As we are becoming familiar with the term, financial technology is the integration of technology into financial services. Further, Fintech aims to ensure that customers have an advanced and improved use and delivery of services. Over the years, Fintech has been growing thanks to the advanced technology integrated into financial activities every other day. But the financial technology became the mainstream due to the pandemic-induced stringent measures that apply even to the financial sector. Now what or how will the future of financial technology be? Let us learn in detail.
Definition of Financial Technology
Financial technology, often shortened to fintech, is an emerging industry that uses technology to improve financial services. Financial technology companies are typically startups that aim to create new and innovative ways to provide financial services or make existing services more efficient. Fintech covers a wide range of services, including payments, lending, investing, and personal finance. Financial technology is still a relatively new industry, but it has already seen tremendous growth in recent years. In 2015, global investments in fintech totaled $19.1 billion, and that number is only expected to increase in the coming years. Financial technology has the potential to significantly disrupt the financial services industry, and it is poised to have a major impact on the way we manage our finances in the future.
Future Trends Of Financial Technology
With the way Fintech is progressing day by day, the Financial sector of India will certainly undergo a major transformation in the future. Further, some of the future trends listed below will likely define the future of financial services. They are:
Mobile banking and cashless transactions
One of the major trends that will transform the financial sector and its services in the future is mobile banking and cashless transactions. Unlike in earlier days when people preferred to visit the bank for banking services, as and when technology progresses, they prefer to opt for banking services on their mobile. Further, with pandemics and its economy looming over the world, cashless transactions have become the prime choice today.
- Access to banking services with a click of a button on the mobile.
- Secure and promising financial transactions.
- Real-time payment/transactions.
- Unlimited data offers and the creation of new revenue streams.
- Increase in transaction volume.
- More opportunities for digital wallet providers.
- Integrating post offices into the core banking system involves unbanked customers to avail of its benefits.
- Simple digital access to bank accounts.
Cryptocurrency and Blockchain
Another significant advancement in the financial sector that can be a major factor leading to the transformation of financial services is cryptocurrency and Blockchain. Suppose cryptocurrency is the virtual currency protected by encryption. Blockchain is the technology that enables cryptocurrency mining and marketplaces to co-exist. Further, with the fintech market embracing the Blockchain, the global Blockchain in the fintech market is expected to expand beyond our imagination. Both cryptocurrency and Blockchain are theoretically required to develop practical fintech applications.
- Cryptocurrency and Blockchain are required for developing fintech applications.
- Major factors that influence the transformation of financial services.
- Digitization of the financial sector.
- Both the technologies help in the development of fintech applications.
- Increase in demand for digital payments and financial services.
- No counterfeiting and double-spending are possible.
Fintech and Wealth management
The third most important trend in the financial sector is the combination of Fintech and wealth management. Moreover, the fintech companies have helped transform the wealth management industry by providing wealth for investors at an affordable price and on time. The coming of startups has challenged the old business models and introduced breakthrough technologies like digital platforms and mobile banking.
- Transformation of wealth management industry by fintech companies.
- Startups challenging the old business models.
- Use of algorithms for securing wealth investment and purchases.
- Generation wealth for investors quickly and at affordable prices.
- Rapid progress in the field of digital wealth management.
- Securing the Fintech and the wealth management industry.
The next future trends in Fintech are the Insurance Industry. Even though Insurance tech has been becoming its industry, it comes under the umbrella term of financial technology. Because the insurance industry is the late adopter of technology, traditional insurance companies have teamed up with fintech businesses to automate insurance services. Further, the combination of Fintech and the Insurance industry has to work towards creating trust and consumer engagement.
- Automate operations related to the Insurance industry.
- Customer engagement and creation of their trust.
- Providing polite customer care.
- Automation of operations and increase in coverage.
- Transparency in communication.
- Regular updates to customers about the latest trends.
Artificial intelligence is one of the major financial technologies that has drastically improved the financial services banks and other financial institutions provide. AI semantic representations, knowledge graphs, and graph computing have played a major role in the financial sector’s transformation. Further, these AI developments will be one of the critical factors for the future advancement of financial technology. Moreover, the ability of AI to assist in building associations and identifying different patterns across complex financial networks, etc., will have a strong implication on the financial sector in the coming years.
- Application AI semantic representation, graph computing.
- Ecosystem-based financing.
- Facial recognition features.
- Machine-based identification of financial elements.
- Minimal data usage.
- Personalized user experience.
One of the finest future trends in the financial sector is cloud computing. Various financial institutions have improved their growth and development with cloud computing technology. Cloud computing has given financial companies to become flexible in providing their services and managing their storage and computing. At the same time, it has helped introduce new formats of financial services like open banking, banking-as-a-service, etc. Cloud computing technology in the financial sector is expected to transform the financial sector.
- Open banking service
- Embedded security processes.
- Machine-to-machine communication
- Growth of development and operations.
- It helps in lowering technical costs.
- Increases the efficiency of work and employees
- Reduces the technical risk.
- Flexible scalability of the financial sector.
Thus, these are the top future trends in financial technology that will help define the future of the financial sector.
Overall, those mentioned above key financial technology trends will be the key to unlocking the future competitiveness of the financial sector. Further, these technological innovations in the financial sector will transform people’s lives by improving their financial transactions.
Moreover, in the future, traditional financial institutions will have to merge with the latest technologies to stay on top of the competitive world of the global financial sector. Finally, make people’s lives more advanced in terms of financial transactions and help them have stress-free financial activities. Thus, future of the financial technology will be the most promising one with these future technologies defining the same. Further, there are chances that with the rise of pandemic-induced measures, financial technology will be at its peak.