Today’s era is moving towards digitalization, mobile connections and service automations. There are similar examples within the payments, mortgages, and financial industry at large. Digitalization helps in reduction of the use of paper, which reduces the environment degradation. Real estate industries and escrow industries who are involved in property transaction have also started using digitized documents, so both the parties could see and sign the forms online. The blockchain particularly, facilitalities with paperless environment, with its smart contracts environment, where documents are encrypted in smart contracts and are witnessed by the stakeholders on the online platform.
A document has its own geo-time-stamped digital signature that makes it more secure, so that it can’t be hacked, as everyone has their individual digital key to get access. In this instance, the entire experience is moved from online to a decentralized environment, resulting in drastically improved costs, transparency, and improved execution, among other benefits. Banks are also encouraging, empowering and educating their customers to go paperless; offering online statements to reduce printing and mailing costs. However, according to the Consumer Financial Protection Bureau, only one-fourth of credit card holders choose to receive their monthly statements electronically.
Banks were not showing interest in fintech companies. Nowadays, they are partners that are pairing up to take the challenges of a digital-era.
Following are the Fintech Industry Trends that will be transforming the Finance Industry
- Removing Friction from the Customer Journey – opening an account or processing any transaction in the bank took a long time. Customers had to go to the bank and do all the transactions, it took time for any of the transaction. With the digitalisation of the banking sector, these transitions are being done within a seconds, which reduce the time of the customer and make the work of the customer straightforward.
- Rise of RegTech – The initial phase of RegTech solutions had focused on regulatory compliance and fraud prevention. As the RegTech technologies AI, data analytics and data visualisation develop, we can increasingly expect products that provide greater levels of analysis, not only of risk, but of performance, using existing information to extrapolate ever further into the future. Products used to provide scenario analysis, forecasting and modelling and to complete required ‘stress tests’ will be further developed to produce faster and more detailed results. Data analytics will also increasingly be used in a predictive context for targeted risk analysis in relation to and more broadly for internal modelling to be used to develop strategy and report to regulators.
- Rise of InsurTech – The digitalisation not only gripped the banking sector but also it has gripped over the insurance sector. It’s good that the insurance companies are indeed heading down the path of disruptive innovation, whether it is the effect of an external factor, such as the rise of the sharing economy, the ability to improve operations using artificial intelligence. It makes the insurance companies easier to serve the customer, as the customer can get the insurance from any part of the world.
- PSD2 (Revised Payment Service Directive) – In post days while doing the online payment there is a middle man between the customer and the Bank, but PSD2 removes these middlemen through the creation of yet another pesky acronym: PISPs (Payment Initiation Service Providers). These let the merchant and the bank communicate with each other directly – a more straight-forward system with reduced costs for merchants and (ultimately) customers. In near future PSD2 is looking that the charging fees would not be detected by the bank and make the customer more efficient to book the flight, train or any public transport.
- Chatbots, Machine Learning, AI – In order to stay competitive banking sector should keep track of the emerging trends and be able to capitalize on them before their competitors do. Artificial intelligence is currently among the most promising fintech trends. It helps the customers to get connected with the bank in the absence of the banks employees. It also helps in ease the jobs of the bank employees, as they don’t need to be active all the time for replying the queries of the customers.
- Fintech gets Integrated with Social Media – Social media is transforming banking relationships in very significant ways, from improving customer service to allowing users to send money to others via online platforms. New financial technology companies are using social media data to help people get access to credit or even simply open a bank account. The social media has also helped the finance technologies to market their company to the global market. Social media can even impact your ability to get a loan. Integration is happing so quickly, it is possible to argue that social media platforms may be the banks of the future. The future of the bank services industry is to fully integrate banking with social media. Those companies that fail to adapt the changing of the fintech to the market preferences will have difficulties retaining their customers.
- Blockchain Technology – This technology was originally developed as a way of securing cryptocurrency transactions. It essentially allows for safe and secure trading of anything, such as money, estate, royalties, ideas, and even copyrights. Blockchain is a public ledger, but equally has heavily encrypted access keys built in for the stakeholder. Its advanced security features, many financial services companies are looking for methods to implement this technology within their institutions.
In conclusion, Fintech companies will continue to grow and increase their business in this digital world. The fintech companies are helping the banks to grow much faster than the early decades. Banks are becoming more advanced and will also become more advanced by using those trends.