The pandemic has changed a lot of things in the world, including the financial sector. So, there’s no doubt that things won’t return to being as they were in this post-pandemic economy.
Those working in a pre-pandemic environment are aware of the hurdles the financial sector faces. But there was indeed a global transformation during the pandemic. Things that were deemed a nightmare to operate remotely became remote, more so because of necessity rather than choice.
These ‘things’ also included services administered by the financial industry. For example, people had to say goodbye to physical visits to the bank. Other critical services like insurance and loans also went remote.
Although managing things remotely felt like a huge challenge a few years ago, it has gained immense popularity now. And by the looks of it, it will likely stay here for a long time, especially in the Fintech industry.
Experts have gone as far as to predict that Fintech will exceed $300 billion globally by the end of 2022. But what is Fintech? We know of traditional finance businesses like banks. But is this fairly new industry worth the hype? And what about the future of Fintech; is there even a future? Read on to find out.
Table of contents
What is FinTech?
Looking at the word Fintech, you might get the feeling that it’s a combination of two words. And you’d be quite right in thinking so. Fintech is a portmanteau word for “finance” and “technology.”
The question then arises, what businesses fall under the Fintech sector? The answer is quite simple. Any company that uses technology to automate or improve financial services can be considered Fintech.
Startups, and established businesses alike, are now beginning to understand the importance of Fintech to provide better financial services. So, let’s now look at why this is so.
Why is FinTech Important?
Companies like insurance, banking, investment firms, and asset and personal finance management can all benefit from Fintech. Fintech applications automate tasks and increase affordability. Given below are a few more benefits they offer:
- Depositing cheques using a smartphone
- Managing investments
- Transferring money online
- Applying for credit
- Raising money for a startup, e.g., crowdfunding
Simply put, Fintech improves financial literacy. Customers can handle their finances faster and more conveniently. After all, that’s what automation does, right?
Previously, people had to physically visit brokers and do all sorts of other things to invest in stocks and shares. They had to pay brokerage fees, commissions and other charges, making it quite an expensive task. But the rise of Fintech has changed this.
Investors can now easily manage their investments and meet brokers virtually. As a result, cutting a lot of costs. So, it’s safe to say that Fintechs are, and will continue to shape, the future of the financial sector. How are Fintechs affecting investments in the coming years?
The Future FinTech Trends to Look Out For
Here are some trends to look out for. These trends define the future of Fintech.
Although blockchain technology isn’t quite old, it is still gaining popularity globally. New advancements are still being made in the blockchain world. As a result, helping financial companies understand its significance, especially regarding SME lending, risk management, and cost reductions.
Blockchain technology can help financial institutions employ secure digital transactions and eliminate identity thefts. So, people won’t be concerned about privacy breaches when it comes to online transactions. Plus, it increases chances for the introduction of new cryptocurrencies. As a result, opening new doors of opportunities for investors.
Artificial Intelligence and Machine Learning
There is no doubt that AI technology will continue to develop as long as the human race doesn’t lose its curiosity. So, AI and ML are two major trends shaping the future of Fintech. Companies can use these technologies to solve customer complaints and carry out virtual assistant tasks.
A great example of this is using voice assistants powered by AI chatbots. These chatbots are smart and efficient, thanks to ML and AI technology, giving customers the best solutions to their problems. Machine learning also gives financial companies a system to effectively analyze their credit data. Thus, allowing them to make wise investment decisions.
Voice assistants like Alexa and Siri are something we’re all familiar with. We use Siri to send text messages, search for things on Google, and even play songs. It’s a completely hands-free, voice-only experience. The future of Fintech is quite similar. As a result, all finance-related operations will be super convenient, effective, and secure.
While on the topic of advanced technologies, it is important to talk about Gen Z – a generation always in tune with the latest trends. A technology that appeals to them will definitely see success. Fintech developers know that. So, the future of this industry also includes catering to Gen Z by leveraging voice technology.
Voice technology can upgrade the financial sector. Coupled with the added layer of security and time efficiency of online payments, the future of Fintech looks solid. That said, we cannot go without mentioning a few of the top financial institutions that use voice technology. These include Bank of America, Citibank, and JP Morgan Chase.
The Future of FinTech is Promising
Currently, the Fintech industry uses technology like robot advisors. But we can agree that this only brushed the surface of Fintech; there’s still a long way to go. With technology developing rapidly, the future of Fintech is promising.
Apart from the above-mentioned future Fintech trends, we will also see a rise in contactless biometric security systems, cloud computing, and hyper-automation, to name a few things. As a result, furthering the growth of Fintech.
These technologies will make things accessible and convenient for customers and investors alike. The best part is that investors can diversify and balance their portfolios. Plus, these upcoming technologies will surely keep up with the growing Fintech demands.
Thus, generating value for users and shaping the financial landscape. So, it’s safe to say that traditional financial industries will have to bear extra weight to rival this wave of financial disruption through Fintech.