Article | April 6, 2020
Covid-19 has had a huge impact on almost every area of our lives: from travel to shopping, the economy to health services. Understandably, these are emotive issues – things that we previously may have taken for granted are now being put under enormous pressure at a time when people are very anxious. Amid the uncertainty, there is a danger that some topics may be sensationalised without any real basis in scientific evidence. One of these is the use of cash as a payment method. In recent weeks, several newspapers have questioned whether cash is still safe to use during the pandemic, with some retailers restricting its use.
Article | July 29, 2020
Over the past few months, in the midst of our global health crisis, some have questioned the connection between sustainability and the broader issues weighing on our society. But if we take one lesson away from these intersecting crises, as our CEO Mike Corbat has said – it is that our physical and economic health, our sustainability and resiliency, and social justice are inextricably linked.
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
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"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, 2020
Soon after, the World Health Organization declared the Novel Coronavirus outbreak an official pandemic, a sudden pandemonium busted across the globe. The COVID-19 crisis carries with it the potential equally disruptive economic fallout. It has brought a dominant shift in reality; in addition to the effects that the virus has had on our private lives, businesses in every industry are being forced to find innovative ways of operating on every level and the world of Fintech is no exception.
Investors began drawing out their money. The stock markets of the world collapsed. Central banks made off-cycle rate cuts and inserted liquidity to keep the economy running. The financial services are currently confronting challenges on multiple fronts: banks have reduced their opening hours serving a few customers at a time due to social distancing rules, putting additional stress on channels like telephone service, online banking, and social media.
Simultaneously, numbers of consumers are desperately trying to contact their bank with questions, concerns, issues, or to request appropriate solutions for their finances impacted by the fallout from the coronavirus. This is not the first or last global crisis. FinTech and banking companies of the 21st century need to be programmed to operate in such circumstances.
Being a fairly new sector, fintech companies are already well-positioned to adapt to a world that suddenly exists primarily online; most fintech platforms now exist in online formats anyhow. Still, the paradigm shift brought to the world by coronavirus is forcing the fintech sector to come up with creative solutions when it comes to supporting customers, building relationships, boosting company morale, and planning for the future in this unprecedented situation.
The behaviors that people can execute from their living room or from their den are going to grow, and behaviors that require face-to-face interaction or getting out into the community are going to diminish. What does that mean? You should have greater mobile apps and digital adoption in general. If I had been holding off on signing up for PayPal, for instance, I might just do that.
Nigel Morris, Managing Partner of QED Investors, Co-Founder of Capital One
“Fintech companies are probably some of the best-equipped organizations to take on this crisis.”
If you’re a Fintech, you’re probably no more than 10 years old and as a result, have built your backend and developmental stacks on cloud environments allowing for operations to continue anywhere. Also, many business-to-business (b2b) communication tools that FinTech companies have naturally adopted and made available to employees such as Slack, Teams, Skype have been more heavily leveraged. Legacy financial brands are more than likely finding this time to be a bit more difficult.
Paul Geiger, President, and Co-founder of Post-Trade Asset Management Firm Theorem Technologies
The coronavirus pandemic could be destructive for multiple companies, but it's also flashing a spotlight on the potential of fintech. It has the potential to revolutionize how consumers and businesses handle financial transactions. There will surely be hits and knocks along the way, but fintech can manage to make this transition a lot easier. Here’s how.
Table of Content:
- Moving Back to the Digital Infrastructure
- Utilizing Robotic Process Automation Software in Banking (Robo-Advisory)
- Acceleration of Cashless and Contactless Payment Methods
- Artificial Intelligence and Block chain Technology
- Fintech Firms Providing Free Technology During the Coronavirus Crisis
Moving Back to the Digital Infrastructure
As the number of cases ticks up in the U.S., many are choosing to go cashless to circumvent potential hygiene concerns around handling banknotes. Almost half of the world’s population is now practicing self-quarantine. Interaction between humans is limited. All the public gathering places are closed down. Businesses that rely on people coming in or the shops that are commonly crowded are now starting to close down.
The prevailing crisis will change our mindset and habits and make us re-evaluate our current way of doing things. All thanks to fintech, giving smaller communities a chance to keep their business open and operating. With digital payment options and online transactions, you can pretty much order any service, any product. You can even access your favorite types of entertainment online and all that without breaking the rules of self-isolation. Social distancing is the only effective method to fight the spread of coronavirus, and fintech has made this practice much more natural. Online services that we can pay for through fintech are now substantially covering every industry.
These digital services have become such an essential part of our lives, and we should be appreciative of how easy it is to quarantine these days. Ordering groceries, favorite food, watching the newest movies, stuffs delivered right to our door, all this is only possible, because of different financial technologies and digital payments that have made money transfer easy and secure.
Learn more: https://www.euronews.com/2020/03/19/next-day-delivery-the-challenges-for-retailers-during-the-coronavirus-pandemic
Utilizing Robotic Process Automation Software in Banking (Robo-Advisory)
Robo advisors, without human interference, provide automated support for all financial advisory services, such as trading, investment, portfolio rebalancing, and tax saving. It works with a pre-defined algorithm and analytics, calculating the best returns and plans for each individual as per his/her requirements and preferences.
The need for no-touch and low touch investment solutions, which can deliver more informed intelligent analytics back to the user, will be more important than ever. Robo advisors are the next level in the evolution of asset management and financial advice. For the banking industry, robotics outlines a unique and underutilized way to increase productivity while minimizing traditional repetitive and manual-labor-intensive processes. The growth of Robo advisory services is attributable to the fact that it enables low-cost services, scalability, cognitive advice, and next-generation user experience.
Though, for the next generation, virtual agents may be an acceptable help for financial matters. It is a fact that client advisors must fit with Robo-Advisors and artificial agents and a human-led technology-enabled model to a technology-led human-enabled business model in financial services.
Acceleration of Cashless and Contactless Payment Methods
The new coronavirus fears could be enough to introduce mobile and cashless payments to those who otherwise didn’t see the appeal.
Learn more: https://capital.report/blogs/how-open-banking-is-catalyzing-payments-change/8262
Before the outbreak, mobile payments in the U.S. had not come close to global adoption rates. In China, by contrast, more than 80% of consumers used mobile payments in 2019, according to management consultancy Bain. In the U.S., major mobile payments apps had adoption rates of less than 10%.
Major payment companies have already warned of the virus hitting U.S. spending. Visa, Mastercard, and PayPal have all cut guidance due to the coronavirus.
I think this is an opportunity for a move to digital. Zelle, PayPal, and online banking could see a boost. I believe this crisis will accelerate and move people to utilize all forms of digital financial services.
Peter Gordon, Executive Vice President and Head of Emerging Payments at U.S. Bank,
The mobile fintech payment service that facilitates easy online and oﬀ-line payments are reaching millions of people and can truly capture the under banked population.
The coronavirus crisis represents a huge opportunity to accelerate cashless and contactless payments. Retail and consumer payments are leading the way in the adoption of innovative payment capabilities aided by the growth in e-commerce and increased penetration of mobile phones. B2B opportunities are also gaining increased traction as a result of being more efficient and cost-effective. Some key trends in digital payments are:
This includes Near Field Communication (NFC) adoption, host card emulation and QR code generation for electronic interactions between consumers and retailers.
Adoption of payment hubs.
Banks are getting interested in looking at investing in harmonizing their payment infrastructure by moving to payment hubs. These hubs can process any form of payments irrespective of the origination channel.
This is transforming the retail funds' transfer process by providing electronic cash to anyone in the span of a few minutes. Peer to peer money transfers has been around for a while and have witnessed high growth.
Built on blockchain infrastructure this offers greater speed and efficiency of the transaction.
Rise of marketplace banks.
Challenger banks are being supported across geographies and given licenses to operate freely. Banks, by adopting open banking, has started exposing their APIs to third parties for large scale payments.
Omni channel offerings.
The framework of digital payments provides a seamless customer experience across channels leading to better transaction experience.
The future of payments was already revolutionizing with new entrants such as contactless payment, NFC enabled smart phones, cloud-based PoS, and digital wallets. The crisis will merely accelerate the desire to tackle the issues with these new banking technologies.
Artificial Intelligence and Block chain Technology
Artificial intelligence and machine learning built upon distributed datasets and shared information are used for dynamic and psychographic client segmentation based on behavior and automated investment services. The adoption of such technology will become pivotal for large financial institutions to manage their client base and investment portfolios efficiently. In fintech, blockchain finds application in areas like digital ID, customer authentication, insurance, to name a few.
Blockchain practitioners are experimenting with this technology to bring out new use cases and applications to solve the complicated issues in the fintech industry.
PWC’s study of financial services and fintech shows that about 77 percent of the financial services industry is planning to adopt blockchain by 2020. The blockchain sector in fintech has been intended to provide banking with a more seamless and efficient experience. We will soon see the process of cash to crypto and vice versa to become ubiquitous.
Blockchain asset management solutions are an alternative to offshore banking because there are substantial efficiency gains for cross-border transactions, for both private clients and businesses. Traditional banking and blockchain solutions will converge over the next decade with blockchain to become a commonly used technology in financial services.
Learn more: https://www.forbes.com/sites/jeffkauflin/2019/12/26/five-fintech-predictions-for-2020-according-to-kleiner-perkins/#40c46b7d3d5a
So, when we look at these phases of development in the fintech sector, we understand that it’s not just about inserting technology into banking, there is a larger shift here. Part of the shift is around trust and the utility of the bank.
Fintech Firms Providing Free Technology during the Coronavirus Crisis
Right now, you will be feeling the need for more reliability in software and information. Luckily, some fintech companies and teams are there to alleviate these issues. To help banks help their customers through these difficult times, many fintech providers are extending free, discounted, or accelerated deployment offers to financial institutions.
Business downturns are not uncommon. Sometimes there are unexpected circumstances. During these periods of change, the winners and losers will be defined by those firms able to make quick and decisive transformation reflecting the new environment. This is not just true in banking but in every industry. Fintech companies from across the world are all-in when it comes to coping with the current global health crisis.
The progressions in digital technology are making the crisis more bearable and are empowering businesses to keep working with access to key services (communication, payments, credit, collaboration, etc.) while enabling social distancing and helping to fight COVID-19. We expect digital technology to experience another boost during and after the crisis.