Financial tech translates to a wide degree of innovative algorithms and software aimed at converting financial activities from complex to very simple.
Introduction – What is Fintech
Fintech is a broad umbrella term that encompasses the process of using technology to advance a company’s business, automate its everyday transactions, and protect it from fraud.
Sounds easy enough, right? The catch is that financial tech relies on constant innovations that constantly improve loopholes and make a plethora of services more user-friendly and secure.
It is not only on the rise but has been an integral part of consumers’ financial lives for quite some time. According to the research done by Fintech Adoption Index, as much as one-third of all consumers worldwide use at least two or more services based on Fintech, and the trend is on the rise.
Here we will examine the most well-established trends with a predictive high-rise and have already seen massive success in the market.
Ready to take a quick dive in this constantly expanding technology-driven world? Let’s begin!
1. Digital – only banking
Banks have gone a long way – the idea behind this fintech marvel lies in encompassing the benefits of the globalized economy and cryptocurrencies into an all-in-one banking service for the consumer market.
Consumers have the luxuries of P2P transfer, MasterCard with free transaction fees, and the ability to make global payments without the need for drawn-out paperwork or mile-long lines to a physical bank.
As noted by Global Market Insight in 2019, the fintech evolution of digital banking has decreased physical visits to brick and mortar bank branches by 36% and, as the trend becomes more prevalent, it is expected to go down even more.
Start-up based on this trend – Monzo
Founded in 2015 and based in the U.K., this digital-only banking startup has seen massive popularity, with more than 4,245,063 domestic accounts accredited to it and $356 million in funding.
2. AI technologies
Since its conception, machine learning has made big promises – from automatic millions of simple tasks to millions of complex transactions in seconds, AI Fintech has massive potential in finance.
Strengthening all aspects of digital business transactions from security (intelligent fraud detection) to advanced investment analysis, predictions strongly point towards AI becoming a golden standard in day-to-day transactions.
According to financial analysts, AI Fintech is predicted to amass a net worth of $8984.9 million in just 4 years, owing to the continued investment of leading companies into AI-fueled finance.
Start-up based on this trend – Parashift
As the financial equivalent of a Swiss army knife, this company bases its innovative startup on a machine learning-based platform that can read any credit card receipt, invoices, or cash receipts with unprecedented accuracy- all entirely autonomously.
It has amassed 1 million Swiss francs in 2018, which was the same year it was founded, and is run by an experienced team that is behind the successful Swiss bookkeeping platform Accounto.io.
3. Payment innovations
This area of FinTech encompasses one of the core components of modern-day business transactions;
- Mobile wallets
- Contactless payments
- ID verification tech
- Security-oriented machine learning
- Fintech AI
As noted by PaymentJournals in 2020, the shift to online purchases is expected to increase in value to over $2.7 billion in 2022, with the very real possibility of furthering the value of global e-commerce over $5.4 trillion in 2025.
Start-up based on this trend – Flutterwave
Starting out in 2016 in Lagos, Nigeria, this Fintech payment company has spread its operational range globally.
Its payment solutions are tried and tested, as they enabled Uber to enter the African market by allowing them to accept payouts in local currencies and have a wide range of partner corporations that depend on its API to make their financial lives intuitive and straightforward.
4. Blockchain
Fintech and blockchain are a match made in heaven- it shines in many areas but is especially useful in supply chain management.
Blockchain utilization can provide lightning-fast, cheap, and reliable payment processing services without sacrificing security.
With the addition of innovative methods of fool-proof auditing, record keeping, and accounting, it is almost certainly going to be received as an alternative to expensive and less reliable traditional iterations that have plagued the financial industry for many years.
Start-up based on this trend – Synaps
This company started as a joined initiative by Ipreo and Symbiont, focusing on smart contracts based on blockchain and the automated global loan syndicate market.
5. E-commerce security
Automating a company’s entire set of day-to-day transactions is lucrative, yet adding an AI-powered platform to separate legitimate shoppers from fraudulent ones is a necessary addition that is often far more complicated.
As Fintech solutions become more widespread, the need for adequate risk management becomes even more apparent, and a couple of startups have capitalized on this need.
Start-up based on this trend – Riskified
This New York-based startup offers an innovative ATO to e-commerce sites that provide different tools such as alternative payment processing, dynamic checkouts, and chargeback guarantees.
With its innovative verification and machine-learning-based platform, it offers strengthened consumer relations and security without complicating transactions.
The rise of the global financial tech market
The area of innovation within financial technologies is virtually inexhaustible – there is always room for people with a vision and talent to bring value to the industry.
What’s also encouraging is that many companies and institutions are usually open-minded and less apprehensive about Fintech – research carried out by Medium in 2020 concluded that investments in robotic automation of banking tasks pay themselves out in 3 to 8 months.
As of 2019, the global financial industry market share of 48 top fintech unicorns (private startup companies valued over $1 billion) is slightly over 1% and is continuously rising.
The predicted growth is even more fascinating – as the use of advanced technology becomes more and more prevalent, the expected CAGR is 23.58% from 2021 to 2025.
Fintech aims to simplify tedious financial tasks and decrease overall expenses for both sides of the transaction without cutting corners. These 5 trends are expected to be one of the leading in the industry that shows no sight of slowing down.