Fintech – The term defines technologies that are applied in financial services or used to help companies manage the financial aspects of their businesses. As more and more startups enter the space and traditional banks try to adopt new technologies, everyone in the industry has ‘Fintech’ on their mind.
Fintech is not new either. The term has been here since circa 2008. The banking sector has traditionally been an industry that didn’t face too many disruptive innovations and changes. However, as the wave of digitalization and computerization hit its shores, it changed the way that transactions are processed and delivered, and suddenly banking solutions and processes became more complicated but streamlined — with the new, improved Fintech.
Before you enter the world of ‘Fintech’, let’s explain what it is. When you want to make an online purchase, and use PayPal, Apple Pay or just your credit card, to do that, all the parties involved in this action — you (the consumer), the e-commerce retailer and the banks behind the money exchange — are using Fintech.
Technologies have changed the financial sector and its services, as what was once handled one way (think human hands), is now digitalized, and we have Fintech startups to thank this for. Fintech, is the principal reason why almost every kind of financial activity — whether its wealth management, banking or payments — turned the overall approach of the industry upside down.
Given that these changes and opportunities attract attention and massive investments, Fintech’s case has been no exception. Last year was a fantastic year for the financial technology industry: it received more than $17.4 billion in investment, and as much as a third of all consumers worldwide are using two or more Fintech services.
Interestingly, although Fintech is often associated with startups, the world’s top banks — such as HSBC and Credit Suisse — have been developing their own Fintech ideas to make operations more streamlined .There is a vast number of Fintech startups in the US, making it a huge market.Factors such as highly trained tech and software engineers and an abundance of resources with a very heavy tech-centric culture has been the main contributing factors.
However, there are some different predictions on Fintech’s future. Experts say that 2021 will bring a new leader in this field — China. What is more, various Fintech companies have made considerable investments in the traditional banking system area, and China has moved 96 percent of its e-commerce sales without the services of a bank: a line-up which includes giants like Alipay and an online banking platform called 91 Financial Information Service.
As well as the financial technology industry booming, , areas like online and mobile payments, big data, alternative finance and financial management have come a long way due to innovative technological solutions in their field. Fintech has had a major impact on these disruptive innovations, such as Artificial Intelligence, Robotics, Biometric applications, Blockchain, Peer-to-Peer lending, and many more.
2019 will be an exciting year when it comes to Fintech’s innovations. Disruptions like Digital
Wallet and Cryptocurrency Wallet with different options are about to hit the market — and some of them already did. The most popular Digital Wallets right now are Android Pay and Apple Pay. A Digital Wallet is an electronic device that enables consumers to make an electronic transaction: it can include online purchases using a desktop or smartphone at any physical store. Normally there is a link between a consumer’s bank account and a digital wallet, which can also contain things like a driver’s license, a health card, loyalty cards, ID documents, etc.
A Cryptocurrency Wallet is a type of digital wallet where private keys are stored for cryptocurrencies — think bitcoin. It can be used to receive or pay cryptocurrency transactions. Right now, the most popular Cryptocurrency Wallets in the market are Bitcoin Core, Electrum and Jaxx.
We’ve talked about Artificial Intelligence and machine learning quite a lot in our articles, but it reaches entirely new heights when it comes to Fintech. AI and machine learning for automation, predictive analysis, addressing queries, and many other key actions, are liked by a huge number of Fintech players. AI is also responsible for securing financial services and transactions, removing potential security risks out of the process. According to PWC’s Global Fintech Report 2017, nearly 30 percent of financial institutions invested in AI. Analysts say that the number of financial institutions that invested in this sphere indirectly is even higher.
As changes in the banking industry quickly approach, it’s also important to note that mobile technologies have had a massive impact on consumers behavior. The so-called transformational shift is the most important one, as consumers are using mobile banking more increasingly every day.
In short, this means that people have developed new habits when it comes to their finances. Nine out of ten individuals are banking from home — logging into their bank accounts while sitting at their desk or in the living room. 31 percent of millennials are using mobile banking services when socializing. Essentially mobile apps now provide independence and opportunities to monitor personal finances conveniently and at speed and growing exponentially.
Analysts say that compared to desktop use, mobile use has been on the rise with the main activities being in e-commerce and social media spaces. The resulting effect is increased comfort and convenience when it comes to mobile payments. Which is why various Fintech companies and startups are working on integrating payment channels with as many mobile-friendly features as possible, starting with mobile wallets and ending with QR codes. which is why the mobile banking and payments are estimated to reach 92 billion USD mark by 2019.
Given that bank transactions frequently raise questions that cause security concern, but many raise the question ‘what about the safety?’. Which is where the Fintech industry like to think it has it covered: Blockchain technology has become a great alternative for safeguarding transactions and related data. Security benefits play an important role in the Fintech industry, that’s why there are so many investments in adopting this technology. Again HSBC as well as Barclays — both are planning to adopt blockchain technology for this immediately.
Due to consumers and their changing behavior: when it comes to their finances, they know what they want and where they want it. Financial companies and startups are very aware of his, and that’s why “convenience” has become such an important word in Fintech — companies are inspired to deliver the best disruptive innovations that meet the evolving consumer’s expectations in financial services, and it’s a game that’s worth playing.