Recently the FinTech industry has shown exponential growth. Unlike any other sector over the past decade. FinTech is an umbrella term incorporating various aspects such as digital payments. This industry aids businesses and consumers alike so operations can be conducted smoothly. Recently, elements such as cryptocurrency and digital trading have made their way into this sector. Without wasting any time further, let’s dive into the upcoming and latest FinTech trends in the industry.
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FinTech Trends Today
In today’s day and age, technology is being incorporated into every industry, and the Finance sector is no exception. The financial industry married technology and gave birth to FinTech. Previously, banks were considered a big part of the FinTech sector. But as new startups are taking over the market, banks are on the opposite end of the spectrum. Startups will come face to face with banks that are still in the stone age. But both institutions need one another to survive in today’s market.
FinTech startups need funds from banks to kickstart their venture. This industry is nothing without help from banks and insurance companies. These institutions are the backbone of this sector as many of the products come from them. So how do banks move around in such an environment? Simple answer is through investments. Institutions such as banks have invested funds in startups that use technology in their operations. This keeps them in the loop for any upcoming trends in the market. This acts as a retention strategy to help keep customers loyal.
Trends in FinTech
The Surge of Mobile Banking
The FinTech industry was kickstarted in 2015 as various payment methods came into existence. Many came and went, but it became clear that mobile banking was here to stay. It isn’t just limited to the tech industry but has its claws in various sectors.
Such as retailers and manufacturing companies. These sectors use internet-based mobile payment solutions, particularly due to their convenience. This allows Gen Z and other unbanked fellows to take advantage of this sector from the comfort of their homes. It’s estimated that around 29 million Americans are using mobile-only banks to make transactions. This number is expected to increase by 7 million by the end of 2022.
This increase in user base is huge, and industry disruptors will take full credit if this upsurge. The scalability of this industry would allow startups to create mobile banking platforms that can cater to varying customer demands. Here’s something that startups should consider; investing in the bank’s digital-only banking. Traditional banks’ API should power it. This assures that you can buy a license for your streamlined operating procedure.
Adoption of Blockchain Technology
Recently in the FinTech industry, blockchain technology has created waves. It allows users to safely send and receive money without having to go through rigid banks and financial institutions. FinTech has been blessed with this technology which acts as grounds for people to trust this new modified version of payments. You can think of blockchain as a goose that lays golden eggs.
As this technology is recent, it has the attention of young folks as well as the older ones, who are seeking profitable investments. The blockchain market is going to be worth $67.4 billion by 2026. A significant reason for this growth is that blockchain-verified data is secure from lurking hackers on the web.
When used correctly, this technology can help your product stand out in the highly competitive marketplace. With the aid of blockchain tech, your startup can be equipped with elements such as increased security and efficacy. With these three helping hands, companies can exchange information in a much more streamlined manner. If you run a small business, you must be wondering how I can jump on this trend.
Here’s what you need to do:
- Create a platform that supports and empowers cryptocurrency payments.
- Hire a team of developers to build a dApp.
- Implement De-Fi in their FinTech products.
- Creating a blockchain solution for various departments within the company.
- Developing a crypto-enabled payment gateway.
Rise of Regulations in FinTech Trends
FinTech is a fairly new industry, which means that the U.S government is still working on its regulations. As the scalability of FinTech increases, government agencies plan to introduce improved regulations and guidelines. This is particularly due to the rise in risky assets such as cryptocurrency.
Regulations for the FinTech industry aren’t streamlined yet. But the framework is divided amongst various organizations. Soon different authorities will realize that regulations are a need of the time.
Primarily, any transactions made through this evolved form of payment mechanism should be taxed accordingly by the respective institutions. In 2023 we will see bills being passed that hold such institutions accountable for their actions.
Here Comes BNPL (Buy Now Pay Later)
Buy Now Pay Later is a product of the FinTech industry. It’s meant to create ease for consumers so they can buy things they can’t afford. This option would be available at the checkout section of an e-commerce website.
Buyers can even create their own payment plan. Like would they want the lump sum amount to be divided into three months or six months? This allows customers to make purchases on items tha were once out of reach. However, the interest rate is one thing to be on the lookout for when opting for this payment method.
Are you still looking at that fancy vase you can’t afford? BNPL might just magically let you have it. Here are some platforms in the USA that are offering such services:
FinTech Trends: It’s All About Embedded Finance
Simply put, embedded finance is when non-financial entities offer consumers access to financial solutions. This would majorly be done through tech platforms. It removes the increased dependency on financial institutions such as banks to clear transactions.
There’s no need to involve third parties in any transactions done through the respective company. Let’s go over the sequence of events; the pandemic gave rise to e-commerce platforms, creating the need for embedded finance. Some companies that offer this service are Uber and MatchMove.
Fintech Trends: Where Do We Go From Here?
This is just the start; as 2023 approaches, adaptation of FinTech trends is expected to increase by a huge number. But how does it help you as a business owner? The answer varies from one company to another. But before implementing this technology, ask yourself your financial goals for the next few years. If they align with the trends mentioned above, then let the implementation begin.