What is FinTech?
Judging from the name, FinTech is an interaction between finance and technology. Well, FinTech trends are new technologies designed to automate and improve financial services to individuals or companies. Unlike initial financial institutions that offered several services, these trends aim at streamlining the user experience. Such impact is termed “disruptive,” as banks must adopt FinTech systems and work with FinTech companies to remain competitive. A good example of this is partnership of Gemix with Neteller to accelerate digital payments.
That said, below are some top FinTech trends to watch out for:
Coupled with machine learning, artificial intelligence is among the top FinTech trends and major influencers behind the advancing technologies in the general FinTech industry. FinTech startups use artificial intelligence in developing bots that can act as digital assistants that help banking customers with simple transactions, such as making payments, checking account balances, providing transaction history, and giving advice on savings and investments.
With continuous machine learning trends, AI-powered chatbots increasingly become smarter as they complete an individual customer’s inquiry. Eventually, these bots will be able to complete complex commands. With such FinTech trends, financial institutions will be able to provide their customers with authentic digital assistance that boosts customer engagement while maintaining the brand culture.
By offering financial advice, most users benefit from prudent financial literacy offered by artificial intelligence. This helps customers learn about their finances, saving options, and other banking concepts they were not aware of before.
Another incredible FinTech trend with significant application in finance and the gaming industry is smart contracts. Smart contracts are tools that moderate execution and control of agreements virtually between the buyer and the seller. This eliminates the presence of lawyers and paper documents when making virtual transactions, as the agreement is signed virtually through cryptographic keys.
Contracts signed using this FinTech trend are tamper-proof, and all transactions and agreements are transparent, irreversible, and trackable. Such high-scale reliability made this FinTech operation applicable in the online gaming industry, which previously faced controversies over ownership and payments.
Smart contracts make it possible for enthusiastic game players to purchase assets for games, such as the online casino 200 bonus, transparently. The use of blockchain in smart contracts enables avid gamers to make purchases and sell their assets without bias.
Unlike physical banks, online-only banks lack local branches as they operate exclusively online. Such digital banks offer several virtual banking services, including international remittance and P2P transfers. Users can also buy crypto coins, such as Bitcoin, from their virtual platforms.
Since its inception, Neobanks have gained unmatched popularity within a short period. The popularity of this FinTech trend is probably due to the convenience it provides to its customers, eliminating long queues, paperwork, and the need to visit banks physically. Fortunately or unfortunately, this trend significantly determines the experience customers will be searching for when choosing a bank.
Currently, most customers prefer FinTech banks with online banking alternatives that they can log in and complete transactions on the go. This explains why banking experts predict a significant reduction in bank visits by 2022 due to these trends.
Open banking is another exemplary FinTech trend that brings banks and FinTech services together by allowing secure exchange of data across different institutions. With user consent, third-party applications aggregate data enabling them to identify the best options, such as best banking options, best financial options for saving, and more.
Open banking also helps small businesses and startups searching for reputable online accounting options in detecting fraud. Most FinTech trends using open data scrutinize transaction histories and other information about service providers before providing recommendations.
Blockchain, which runs on a distributed ledger, is another FinTech trend that has transformed global finance. The fact that any written data cannot be deleted or altered is what makes blockchain technology valuable in finance. Such high-end security makes it suitable for applications in various sectors, including banking, healthcare, insurance, energy, and other sectors handling confidential information.
Despite being in its early stages, the adoption of blockchain in FinTech has increased, with tech giants, such as IBM and Microsoft, using these innovative solutions. The technology has made it possible to make secure transactions between financial institutions. Banks also use this FinTech trend in drafting smart contracts with their customers.
The adoption of blockchain has also stimulated the inception of multiple P2P financial institutions that facilitate decentralized monetary transactions. Due to this FinTech trend, most banking and financial institutions have considered increasing their investments in blockchain to reduce expenses while enhancing internal procedures.
With extreme competition, banks and financial institutions should fast-track the implementation of these FinTech trends to meet the increasing customer expectations and demands. Adopting these trends enables financial institutions to provide better services to their customers and build lasting relationships and boost customer loyalty.
Evidently, these FinTech trends have gained traction and are poised to cause further disruption in the banking industry. With these changes, what do you think is the future for these FinTech trends? Are there any other trends likely to overtake them? Let us know in the comments.
Bio: Thomas Glare is a financial advisor with a whole wealth of experience running into decades. He has practiced both as an analyst and as a teacher to many economic students. He shares his knowledge through journals, and his website.