However, with FinTech, people can now easily access loans, mortgages, and so on without having to appear physically in a bank, or deal with the traditional financial institution.
What is FinTech?
Financial Technology (FinTech) is any technology that helps to automate and improve the way financial transactions and processes are carried out. This year alone, FinTech investments are said to exceed $30 billion, and this will bring about improved financial services at a lower cost to consumers.
In this article, we will be discussing the major FinTech trends that will dominate the financial industry.
Major FinTech Trends for Financial Industry In 2020
One of the most significant fintech trends we will see this year is blockchain. Blockchain is the game-changer that will birth efficient and uber-secure transactions. People will transact without the need for intermediaries and their cut-throat prices.
According to a recent World Economic Forum, about ten percent of GDP will be stored in Blockchain by 2027. Another prediction by PWC states that this year 2020, seventy- seven percent of financial institutions will embrace some form of Blockchain technology. Also, this year, the banking industry would make $1 billion of business value by using Blockchain-based cryptocurrency.
All of these predictions show that enthusiasm and investment in Blockchain are on the rise. A lot is at stake, and companies are starting to learn and apply Blockchain technology.
When the financial sector deploys Blockchain technology right, the following are possible benefits:
- A more secure payment processing
- A massive reduction in fraudulent activities
- An automated trading process
- Smart and independent verification of clients, amongst others
Blockchain is an essential addition to the financial industry for more secure activities.
Human error has continued to be one of the major reasons for mistakes in the world of finance. Even the most sophisticated traders in the financial markets are prone to making errors; hence, a lot of companies have sought ways to automate most of their financial processes.
With the evolution of fintech operations, mundane and other traditional banking functions will get automated. This will improve the consumer experience and, at the same time, help companies save costs while generating revenue.
Big data and AI — Engineered Hyper-personalization
In the rephrased words of a financial writer, Kamalika Some, "the banking industry generates data on each step. And the quantity of data generated per second will reach 700% by 2020." This data collected can be effectively used with the help of Big Data.
Big Data defines the massive quantity of data that is collected by an organization. These data can be structured, semi-structured, or unstructured and are analyzed for information.
Financial institutions can now collect and manage Big Data to get a thorough view of each customer. This will range from their behavior, social browsing history, and so on.
Using the information collected, they can create personalized targeting and offers in real-time across multi-channels to consumers. And leveraging predictive analytics, they can detect fraud and reduce business risks. Engaging customers this way will lead to more retention of clients and increased loyalty.
One of the things we were taught while growing up was to share what we have with people who don't have. This can be likened to the concept of sharing economy in the financial industry.
Sharing economy is simply an economic model where individuals can invest in, rent, or borrow assets owned by someone else either for a fee or free. However, in the sharing economy, this entire process is done through the internet.
This economic model has not been very efficient. However, thanks to fintech, this year, we expect complex banking and regulatory practices to become easier, which will help open more investment opportunities to people.
The application of fintech to the sharing economy has massive potential and is attracting huge investment. PWC estimated that the sharing economy would be valued at [$335 billion by 2025.]
Fintech is the new dawn for the sharing economy because it will help more businesses to generate revenue. It can also challenge the traditional banking system, which isn't customer-centric. Individuals can now become lenders, and groups can become financiers.
Robotic Process Automation
The usual method of carrying out banking procedures manually in the financial sector isn't as effective in this digital age. It's time-consuming, costs more, riddled with errors, and lowers productivity. This is where fintech comes in through Robotic Process Automation.
Robotic process automation refers to the application of specialized software and tools for carrying out rule-based, high-volume, and recurring tasks. This will increase staff accuracy and productivity, leading to excellent business outcomes.
The application of robotic process automation in the financial industry will help accelerate the following processes, such as:
- Opening new accounts
- Customer onboarding
- Suspicious activity reports
- Customer mortgage lending
According to dashdevs, financial chatbots save over four minutes of every interaction. This means that when you replace human involvement with tech in business, efficiency and productivity will improve. A report by Gartner confirms this, saying that by 2020, 85% of banks and companies will employ chatbots to interact with customers.
This makes chatbots one of the fintech industry trends that booms. This is due to the progress made in speech generation and language processing.
This conversational interface is a tool that customers have come to depend on. They trust it to provide round the clock service, quick response to inquiries, and complaint resolution. This will help to make individualized banking a seamless process. Banks can also get feedback from customers in a quick time.
To thrive, financial institutions will have to adopt the tons of innovative technology available today. Fintech goes a long way to make financial transactions and operations more efficient for customers and financial institutions. It will make things such as taking loans, mortgages, documentation processes, security, and much less complex.
Author-Bio: Frank Hamilton has been working as an editor at review service Online Writers Rating. He is a professional writing expert in such topics as blogging, digital marketing and self-education. He also loves traveling and speaks Spanish, French, German and English.