The ripples of the dewy emerging technology is affecting every sector in its own way. And the elements of every sector have to cope up with its speed, otherwise, they’ll be left behind with their name in the history and lose their existence in the present. Fintech is one such sector that is having waves of its own due to ripples in Machine Learning, Artificial Intelligence and BlockChain. Here is an article about rising trends in Fintech that we’re gonna observe with the coming decade.
What is Fintech?
Today, technology is slowly obliterating the much abominated impediments of each sector. This room of improvement in made the emergence of Fintech possible. Fintech is the application of new technological improvements to the financial services and products and aims to liberate the them with the obstructions and make it automated and better. Fintech has a broad range of applications that facilitate both businesses and customers. Apart from the applications like mobile banking and insurance to cryptocurrency and investment apps, it also has a hefty capital investment backing its innovation. It truly has created the disruption of the rusty primitive methods of finance.
Since its emergence in the mid 20th century, its definition has changed a lot. It was first perceived to sustain B2B models of businesses for banking only. But now, it has its share of users in numerous areas of finance. Now, Fintech is one of the fastest expanding sectors of technology creating progress in every area of finance with technology. Some of the best Fintech business models are Transaction delivery, Alternative insurance underwriting, Alternative credit scoring, Asset Management, Digital Banking and many more.
What’s Hanging with Fintech?
The gradual increase in VC funding with every fiscal quarter can only be supported if the ongoing advances are worth them. Fintech companies live up to every bit of their name in proving that. Here are some of its applications that we all are aware about, but might know that they are part of it:
Bank customers have increasingly craved for a digital access to their money. Mobile banking has made that possible. Many established banks have adopted an easy and digital access for their customers. The rise of neobanks i.e. banks that are 100% digital and reach their customers on mobile apps and personal computer platforms only, has also magnetized the attention of traditional banking systems towards themselves. Fintech industry has also applications in banking sector in security by using physically unique features of an individual, including fingerprints, face, voice, retina, and other forms of recognition to enhance security and identity verification.
- Cryptocurrencies and Transactions
The tech genie has once again served its master well by giving out BlockChain. BlockChain or as the well-read folks like to call it, the distributed ledger technology has birthed numerous cryptocurrencies that intend to make the transactions nearly unbreachable and hence eliminates the underlying distrust in the transactions. Although both BlockChain and Cryptocurrencies are not considered under Fintech industry’s realm, but they often go hand-in-hand to give new and better financial services.
- Machine Learning and Trading
If the graph plots of the markets are suddenly predictable to you one day, it’s like saying that you’d be omnipotent. Machine Learning is playing an important role in Fintech. Its statistical approach over a bunch of data to mark trends and risks and hence helps investors to speculate the market rate of different funds.
- Payments and Transactions
Gone are the days when you had to beat your mind for hours over digital payments. The disruption caused by the Fintech companies has made sure that the bottlenecks in digital transactions be broke. The rise of platforms like Zelle, PayPal, Stripe and Square has made sure that money can be sent anywhere around the world in one or two clicks.
The lending sector in finance is one of the areas that got reformed the most with the emergence of the Fintech industry. Fintech companies that have loans under their spectrum aim to streamline the process of approval, introducing alternative credit scoring, and enhancing risk modelling so that you can avoid long queues and get the access to required credit in a snap through your mobile device.
Fintech has baked many subsets of its own such as regtech, insurtech, etc. Insurtech is slowly becoming its own industry but it still comes under the spectrum of Fintech. Although it has been hardest for Fintech to oust traditional techniques in the insurance sector but it is automating and expanding at its own speed and working towards easy access to buying insurance plans and their paying premium. There are also a group of Insurtech companies that compare different Insurance plans.
Apart from this, there are also many Fintech applications and subsets like RegTech (Regulatory Tech) and Open Banking APIs that promise more transparency and access to banking data.
With so much already been achieved in the Fintech industry, you might wonder about the new trends that we might see this new decade. We can’t predict about the decade, but here are some of the trends that you’re going to observe in 2020 in the Fintech industry:
Robotics Process Automation or RPA is pushing the Fintech future to be upon us earlier than today. It’s generally a virtual workforce made of source codes that aims to free up the humans of tedious tasks to increase their productivity. Robotics has already provided uses like customer service and processing to credit card reconciliation, wealth management, fraud detection, auditing, compliance under Fintech’s umbrella.
Robo-advising hasn’t been utilized and is yet to bloom in a full-swing. Robo-advising is a class of financial advisors that provide investment or asset management advice based on a combination of hefty data and statistical algorithms. These algorithms take into account and automatically allocate and manage clients’ assets.
- Anti-Money Laundering Compliance using ML, AI and BlockChain
Money laundering has been a problem that needs to be curbed for a very long time now. It is a process through which the links between the funds can be cut and the transactions are made untraceable. With making a total of whopping $2 trillion, It helps criminals and terrorists fund their illicit activities, dampens global economies and threaten global security. This is where BlockChain comes in. The distributed ledger can be used to identify and prevent illicit transactions. ML and AI can do the part where they can run loads of data to find whether money laundering is happening or not. It can then be stored in the BlockChain as well.
- Alternative Credit Reporting
Before the Fintech era, an individual’s credit scores were just based on credit cards, mortgages, car payments, and student loans, etc. But alternative credit reporting aims to base an individual’s credit score on phone and electric bills, rent, and payments to many types of credit providers such as payday lenders, rent-to-own stores, and online personal lenders, etc. This will help in getting lower income people out of the deadlocks and get into traditional credit and improve their credit score.
- Decentralization of Global Transactions
With The Trust Protocol on the verge of setting up, there is a wave of driving centralized servers and third parties out of payments systems for quite some time now. a decentralized payment system solves all of these issues. Decentralized systems are borderless, so it doesn’t matter if your money is going to the other side of the town or the other side of the world. Secondly, your funds are also much more secure when using a decentralized system. Using two keys, one being a public that acts as a digital signature and the other being a private key, the decentralized system is much more fenced.
These were some of the trends that the 2020 is sure going to notice in the Fintech industry. Fintech has been a pool of opportunities and everyone has tried to jump in it every chance they got. With these trends lined up for Fintech’s fate, the saturation is very far from the shore.