What are the key trends you can look out for in the fintech industry? Here are the top 6 trends of 2020 that have been predicted by industry experts:
Fintech cybersecurity and stability
Many individuals were worried about their sensitive personal information when they first heard about the fintech business model.
Undoubtedly, the digitalization of financial institutions might concern the majority of consumers because technology hasn’t been known to be 100% reliable. The threats that most people were concerned about were identity theft, money laundering, and espionage.
Cybercriminals have preyed on the little guys which are smaller banking firms because they were known as companies that don’t invest much insecurity. There are more efforts to build awareness on the importance of safety, especially in fintech companies.
In 2020, more fintech companies will be educated about how they can secure their business operations and survive a cyberattack. Part of their education includes being proactive in their security system planning but also includes a reactive strategy.
That focuses mainly on what the business will do once they have been attacked so they can fully recover and bring the business back to health.
The importance of updating security systems cannot be stressed too much because if fintech companies don’t do so, they are putting themselves in the crosshairs of cyberattacks. Companies should make security their priority in this industry because it is their most important commodity.
Imagine banking institutions that only exist in the virtual world that offers global payment methods and other useful features such as tapping into cryptocurrencies easily. There are more financial institutions that are following this lead and have offered interesting services at a very affordable price.
There are many appealing features to digital-only banks and they include that you don’t have to go to a brick and mortar bank. That means you won’t have to wait in line or deal with the different moods of bank tellers that can aggravate you.
Also, you don’t have to go through the paperwork that is required with traditional banks. On the flip side, banking institutions can save a lot of money with the digital-only bank model. Instead of worrying about opening up branches in different locations, they will just be concerned about maintaining the website.
That costs way less and there won’t be many employees needed to process the applications and other admin tasks because they will be automated.
The main focus of these fintech companies and their HR system is staying on top of security updates to ensure that they don’t lose sensitive data. In 2020, this trend might grow rapidly because more customers are starting to recognize digital-only banks as a more efficient way to the bank.
Although these fintech companies are awfully cheaper than traditional banks, customers should proceed with caution and choose the bank they will use carefully.
The use of Big Data in Fintech
Fintech companies have used unstructured and structured data, colloquially known as big data to segment customers, detect fraud and manage risk. They analyze the big data and augment it to certain algorithms that will help them in making important decisions.
For example, they might use big data for predictive analysis to manage risk better and create profiles to easily identify how risky a certain investment is. It also works with creditors because the predictive analysis can also create risk profiles of each individual applying for finance and help companies make educated decisions.
On the other hand, big data can also be used in fintech to detect fraudsters easier than a human eye would. The big data gathered is analyzed to identify the normal buying habits and behavior of customers. That helps fintech companies identify suspicious behavior that could be malicious to the entire business operations.
The latter use of big data contributed to the bigger picture of fintech, which is making transactions more secure. Also, fintech companies can also use big data to segment customers and offer more personalized offers to them.
That can lead to customer retention because happy customers are bound to call again and even recommend your services to friends and family.
Cryptocurrency and Fintech Blockchain
For the past decade, cryptocurrency and the blockchain were refined and tuned to be more effective and add more security. The real question, though, has been, will the blockchain reach the requirements of fintech.
Those demands are primarily based on the privacy of the parties involves and the security of transactions conducted. Bitcoin has been working around the clock to meet these demands without having to compromise the performance of their platform.
Due to those developments and contributions from other institutions, the blockchain has become more effective in fintech. It has proved that it can significantly speed up the transactions between banks through secure and dedicated servers.
Generally, the systems that fintech currently has in implementation take at least a day to more than one to clear. Blockchain, on the other hand, can take care of those transactions in a fraction of the time.
The processes that are involved that blockchain will take care of are right from the issuance stage right up to the settlement phase. Banks and other financial institutions will also be enabled to build smart contracts based on any type of business or transaction.
In 2020, more developments will go into the cryptocurrency blockchain to make it better suited for fintech. More research will go into this sector with the intention to fully implement it to the financial industry at large.
If you go back a couple of decades ago, the payment methods were very limited to signing a check or swiping a credit card. As time unfolded, there have been many more payment methods that were brainstormed and implemented as part of the fintech.
These payment innovations have made things very simple and easy for users because they have become more mobile and accessible to all.
Amongst these payment innovations, there are mobile wallets that have slowly phased out the need for an actual wallet that stays in your pocket. The trend of mobile wallets with all the necessary details such as credit and rewards cards will continue to grow in popularity during 2020. The assignment writing services on PapersOwl reviews are already using this technique and benefit the students they cater to.
On the other hand, technological developments like contactless cards that were piloted by different banks will take shape in 2020 and the users will increase exponentially.
Another payment innovation that has intrigued many fintech fanatics is the use of QR codes to make payments. You can link your credit card to certain apps that offer the service like Zapper and then scan at the till in shops that have that feature.
It simplifies life because even if you forgot your wallet, you could still make the purchases you intended on making. E-Commerce has also received its fair share of fintech developments like the development of Google Pay and Apple Pay, which helps customers check out faster.
The integration of AI in financial institutions
AI has also been integrated into the financial industry and has been adopted by individual institutions, respectively.
The AI-powered systems being implemented can help reduce the operating costs of banks and other financial institutions. Experts to predict seeing the relationship between AI and fintech grow stronger in 2020 and will be one of the most popular trends.
For example, there are systems currently being implemented that help investors make wise investment decisions. These AI systems gather data and analyze it with the intention of rooting out the best investment choice.
They can generate a report that shows the reason why it is the best choice. That can help many people notice some points that wouldn’t be noticeable to the human eye.
Some banks use AI to help them make underwriting decisions and they have helped humans rethink this entire process. Creditors have also used AI to help them make decisions on whether they will lend certain individuals money.
They use a credit scorer which is powered by AI to determine the financial health of that individual. Some banking institutions have integrated AI to take care of the repetitive admin tasks that take up the majority of employees’ time. In that way, they can streamline processes and be more effective at it.
The bottom line
Fintech is a rapidly growing industry that will continue being developed and fine-tuned in 2020 to be more secure and satisfy customers. The payment innovations such as mobile wallets and digital-only banks break the borders financially and enable users to make global payments.
Kurt Walker has been working as an editor and a copywriter at College papers, resume services, writemyessay4me, UK writings, Top writers and Assignment Geek in London for 3 years. He is also a professional content writer and journalist covering topics in inspiration, productivity, education, and technologies.