Financial security and threats related to it is something that bothers every enterprise. This is why, right from the beginning, businesses have shown a natural resistance towards integrating technological advancements into Finance.
FinTech had initially been restricted to internet banking and mobile wallets. The only true changes were made at the level of customer instruction or mode of payment. Digital accounts were created, the UI of the bank websites changed, UPI payment was introduced, and slowly, all brands and companies started to integrate mobile wallets as payment modes.
However, there has been almost no change in the value chain, which finally leads to the payment mode or customer interaction. 2020 has been a rough year worldwide, but the FinTech industry has seen a rise in both interest and funding from top investors around the world. This leads us to think 2021 might well be the year that changes the landscape of traditional banking and financial services as we know them.
What is FinTech?
FinTech is an abbreviation for financial technology where contemporary technologies like artificial intelligence and blockchain are used to provide innovative financial solutions. The industry aims to create a seamless user experience for customers of both financial services providers and businesses.
The FinTech industry has shown great growth over the last few years and also has an auspicious path ahead, as it is set to grow to $158 million by 2023
With FinTech, users can now overlook the mundane tasks of banking like tracking transactions and invoices. Digital payment apps and banks also provide credit, saving, and investment options, overall leading to an enjoyable user experience, one that is almost impossible in a traditional retail banking setting.
What changes has 2020 brought upon the FinTech industry?
2020 was a year of uncertainty, especially regarding health and finances. The banking industry faced major challenges and for most customers, stepping out for routine banking tasks was a health risk. Fortunately for us, the FinTech industry took great strides to make sure customers were not left in the lurch.
FinTech pioneers and even the smaller startups used this opportunity to expand their customer base and introduce a plethora of new services, which could all be carried out remotely.
A few startups have been focusing on finances for retirement- which is of paramount importance in the US, where healthcare isn’t free. These startups have custom investment and saving options and tend to the needs of their target groups.
With Bitcoin achieving unimaginable value, Paypal has decided it is time to step up its cryptocurrency game. So from 2021, Paypal will be allowing customers to buy, hold and sell cryptocurrency.
In the year where a chunk of the working population of the world lost their jobs and turned to freelance, FinTech company Lili rolled out specialized mobile banking for freelancers.FinTech startup Openblocks has even opened the cryptocurrency door to users who are skeptical of the whole matter of cryptocurrency- they give you the option to do transactions via Bitcoin and even change it to real, tangible money if you please.
With such exciting developments in the field, 2021 will be quite the year for the FinTech industry. Let us have a look at what other FinTech transformation trends are set to rock the world of banking and finance!
With in-person transactions out of the question, financial service providers and customers suffered alike. Thus, the FinTech industry needed to come up with a better solution to the problem.
Enter autonomous finance.
Autonomous finance uses AI, ML, and automation to provide customers with a flawless experience on mobile portals. The abundance of data and the fast-growing field of AI have made self-driving finance a very real possibility.
In autonomous finance, the customer does not directly give the inputs. Rather, he makes use of a virtual banker created for him on the portal. This virtual banker will manage and analyze your portfolio, risks, and investments. Then the AI algorithm will generate the best investment and savings options for the customer. This greatly reduces the chance of human error, and any wrong judgment calls the customer may make.
However, autonomous finance will take time before being applied on a large scale as the technology required for it is quite expensive and hence, not affordable for most FinTech companies across the world.
One of the top FinTech transformations of the year will probably be the advent of open banking, which pertains to data sharing among banks and financial service providers. Banks will have to share data securely with authorized providers. Then, these providers will build different apps and services in partnership with the banks. This symbiotic relationship was much needed by banks to modernize the transaction processes and by FinTech companies to get access to data.
For example, if you are looking to shop for insurance, you can log into any insurance and investment website which collaborates with the bank you have an account in. It will thoroughly gauge your savings and salary and give you options where you can comfortably pay the premiums.
These partnerships will also allow consumers to get a holistic view of financial management – debt management, investment options, wealth generation on a long-term basis, and other options.
Again, the only downside of the whole arrangement is data security. Though all data that is transferred to the service providers is encrypted, breaches have happened, even more so in the larger organizations. Once the security issues are eliminated, there’s no stopping open banking!
Digital Only Banking
To date, we have referred to digital banking or internet banking as financial transactions via the website of a brick-and-mortar bank. However, things are soon set to change!
Digital-only banks which have no physical branch will be the norm very soon. This arrangement will be cost-effective for both banks and consumers – banks can forego the cost of real estate and cater to long lines of people, consumers can forego the cost, effort, and time required to travel to the bank and wait for an inordinate amount of time.
FinTech industry leaders like Monzo and Revolut are already giving traditional banks a tough fight by offering a range of services at lower prices.
This is good news for us consumers! Even if digital-only banks take a little time to be the norm, they have already caused a shake-up among traditional banks that are pushing their boundaries to render better service.
Even though the digital-only banks are cheaper, it might not be wise to immediately hop on board. These are bound to be victims of financial fraud- so better wait and watch!
Robotic Process Automation in the FinTech Industry
Robotic Process Automation (RPA) is the automation of mundane, repetitive tasks via software robots. These robots identify and imitate human actions and their interactions with computers.
RPA finds application in tasks like onboarding of customers, data entry, processing of claims and loans, and customer support. Eventually, helps in enhancing business process automation (BPA) The workflow used in BPA is more complex, where a single processing model is used to build workflows that incorporate diversified systems. RPA does not interrupt current business processes and can be embedded in existing BPA applications like ERP and CRM.
This step is still not done remotely in most banking institutions across the world. This takes up time on the part of the customer and both time and resources for the bank. But with the help of RPA, we can make the process efficient both in terms of time and costs. The customer need only upload their documents on the portal, and the bot will pick out and fill the details from the documents.
Another time-consuming process, one which often involves several clerical errors. With RPA, this process can be made much quicker and free of any human error.
Instead of humans, bots transfer data between portals, eliminating human error from such a crucial process.
Thus, simply by integrating RPA in the banking process, financial institutions can make all processes quick and error-free, making the customer experience better and their work easier.
Voice search is currently a rage on Google, with more and more people opting for voice search than typing in a query.
Pace and personalization.
So it isn’t much of a surprise that voice integration is turning out to be a big thing in the FinTech industry as well!
Several FinTech companies like Paypal and Liberty Mutual have started using voice payments for personalization- it gives the company a ton of data about the customer which they can analyze for better service and experience.
Currently, voice integration in FinTech is limited to checking balance, transfers, and bill payments. But with time and more research into this, the functionalities are set to get better.
Erica, a voice assistant, provides expert financial guidance to users and helps them in daily banking processes. All they have to do is give her the commands.
Even some of the top banks of the US are opting for Siri and Alexa to give customers a smooth transaction experience.
Another interesting application of voice integration in banking is client verification. Citibank and Australia and New Zealand Banking Group are already using it in South East Asia and Australia, respectively. This takes away the requirement of sending and retrieving PINs, OTPs and passwords, making the process less cumbersome.
The only stumbling block in voice integration is again security. There’s no doubt with more robust security systems, most financial institutions will be going for voice payment systems.
You can check your balance, get information about claims and loans and even conduct transactions with this.
Conversational banking has multiple benefits:
- FinTech providers get to interact with the customer over several channels. For so many decades, bank officers had to call you, or you had to show up at the bank for them to connect with customers. Now it can happen over text or even social media!
- The whole process of banking is made more flexible. Concerned about security? The customer can visit the physical branch. Busy with work? Get it done via chat.
- Chatbots can help in an efficient marketing process. Instead of the agent explaining A-Z of services and benefits, the chatbots can search for good leads and lay the groundwork. The agent will merely do the final round of convincing.
- Screen sharing via video call can help bank agents correctly gauge the issue the customer is facing, and they can come up with a personalized solution.
The whole process of conversational banking has a lot to offer but what makes it so appealing is that it makes the customer feel more connected to the financial institution.
FinTech leaders are quite dependable and have bailed quite a few customers out of financial difficulties the last year put them in. Because of this, investors are now pouring a good lot of investment into the industry, making it a good time to venture into it. However, it is a niche market, and you must consult a trustworthy provider for FinTech solutions. For FinTech software development or any further discussion on this matter, feel free to drop us an email at Radixweb!