It’s difficult to pinpoint when the word “fintech” was developed. However, Chris Skinner, a worldwide FinTech critic, believes it began in 2005 with the introduction of Zopa, a UK peer-to-peer lender. Since then, the industry had developed consistently until 2020. It was the year when we witnessed a significant 72% jump in European fintech app usage.
While GDPR has undoubtedly brought fintech services to the public, there are a number of other factors impacting the future of a fintech industry. Fintech software development company, banks, and other players are joining the field behind the scenes. Together, they have been defining the future of the industry. These factors will significantly impact how banking will appear in the future.
Artificial intelligence Is Driving The Value Up the Hill.
According to McKinsey, artificial intelligence (AI) may bring up to $1 trillion in value to the global banking sector each year. Banks and other financial institutions are expected to embrace an AI-first approach. They are better preparing themselves to withstand incursion by increasing technology corporations.
Automatic factor discovery, or the machine-based identification of the components that drive outperformance, will become increasingly common in financial services. It will assist in the refinement of financial modeling across the sector.
Knowledge graphs and graph computing will also play a larger role as a crucial application of AI semantic representation. Their potential to aid in forming linkages and identifying patterns across complex financial networks, relying on a diverse set of frequently divergent data sources, will have far-reaching ramifications in the coming years.
AI applications will permeate the whole financial industry’s activities, including front, middle, and back offices.
Some examples of customer-facing applications are as follows:
- Tailor-made products
- Personalized user experience and analytics services
- Intelligent service robots and chat interfaces
- Market trackers
- Automated transactions and Robo-advisors
- Alternative credit ratings based on non-financial data
- Facial recognition authentication
Smart procedures, increased information representation tools (epitomized by knowledge graphs), and natural language processing for fraud detection are examples of middle-and-back office applications.
Blockchain will Decentralize the Current Financial Streams.
Distributed ledger technology is rapidly serving as the digital world’s backbone. It is the technology that powers Bitcoin and other cryptocurrencies, but it has many additional uses.
The promise of blockchain technology has yet to be fully realized. Over the next few years, some ground-breaking discoveries in this subject are possible, which will fuel the business of a fintech software development company.
Decentralized finance (DeFi) and non-fungible tokens (NFTs) are only two examples of how blockchain might revolutionize finance. There are several more applications for this technology, and it is difficult to foresee what new discoveries may emerge in these fields in the next few years.
Blockchain has enormous development potential, but there are some obstacles to overcome before it becomes more widely used.
Neobank is a Hot Topic!
One of the most prominent services of a fintech software development company challenging traditional banking is neobanking. A neobank is a new form of the bank that exclusively operates online and is created using mobile-first design concepts.
Customers may open an account on their smartphone rather than visiting a real location or filling out tedious paperwork on paper.
Such applications are more user-friendly, and the majority of them provide a wide variety of financial services, such as savings accounts, loans for clients’ automobiles or mortgages, and simple payments and transfers.
For example, the applications of neobanks such as the UK-based Monzo or Starling Bank, as well as Germany’s Number26, have been growing quickly in Europe. They are frequently ranked higher than banks. According to a Forbes report, banks have invested $1 trillion (USD) in digital banking throughout the world in order to remain competitive.
Augmented Reality/Virtual Reality is Hitting the Market
VR use cases in financial technology are progressively entering the market, with users able to invest in stocks or trade currencies using virtual reality. In addition, it delivers an immersive experience for monitoring real-time market fluctuations. Simultaneously, it makes rapid investing decisions. All in all, it’s a great illustration of how customers can leverage fintech and current technologies to make smarter investments.
While most experts think that it will be some time before VR has other acceptable use cases, businesses are actively experimenting with the technology to see what it can do.
Fintech is a continuously changing business, with new trends emerging every year. Therefore, discovering these top fintech trends might provide fresh insights. They help you remain ahead of the competition by making intelligent business decisions for the future growth of your organization.