for many industries, including Fintech. It is helping transform the way the financial services industry provides its services to its consumers. AI can be very successful because it derives from human intelligence but performs beyond the human scale.
On top of that, AI is built using data which is becoming ever more prevalent in an increasingly digital world. At the rate it is growing, AI has the potential to quickly replace current “human-based services” with AI. Some ways how AI is already helping (or will help soon) are:
- Through the use of client servicing software – AI is integrated into virtual assistants (chatbots) that customers speak with. Machine learning technology allows it to handle human conversation. This eliminates the need for human assistants.
- AI is more capable of handling online threats such as cybercrimes and frauds. An AI is already structured with Machine Learning data and can work for 24 hours, unlike humans. This means they can learn and evolve from past data to solve complex problems in the future, which is a great solution for combating online attacks.
- The use of Robo-advisors – These are online platforms that can create a personalized investment portfolio using data. These are based on an individual’s interests that are then suggested to the individual. This is done using big data and cognitive computing technology to identify the best strategy for investment.
Financial technology trends – Digital Banking
Digital banking has revolutionized the way people interact with banks. They are able to manage all their finances online, make deposits, or transfer funds using their mobile phones. There is little need to visit a bank teller anymore. Physical banks are still prevalent worldwide, but there has been a shift towards digital-only banking. This is through the introduction of Neobanks.
Neobanks have disrupted the fintech sector by being a type of bank that only exists online. It is built to primarily be used through mobile phones and customers are able to do any interaction they would with a bank, through their phone.
Whether it is to open a new account, take out a loan, or manage remittances, customers don’t need to visit a bank any longer. Some examples of the top Neobanks currently active are Revolut and Statrys. Other applications that are not Neobanks but offer similar features are digital wallets like Cashapp or Venmo.
Financial technology trends – Payment Innovations
The pandemic has again changed the way people approach payments in 2021. New innovations have been brought into the Fintech space. These make use of identity verification technology, replacing physical wallets, and contactless payments.
As new technologies were introduced this year, the contactless payment market grew rapidly. It reached over $650bn in transactional value in 2021 and is expected to grow to over $1.6tn by 2024.
Another new payment innovation is voice-enabled technology. This makes use of two parts of a smartphone – Voice recognition software and the phone’s assistant. Anyone can make financial transactions without touching their phone. People can ask about their bank balance or tell the assistant to make a transfer or payment from their bank.
Financial technology trends – Biometric Security
Biometric technology already plays a role in identity verification in people’s daily lives. For example, certain banking apps use face recognition or fingerprints to unlock the app without having to type in the password.
Biometrics have shown how they can simplify the process of identity verification. Online transactions can be authenticated without the use of passwords. These metrics are more secure than passwords, and so will be playing a much bigger role in the future as the technology develops. Some of the new metrics being used for biometrics include:
- Palm vein pattern detection
- Iris and retinal scanning
- Hand geometry recognition
There are many financial technologies still being developed, but the fact is that the future of Fintech looks promising. People have already begun to incorporate some forms of fintech into their lives. One such way is through earning crypto interest. Others are creating their own fintech using fintech software development services.
Fintech is rapidly evolving with new trends coming up every year. Unearthing these trends will help anyone stay on top of their competition. They will also make learned decisions on how to improve their businesses and lifestyles using these trends.