Article | April 8, 2020
The futuristic utopia that technological progress promises is coming ever closer at an astonishing pace, yet unseen challenges, have surfaced during the COVID-19 virus outbreak. The pandemic has managed to plunder and destabilize the world in just the last few months, putting in danger not only lives, but economic boundaries, well-established global businesses, and the very essence of the world’s financial system.
Article | February 19, 2020
You may think of ATM workings as a revolutionary experience but since the advent of Fintech, the entire financial services domain has entered a new era. Whether you purchase a cup of coffee or manage your finances, fintech is everywhere. From payments via apps such as Payoneer or Paypal to getting reports, or even using cryptocurrency, fintech is everywhere. This decade — 2020 — is bringing along loads of useful technological developments and therefore, you need to implement these updates to stay ahead in the industry and offer better services.
Article | March 12, 2021
The Fintech industry is consistently regulating itself since its inception. The industry has become a game-changer since the pandemic caused every consumer to look for convenience in daily transactions. Recent situations have created a necessity for Fintech companies to empower financial institutions as digital transactions soar to an all-time high, with the Indian Fintech sector at the forefront, contributing the highest in CAGR (Combined Annual Growth Report) globally.
According to the market research report of March 2020, Indian and Chinese markets contributed the highest in Fintech adoption rate (87 percent) out of all emerging markets worldwide. These numbers are a green signal for the industry to roll up its sleeves as market researchers expect the Fintech market to reach INR 6207.41 billion by 2025 in India.
As the Fintech world sees an all-time high upsurge, this article covers the list of 5 Fintech trends to look out for that will shape the banking industry. But before that, let's take a look at what Fintech is, and what value it can provide.
What is Fintech
Fintech is an abbreviation of Financial Technology and refers to the emerging technologies in finance that provide improved business solutions to clients, and a convenient way to transact. Fintech helps customers to interact and exchange value with businesses more efficiently.
Fintech is neither a software, nor a brand name. You can describe Fintech as a collection of technological advancements in the financial sector to ease up transactions. Fintech trends help customers do banking in a faster, smarter, and efficient way.
Fintech is on a bull run with the ongoing pandemic covering the finance industry and making users pay without wasting any time or physically being present. With Fintech, financial institutions use technologies like blockchain, artificial Intelligence, biometrics, electronic and mobile payments, etc., to make their business more efficient, helping them interact with their customers effortlessly.
New upgrades and innovations in Fintech allow businesses to integrate their financial accounts with secure mobile applications. Receiving and making payments, alerts, and tracking invoices have become swift due to this integration and allow users to undertake time-intensive activities within seconds. With the help of Fintech, you can sell or buy products and pay for them from anywhere around the world—that is how Fintech is changing the world.
5 Fintech Trends That Are Shaping the Future of Banking
Financial firms are aggressively taking on Fintech
Financial firms and banks are adding new features in their cashless transactions to fit this pandemic-hit economy. Fintech offers convenience to customers as it has multiple options to choose for cashless transactions like mobile wallets, QR codes, contactless payments, etc. It provides a speedy process for payments and digital loans and can create dynamic growth in financial services. This acceleration will continue to groom the investments until banks and Fintech become interwoven. Now, it is just a matter of time for Fintech to emerge as one of the most booming industries.
Blockchain and Big data
Although blockchain and big data are on a bull run, there are miles to go before it enjoys a major slice of the market. This full swing of blockchain and big data may disrupt if challenges like cyber-attacks and fraudulent activities don't get addressed. To help overcome these obstacles, financial services adopting blockchain technologies can utilize Fintech. This implementation will help reduce fraudulent activities, phishing, and cybercrimes while generating trust with the customers. Looking at all the advantages that Fintech offers, banks adopting blockchain technologies will benefit the most out of it.
Artificial Intelligence & Machine Learning
Additional fields where the Fintech industry has to shift its attention are AI (Artificial Intelligence) and ML (Machine Learning), where there is a lot of room for growth. Progressively, Fintech brands rely heavily on AI technologies to reduce costs and monitor transactions closely.
Experts predict AI will lower the cost of financial services up to 22 percent in the next five years. Through Machine Learning, banks can offer ease of use to their customer with speedy transactions, automated trading processes, and secure payment processing.
Providing multiple services on a Single Platform
Instead of downloading a separate app for each financial service, any customer would prefer to have a single platform that can do everything. Many banks have already taken a step to offer multiple services across one app. It may increase the cost of building such apps with powerful API integration, but soon enough, it pays off as most financial services will turn to those banks that offer 'single platform, many features' apps. Some financial institutions may not deliver this kind of app, but the Fintech industry is sufficient to meet their demands.
Fintech becoming 'the new normal.'
The Fintech industry is slowly taking a step towards the general community of consumers. As the need for secure payment processes and easy accessibility of transactions keeps increasing, so does the value of Fintech serving these demands.
Adoption of data analytics will garner a massive Fintech market in the upcoming days. According to market research experts, banks have already started providing financial services with a customized and local offering to their customers by closely watching market movements and data analytics.
What should we expect from here?
As the need to balance the demand and supply of financial transactions keeps increasing, payments and the banking sector need to keep up the speed. It is only a 'wait and watch' game to see to what extent the Fintech market grows.
Frequently Asked Questions
What is the next big thing in the Fintech industry?
AI and blockchain are the next big thing that would take over the Fintech industry by storm. Artificial Intelligence like chatbots reduce the front-desk manual work and can be available 24/7 to help the users. Blockchain provides security on every customer transaction on payment platforms.
What's new and trending in the Fintech industry?
Financial institutions are focusing on financial literacy to enhance the banking experience for users. They have more control over their expenditure and savings through innovative features of Fintech, like income and expense analytics.
What are the benefits of Fintech for banking?
Through new Fintech innovations, the Fintech industry is reaping the benefits of improved global money transfers. Here are some of the benefits banks get through Fintech:
• State-of-the-art security and compliance
• Better speed in transactions
• Enhanced transparency
• Reduced costs
"name": "WHAT IS THE NEXT BIG THING IN THE FINTECH INDUSTRY?",
"text": "AI and blockchain are the next big thing that would take over the Fintech industry by storm. Artificial Intelligence like chatbots reduce the front-desk manual work and can be available 24/7 to help the users. Blockchain provides security on every customer transaction on payment platforms."
"name": "WHAT'S NEW AND TRENDING IN THE FINTECH INDUSTRY?",
"text": "Financial institutions are focusing on financial literacy to enhance the banking experience for users. They have more control over their expenditure and savings through innovative features of Fintech, like income and expense analytics."
"name": "WHAT ARE THE BENEFITS OF FINTECH FOR BANKING?",
"text": "Through new Fintech innovations, the Fintech industry is reaping the benefits of improved global money transfers. Here are some of the benefits banks get through Fintech:
State-of-the-art security and compliance
Better speed in transactions
Article | April 15, 2021
Open Banking is all about the customer being in control of their data and funds. It gives them the freedom and flexibility to decide when and with whom to share their valuable information. However, as with all vibrant and progressive ecosystems, speed, security, and ease of use will determine open banking’s future success along with the key issue of trust. Will the end user trust people to share data with them and trust their banks to still protect their data?
PSD2 Open Banking gives Payment Service Users (PSUs) the legal right to share their transactional account data with regulated third party providers (TPPs). For this to be possible, the 6,000+ Financial Institutions providing transactional payment accounts that can be accessed online have to put in place open banking APIs. These APIs give TPPs the access required to either make payments on an account holder’s behalf or view account data and funds, both of which require the account holder’s prior explicit consent. Access can only be denied if a TPP is believed to be unauthorised or fraudulent.
Open banking regulation has given rise to a new group of FinTechs who are seizing the opportunity to create innovative apps and products with the customer at the core of the offering. At the end of 2019, 240 TPPs from across the EEA and UK were regulated to provide open banking services. A year later, this figure had increased to 450 (excluding the thousands of credit institutions that are also able to act in the capacity of TPPs). The near doubling of newly regulated entities demonstrates user demand for the innovative products and services that these organisations are offering – it is now down to trust and security in the ecosystem, along with ease of use, to drive volumes.
The ability for TPPs, many of whom may be unknown to these Financial Institutions, to request immediate access to valuable data and funds presents many challenges and risks – all of which must be addressed without introducing potential friction in the customer journey. The main challenges are knowing if a TPP is who it claims to be and whether it is regulated to provide the services being requested at the time of the transaction request. After all, these are the key factors enabling the bank to trust the TPP and feel confident the end user can trust them. The added difficulty of knowing which markets within the EEA a TPP is authorised to operate in is an additional challenge.
Financial Institutions have long been the trusted guardians of their customers’ data and funds. Although the open banking model means the customer now has ultimate control of their data, it is still primarily the Financial Institution’s responsibility to ensure nothing goes wrong and they are likely to be held liable in any disputes that arise. There is also the very real reputational risk to Financial Institution if something does go wrong.
Checking a TPP’s identity, its current regulated status, and the services it is requesting to perform are essential but not easy tasks to complete in that, firstly, a Financial Institution needs to determine whether a TPP is who it claims to be. This is done by having real-time access to the 70+ Qualified Trust Service Providers (QTSPs) who can issue PSD2 eIDAS certificates. These eIDAS certificates contain the requisite information on a TPP’s identity and are used to secure communications between Financial Institutions and TPPs. They also digitally seal messages, ensuring the integrity of the concept and proof of origin.
However, an eIDAS certificate can have up to a two-year validity period. During this time, changes may have been made to a TPP’s regulatory authorisation status by its Home National Competent Authority (NCA). This introduces significant risk to the Financial Institution’s decision process.
eIDAS certificates also do not contain information on the countries a TPP is authorised to provide their products and services into under passporting rules. This information is held on the TPP’s Home NCA Credit Institution and Payment Service Provider (PSP) registers. Between them, the 31 NCAs maintain over 115 databases and registers. Checking them at the time of a transaction request is paramount to prevent fraudulent TPPs from slipping through the net.
According to the Konsentus Q4 2020 TPP tracker, every country in the EEA had at least 75 TPPs who could provide open banking services. These may not all be Home regulated TPPs. Take, for instance, Germany, who had 35 Home Regulated TPPs in December 2020 but an additional 112 TPPs who could passport in their services. To do the requisite due diligence on all these TPPs would require having online access to all the databases and registers hosted by the NCAs regulating these TPPs. This means connecting to the 31 NCAs and interrogating over 115 separate registers in real-time, in addition to connecting with all the QTSPs who issue PSD2 eIDAS certificates.
When a Financial Institution is presented with an eIDAS certificate by a TPP, if a real-time online connection can be made to all the legal sources of record, the Financial Institution can make an instant informed risk management decision on whether, or not, to give the TPP access. All this can be done behind the scenes without the end user even being aware of what is happening.
As volumes look to dramatically increase over the next few years fraudulent and other sorts of attacks are bound to increase. Financial institutions are going to face increasing challenges around protecting end users’ data, ensuring access is only given to those with the appropriate authorisations and permissions. A very real risk for them is the reputational one; after all, end users may not be that good at separating a reputational issue around open banking from broader issues around their banking relationship.
For Financial Institutions, maintaining trust in their brands is going to be crucial going forward, but the risks are going to increase if they have not locked down who can access end user account data and funds.