Financial technology refers to a broad range of sophisticated algorithms and software targeted at simplifying financial transactions. Fintech is a wide phrase that refers to the practice of employing technology to develop a company's business, automate daily processes, and safeguard it from fraud.
Sounds simple enough, doesn't it? The catch is that financial technology depends on ongoing innovation to close gaps and make a wide range of services more user-friendly and safe. It is not just on the increase, but it has long been a part of consumers' financial life. As per the Fintech Adoption Index research, up to one-third of all customers globally utilize at least two or more Fintech-based services, and the tendency is increasing.
In this article, we will look at the most well-established trends that have achieved huge success in the market and have a forecasted high rise. Ready to take a fast plunge into this ever-expanding technologically driven world? Let's get started!
Fintech Trend #1: The Expansion of Cross-Border eCommerce
Progress inevitably entails change, and the last few years have witnessed transformations that would have appeared unthinkable just 5 or 6 years ago. The most significant shift is probably owing to how Covid and home-delivery collided, radically altering the idea of a "hometown company." According to a report provided by Accenture, the total global cross-border payment flow is expanding at a CAGR of roughly 5% per year and is expected to reach US$156 trillion by 2022.
International transactions provide huge development possibilities for small firms as a result of the proliferation of eCommerce. We've been thrown into a new world of cross-border business, where customers demand straightforward and easy payment options as standard.
Fintech Trend #2: The Rise of "Digital-Only" Banking and Its Impact on Your Business
We're not talking about just digital payments here; we're speaking about virtual banks. The technology is already available, and there are several advantages to switching from brick-and-mortar to the virtual world. Cloud banking and free-floating banking platforms are already transforming the way people bank, and it's not difficult to imagine a day when the vast majority of the world's banking would be done online.
Fintech Trend #3: Blockchain Technology is Changing the Way Your Company Will Operate
The adoption of blockchain by financial firms has been sluggish, but it is still a major trend. Indeed, we are witnessing a growth in blockchain-based firms and the application of crypto technology across many business sectors. Let us take a glance at some of the reasons why:
Blockchain technology is very secure
The usage of blockchain in digital identity management (DIM) delivers unrivaled security at both ends of the transaction funnel. Blockchain is increasingly being utilized to avoid fraud and handle regulatory and audit challenges.
Blockchain is really quick
Blockchain technology has the potential to streamline asset transfers, payments, as well as investments while removing mistakes that create delays.
Given these benefits, it's clear why Blockchain is a trend that none of us can possibly ignore.
Fintech Trend #4: Where the Industry Stands on Artificial Intelligence with Adaptive Machine Learning
Companies will extend their usage of intelligent technology, from typical institutions testing automated advisers to sophisticated algorithms examining credit profiles. The implementation of AI, machine learning, as well as robotic process automation provides numerous benefits to those in the financial sector, including reduced risk from loan defaults, improved risk management, operational efficiencies from data collection and data analysis, and improved customer experiences.
Fintech Trend #5: The Emergence of Platform as a Service (PaaS)
Fintech is a never-ending battle between security and convenience. Customers will gain from the establishment of APIs to their data as banks adapt to changing rules. PaaS enables institutions to respond to changing demands by providing customized infrastructure that enables them to fully adopt cloud platforms. These services offer the foundation for a number of activities, such as team communication, resource planning, payment services, including credit risk management.
Fintech Trend #6: Transitioning from Competitors to Collaborators
Conventional banks and also other financial institutions are interested in the technology breakthroughs that startups bring to the table. It's easy to understand why new, creative financial services would clash with older, more conventional institutions at a time when so much is changing. One of the most significant emerging trends is a shift toward perceiving opportunities rather than competitors. Both old and new financial institutions will continue to collaborate for mutual gain. If there is a keyword for fintech in 2022, it should be "collaboration."
Fintech Trend #7: Options for Mobile Payments Become More Popular
The customer gains power with mobile banking. This fintech trend encompasses a variety of payment methods, such as ACH, virtual money, and blockchain. These options alter users' perceptions of mobile banking and financial transfers.
Customers are increasingly accepting smartphone transactions, and we in the financial sector are concerned about how mobile technology can manage rising transaction volume. Upcoming technology assures that networks can manage increasing volumes of transactions while still providing a dependable experience. As more people abandon their credit and debit cards, financial firms that provide digital payment options will be able to attract and keep clients.
Fintech Trend #8: Payroll Fintech Is Emerging as a Major New Player
Fintech has typically been focused entirely on consumer-to-merchant payments, but that is about to change. Payroll solutions such as salary on demand, salary advancements, crypto payments, and early direct payment will enter the mainstream in the next year.
Fintech Trend #9: Buy-Now-Pay-Later Becomes Commonplace
With the surge in the growth of online shopping and the influx of new generations online, new payment solutions are being adopted at a quicker rate than ever before. Consider buying now, pay later services like Klarna and Afterpay, which allow customers to turn their houses into a "virtual changing room" by experimenting before they purchase.
Fintech Trend #10: Combination of Traditional Institutions with Fintech Services
It's no surprise that, with the rising focus on technology and the necessity for market fluidity, conventional banks' investments in fintech technologies are expanding at an exponential pace. RegTech and InsurTech, among hundreds of other hybrids, have emerged in recent years, allowing traditional firms to modernize their infrastructure while reducing long-term expenditures. Fintech businesses will continue to gain market share via smart alliances and mergers.
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