Several firms, regardless of their size, have adopted new means of administering and managing finance through technology tools with the aim of improving financial services. This approach has transformed various industries, and to keep pace with rapidly evolving markets, it is focused on offering a high-quality customer experience with more transparency and better services.
What is FinTech?
Fintech – a fusion of the words “Financial” and “technology” - is a branch of technology that aims to innovate financial methods to deliver exceptional financial services. It leverages algorithms and specialized software paired with various devices to manage financial processes and various operations.
With its introduction and ongoing improvements, the fintech sector faces challenges to make progress in the financial market with futuristic goals aligned.
It is observed that Fintech start-ups have also become part of the mix by offering financial products and services that were previously only offered by banks. Today, you can see numerous solutions catering to a vast consumer base of distinct industries.
Exceptional Customer Experience
Fintech delivered more convenience in terms of customer experience during the peak days of the first Covid-19 wave. The lack of client-bank face-to-face interaction gave rise to digital solutions that later emerged as formalized and improved fintech solutions.
Fintech has delivered limited financial services that permit real-time data transfer offering seamless interaction between consumers and sellers.
In terms of customer experience, it offers customers faster payment settlements, smart contracts in trade services, higher functionality payment cards, cross-border custody services, and more.
It also offers digitally secure wallet solutions by simplifying the procedures and facilitating online commerce. Fintech has swift protocols to validate financial operations by using sophisticated algorithms resulting in simple, easy-to-use, and convenient financial services to customers.
Wider Usage of Blockchain Technology
Blockchain assists with managing data breaking and other suspicious operations to enable safe data transfers and sharing through a decentralized network. Sending money, regardless of the amount, has become much faster and transparent with blockchain implementation in fintech apps.
Furthermore, blockchain-based fintech apps dramatically reduce transaction costs as it enables P2P transactions that removes unnecessary expenses. It is observed that blockchain as a part of fintech has been in the spotlight since 2018 and has been working wonders in the financial sector since then. It is observed that blockchain tech in the fintech sector grew from USD 370 million and is projected to reach USD 6228.2 Million by 2023.
Coupling fintech and blockchain enables users to analyze who they can trust and want to share their identity and confidential information with. Blockchain in fintech permits consumers to generate unique identifiers like digital fingerprints for high-security purposes.
Blockchain in the fintech industry offers incredible and safe fund sharing with security measures and rigorous financial track records. As a result, fintech blockchain applications are in high demand in the financial industry currently. Apps that play a vital role in the growth of the banking sector are focused on increasing their efficiency and reducing infrastructure costs.
Mobile Banking with Further Options and Flexibility
According to Statista, more than 70% of senior banking executives adopt fintech to distribute products and services, which reflects the most important opportunities for banks to generate non-traditional revenue globally since 2018. However, there is no doubt that when technologies emerge with industries, it produces unprecedented results – It’s apparent that IT-business relations will continue to lead the market.
The Covid-19 outbreak changed the concept of online shopping, and there’s no exact prediction as to what the coming years will bring for the financial and banking sector. The banking sector did its best to offer mobile banking that brought ease with adopting several tech stacks, including fintech.
With the emergence of fintech in the banking sector, an innovative approach is being utilized for back-end processes for both business and customer convenience. The increasing use of mobile phones and apps encourages the banking industry to introduce more compelling applications to their clientele which help them to transfer funds, make check deposits, and track records of their bank balance conveniently.
According to CurrencyCloud’s Co-founder, Stephen Lemon, fintech trends are expected to go further and strengthen relationships in the financial sector. He stated, “Fintech will become embedded in the technology stack of next-generation companies. While the big tech companies like Apple, Google, and Uber are currently leading the charge in the development of this space, we need more competition to ensure that this new paradigm will live up to its promise for delivering a better customer experience.”
Process Automation and Role of Robotics
AI widened its branches to introduce chatbots and AI virtual assistants, and there is more to come. Industries have adopted these inventions of AI to provide exceptional user experience in a variety of ways. Robotic Process Automation (RPA) permits bots to handle repetitive tasks without human interaction.
FinTech has brought another means of convenience to automate a variety of error-free tasks that include fraud detection and AML, customer Identity verification, regulatory compliance, and so on.
To that end, voice assistants, Siri and Alexa, are prominent examples that showed their usefulness for making payments, and therefore, a wider range of people use voice assistants to make payments online. Thus, voice-enabled payments have become a preferred solution that is an alternative to traditional payment methods. Artificial intelligence, with its super inventions, has more to achieve in the future.
Increased Fintech API Development and Adoption
The insane increase in the adoption of fintech APIs (application programming interfaces) has transformed the financial sector. This adoption has brought an explosion of innovative business models, services, and applications.
Though APIs allow different systems to connect, when fintech is integrated with a systems’ API, it enables data sharing among the parties involved in financial transactions encompassing third-party providers, banks, websites, and users.
Fintech APIs offer real-time data access by allowing the banking sector to hold on to customer data within the financial sector. The shift encompassing the increasing dominancy of fintech API allows banks and payment institutions to seamlessly connect with third parties to stay ahead of the digital market and offer better services to their consumers.
API use is bringing innovation across multiple industry sectors that prominently include banking, accounting, financial market data, and many more. Advantages of fintech API usage include:
Constant Innovation and Diversification in Payment Methods
Fintech has become a segment with the most growth in the financial services sector. Many financial software development companies are likely to incorporate fintech in their business architecture and make the most of it. Fintech innovations have changed the financial sector, and end-consumers are prominently enjoying the benefits out of it.
Fintech offers high-security payments, real-time money tracking, a secure method of international money transfers, and reduces the chances of fraud. Apart from this, it offers customer-friendly payments, high conversion rates, faster processing, and more.
A Move toward Operational Efficiency
Fintech has come forward to provide operational efficiency to many sectors, be it the financial sector, big data analytics, Machine learning, and robotics. Fintech enhances operational efficiency by lowering operational expenditure and optimizing the process.
Perhaps only an out-of-the-box approach would suffice to restore stability in the post-pandemic world, which means that industries need to update their workflow processes and strategies while implementing t fintech. This could lead to holistic improvement at the next level, which tends to improve operational efficiency from the organizational and the client’s side.
Wrap Up
There is a lot to come in the future as the word “tech” in fintech is still in an evolutionary process. Fintech has changed the customer experience and offered means of ease in multi-dimensional industrial sectors, including AI and ML, finance, blockchain, etc.
Enterprises are investing in fintech software to ensure the best and efficient management of finances. Therefore, you might want to give your systems a thought when it comes to implementing fintech software in your business systems.
Have a query or want to share an idea? Feel free to reach out to our experts.
