As you may already know, Fintech is modern technology designed to improve banking systems and financial processes. The term has been around for a while but as technology evolves, so do financial processes that become more and more sophisticated.
More often than not, adopting new technologies that will transform everything is quite disruptive at first. However, after a while, the benefits of these new technologies become evident. Today, various devices, software, apps and interfaces, among other things, are omnipresent in financial services.
Not just that, but the financial services themselves have also changed and evolved drastically. Businesses today have access to services like invoice financing from alternative lenders, such as Ark Kapital, and the entire process is digitized and seamless.
The same applies to individual consumers. You can apply for a loan or make a transaction with a single push of a button. With that in mind, let’s have a look at some of the Fintech that has transformed the financial industry.
Mobile traffic has long since surpassed desktop traffic and almost everyone in the world uses a smartphone these days. This trend has given birth to numerous Fintech innovations that have transformed banking and other financial services.
Today, people rarely visit a bank in person. They rarely use ATMs anymore as well. Almost every financial process is conducted through mobile banking.
You simply download a banking app on your phone and you can make transactions, convert currencies, manage your bank account and even apply for a loan. And that’s not all. Both online and offline retail shops also support mobile Fintech that allows consumers to make purchases with their phones.
This has nearly eliminated the need for cash or credit cards for that matter. It’s estimated that there will be nearly 2.5 billion active mobile banking users in the world by 2024. Without Fintech, none of these services or processes would be possible today.
The Rise of Artificial Intelligence (AI)
AI technology has been in development for some time now and significant improvements have been made over the years. It was only natural to assume that AI would make its way into Fintech sooner or later.
Many financial processes today are, indeed, powered by AI. The main reason the financial industry was keen on adopting AI as soon as possible is that AI has machine learning and deep learning capabilities that can potentially revolutionize financial processes.
AI is being used to automate processes, in customer support, fraud detection and prevention, credit risk assessment, lending decisions and many more.
AI also plays a pivotal role in improving cybersecurity for Fintech solutions. Furthermore, AI can be found in providing customers with adequate service and support, most commonly in the form of chatbots.
Chatbots are actually capable of mimicking human behavior due to their natural language processing capabilities and can, therefore, provide customers with adequate service and support 24/7. This is all thanks to the AI technology that powers these computer programs.
As you may imagine, with the evolution of Fintech come more sophisticated cyber attacks. The more reliant financial services are on technology and the Internet, the more vulnerable consumers and financial institutions become.
That’s why new Fintech solutions have been developed to combat these new threats. This is where biometric technologies come into play. These technologies are designed to make authentications and transactions more secure by replacing passwords and PIN numbers with biometric data like fingerprints or retina scans, for example.
Moreover, biometrics are more convenient as far as consumers are concerned. After all, you can forget or lose your password but your fingerprint will always be the same and remain with you all the time. That’s why many new devices and apps are being developed that will support this technology and help revolutionize financial services as we know them.
Ever since 2018, blockchain technology has been a buzzword across various industries, and especially the financial sector. The notion of a secured ledger that’s next to impossible to hack is an opportunity the financial industry isn’t going to let slip by so easily.
Ever since blockchain technology was made publicly available, there have been numerous Fintech startups that focused on implementing this technology into existing financial processes. Potential benefits of using blockchain technology include improved security, enhanced encryption, tokenization for the use of universal currencies, and so on.
Although very few blockchain implementations can be seen today, mostly in Asian countries, the financial industry is still working on developing a feasible blockchain system that can be used by banks and financial institutions all over the world.
Also known as RegTech, regulatory technology is helping the development of new Fintech software and apps that will ensure that financial institutions and processes are compliant with regulations.
This may not seem as much but it takes time for a financial institution to adopt legal requirements and rules in order for it to operate as intended by the local government.
Regulatory technology automates such processes and makes them more seamless. This technology also helps financial institutions to collaborate with government regulatory bodies on coming up with the best way to ensure compliance with specific rules or laws.
This is all in the best interest of all parties involved, which include local governments, financial institutions and consumers. In addition, RegTech ensures that financial institutions are up to date with any new restrictions or regulations that may arise by keeping all the data in a centralized database.
That way banks and other institutions can quickly adjust to any new rules without any disruptions to their operations. Regulatory technology may be niche-oriented for now but this Fintech has the potential to transform the entire industry.
Fintech or financial technology is of vital importance to the financial industry. Modern banks and financial institutions simply wouldn’t be able to operate at such efficiency if it wasn’t for Fintech. As consumer expectations and needs increase so does Fintech. It continues to evolve to improve financial processes and provide additional convenience to consumers. That’s why it’s highly likely that we’ll see more gadgets, apps and devices being developed in the future.