FinTech is the latest buzzword in financial and technological circles, having taken the world by storm over the last couple of decades. A literal combination of the words “Financial” and “Technology”, FinTech has been responsible for changing the entire banking and financial industries around the world. Most modern innovations in these fields have been made possible due to investments in FinTech. For example, the ATM which seems to be a basic device today was seen as a groundbreaking innovation a few decades ago - and at the time, it was. In just a few years, the world has advanced to contactless payments and cryptocurrency, which is a major leap.
Let’s take a look at the current global trends in the FinTech industry which might change the financial eco-system as we know it and which you should keep an eye out for…
Current Global Trends in the Fintech Industry
If you think mobile payments have reached their peak with the current innovation levels, think again. Mobile devices are constantly evolving and expanding across platforms, from mobile phones to smartwatches and other wearables etc. They are well on their way to becoming a staple of modern society, even more so than they are now. While mobile payments have made rapid advancements, we can expect to see more in the near future, perhaps even a shift to a fully cashless society where all payments are done through an app, a swipe or even a biometric transaction facilitated by your mobile device.
Ever since the unprecedented hype for Bitcoin, cryptocurrency has become “the next best thing”, especially in technological circles who are investing heavily in cryptocurrency. The thought of a decentralised currency with equal access and value around the world is very lucrative and we have just scratched the surface. With further crypto-assets like NFTs entering the daily lives of consumers, a shift of the global banking and financial industries to virtual platforms and assets might not be too far fetched.
Robotic Process Automation (RPA)
RPA is expected to disrupt many industries around the world, including the banking and FinTech industry. Many activities in the finance industry are still done manually by employees. Total automation of selective services can be expected to massively increase access and convenience for customers who will be able to carry out complicated financial transactions and activities outside of banking hours. Not only will it eliminate repetitive administrative tasks from employees’ daily work, but by incorporating machine learning, it can even handle complex and sensitive work such as risk assessment, security checks and verification.
With the evolution of RPA, conversational interfaces are also becoming popular to retain the “human element” during services and transactions which many customers still prefer. AI-based chatbots integrated with Natural Language Processing are just one example of how conversational interfaces can give customers a people experience at all times of the day but without any real human involvement.
AI has been one of the most-talked about trends for years now, but the present reality is still not at the levels envisioned by the pioneers many decades ago. While the extent of AI innovation seen in Hollywood movies and Science Fiction novels (such as all-knowing machines and humanoid robots) is still a dream, AI in a smaller scale is already being implemented in backend banking and financial procedures, to reduce operating costs and produce business and market intelligence to assist in making corporate and investment decisions. However, AI remains the dream and we can expect many more developments in this space.
Now that virtual currencies are reality, we can expect to see digital-only banks sometime in the near future. At the moment, all banks are very much physical entities that still require customers to visit branches for even minor administrative work, with so much paperwork and mandates involved. Opening a fixed deposit in Sri Lanka still cannot be done with most banks unless you visit a physical branch. This will allow people who live in rural areas with poor transportation infrastructure to access banking facilities, as well as reduce the overall costs involved due to lower overheads and employees required.
These trends in the FinTech industry might seem like buzzwords, however they carry very real ramifications in the global banking and finance ecosystems. There are still millions of people around the world who don’t own a bank account or have even visited a bank, but own smartphones and are on social media. Fintech has the power to not only make financial transactions more convenient than ever before, but also make banking more accessible to millions of people in under-developed regions and bring them into the financial industry. Cybersecurity and data privacy mechanisms are still being developed, but once they have reached required levels of assurance, we can expect to see unmatched advances and trends in the FinTech industry which we should watch out for.