Talking about the major disruptors in the last decade, Fintech has to be kept under a special category. As a major disruptor, it is influencing every other convention in the market. And with the assistance of some contemporary tools like Big Data, Machine Learning, Artificial Intelligence, Deep Learning & Blockchain, the technology in finance has achieved massive success in terms of its adoption.
Look at some amazing stats presented by KPMG, a major consulting firm.
According to the firm, in 2019, the Fintech companies will gather around $135.7 billion in investment. And by 2023, the global FinTech industry will touch $158,014.3 million while growing with a whopping CAGR of 9.2%.
Despite the disastrous pandemic of Covid-19, financial technology is growing at an unprecedented rate. As per the study conducted by the World Economic Forum on 1.385 FinTech Firms operating under 169 jurisdictions. The study showcased an average growth of 13% in 2020 during the pandemic. This growth is special in many ways, as it was 11% in the previous year.
Whether it is related to money, banking, or payments, Fintech technology impacts everything with its technology subsets. Now, without much ado, let us get down to the core of Fintech and what exactly it is all about.
What is FinTech?
In the most succinct terms, a Fintech is an abbreviated form of Financial Technology. It is also used as a collective term for all the technology in the financial sector. From a technical perspective, it is the seamless integration of technology in the finance sector to produce fast, accurate & efficient solutions for both consumers and businesses.
FinTech has enabled the banking industry to become smarter and quicker than ever. And as we are thriving in the Industry 5.0 ecosystem and its widespread digital wind, the adoption of FinTech technologies in the form of apps and websites is also widespread.
Now, it is time to explore the trends that set the vision for Financial Technology in 2021 and beyond that and make the finance world more convenient, quick, and secure.
According to the statistics presented by the World Bank, about 69% of the adults in the world (about 3.8 billion) have access to a bank account or a third party money provider. But a potential number of 1.7 billion adults remain unattached to the banking system, although 75% of them have mobile phones that can make them an integral part of technology in the financial sector.
Most of these people belong from developing nations, so the drive of financial inclusion has to begin from these territories. But, thankfully, the penetration for mobile phones is high in these territories, so it is high time for the financial institutions and services to include this population in the banking system through Fintech services and branchless banking.
That’s why it is included as one of the biggest technologies in finance and accounting in 2021 to provide banking services to all sections of society.
Robotic Process Automation
Have you heard about the digital workforce? These are software robots under robotic process automation to automate specific tasks usually performed by humans. And as the AI technology evolves more, the process will enhance and optimize all the finance-related processes.
Talking about its adoption, many financial institutions and services have already adopted RPA in their multiple operations like Account Transactions and Maintenance, customer onboarding, loan processing, Generation of installments, and more. RPA completes these tasks at a rapid pace with zero errors so that companies can focus on the part of revenue generation and customer retention.
Big Data Management
Data is the most valued yet underrated currency in the world. It carries the same significance in the finance domain as others. Today, all financial institutions amass a huge amount of data daily. Most of the data is unstructured and must be processed through analytical ability to identify future business prospects, associated risks, market trends to make future-proof strategic decisions.
Well, all the data is not disorganized, as the loan applications, tax documents, and bank statements are well structured and organized. If an organization manages all this data analytically, it can unearth future business prospects, identify future-proof products, and can automate essential services.
Here comes the role of App developers with analytical acumen. They can build apps based on algorithms that can extract insights quickly. Anyways, Financial data algorithms are quite good at identifying multiple patterns of data and sorting them into the proper order for further analysis.
Fintech applications ensure that institutions can handle their data in the most efficient way to extract business insights and integrate technology in finance and accounting.
Recently, a report has been presented by IDG study to showcase the business impacts of the Covid-19 pandemic. The report stated the fact that about 40% of employees are expected to be working remotely at least until January 2021. It implies that the financial institutions will need better digital tools to ensure secure access to files and facilitate collaboration.
And to ensure data security and error-free operations, a dedicated solution for viewing, editing, and managing documents has to be there, as the usage of third-party solutions can pave the way for data theft. If the features are integrated with the fintech applications, institutions can keep their documents safe within a secure infrastructure.
Voice Search Integration
Voice is the future. It is no longer a buzzword as most of us have a virtual assistant in our homes, workplaces in our speakers, phones, gadgets, and more. Quoting a figure from 2019, there about 3.25 billion digital assistants were functioning. Alone in the USA, a significant 72% of the population use voice search to seek information.
Today, voice dictates about 50% of the searches, and it is bound to penetrate the fintech sector as well. In terms of functioning, voice search can be integrated to execute tasks on getting credit balance, overdue, due date, request statements, initiate service requests, check market conditions for investments, and more. Technology in finance can also use voice for collecting data for analytics for better customer service.
RegTech in financial services
RegTech means regulatory technology. It is related to offering technology advancements to regulate the financial industry. This is why businesses spend a huge amount of sum to avoid any kind of breach.
The technology enables financial companies to harness software to simplify compliance processes with the existing law framework. The regtech solution is divided into identity management, regulatory reporting, transaction monitoring, risk management, and compliance software.
If the banks and other financial institutions operate in compliance with Regtech, they can reduce administrative overhead, protect customers, and ensure financial stability for everyone. Furthermore, it ensures agility, analytical ability, and safe transactions.
These automated RegTech software solutions are specifically designed to upgrade and learn from the multiple patterns found in large data sets. Thus, it becomes easier to identify problematic cases or even reveal fraud.
Without a shadow of a doubt, financial services technology is growing unprecedentedly, and the trends we have discussed will make FinTech more accessible than ever to every financial institution. However, the Fintech industry has already got much technical edge in its operations, but with more technologies coming into play, they enable faster transaction, financial data, transparency, prompt customer service, and safety.
But technology disruption also paves the way for fierce competition, so it is quintessential for all financial institutions and services to adopt the FinTech Trends to reap peerless future growth.