Fintech, the technological innovation in the highly regulated financial industry has been evolving rapidly. Banks, insurance companies, payment providers and other financial service providers have embraced the financial disruption and shifted their focus to provide customer-centric services. Rise of online banking, mobile payments and person-to-person payments (P2P) apps have contributed to the tremendous adoption of fintech solutions
. According to CB Insights, Fintech companies raised approximately $39.6 billion from investors globally, in 2018, which represents a 120% year-on-year increase compared with the $18 billion worth of venture capital that was raised collectively by the industry in 2017. Furthermore, 82% of the traditional financial organizations have revealed their decision to increase their collaboration with fintech companies
in the next three to five years. So let’s take a look at the key Fintech trends for 2019 & beyond.
Blockchain Powered Fintech ApplicationsBlockchain
, the revolutionary technology behind bitcoin is poised enough to transform the global banking system and finance sector. Conventional banking systems are facilitated by a centralized architecture whereas blockchain is a decentralized, distributed ledger of all transactions across a peer-to-peer (P2P) network. A transaction is encrypted and added to the block which can be accessed by multiple parties (P2P nodes). The computers in the network verify the details of the transaction and reach a consensus. Verified blocks of transactions are added to the shared ledger, which is tamper-proof and secure. Decentralized architecture, immutability, transparency and cryptographic security are some of the notable attributes of blockchain technology that have made it a new buzz word in banking and financial services sector. Today, banks and financial institutions are experimenting with blockchain to see how this innovative technology can be leveraged
to effectively address the inefficiencies and loopholes in the existing banking system.
Artificial Intelligence to Redefine BankingArtificial intelligence
(AI) is a paradigm-shifting technology that has been making a huge impact in the fintech industry. From robotic clerks in banks to fraud detection and investment predictions, AI has a wide-ranging applications. Machine Learning, Big Data analytics, deep learning, natural language processing, cognitive computing and several other subsets of AI have the potential to transform banking and finance sector. The main applications of AI includes, but not limited to eliminating the human error in banking operations, comprehending the evolving customer demands , detect fraud, and assess creditworthiness and risk. Chatbots and Robotic process automation (RPA) are the fastest growing applications of AI
in fintech industry. Time-consuming and repetitive manual business tasks can be handled by AI enabled chatbots, thereby improving efficiency, reducing personnel costs, eliminating manual errors and ensuring quality services.
RegTech for Compliance and Risk Management
Banking and finance industry are under constant pressure to stay in compliance with the changing rules and regulations.Regulatory technology (RegTech) - a subset of FinTech, can be defined as “ a set of technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities.” This revolutionary approach focuses on exploiting the data being requested by regulators in a smarter way by creating a transition from “know your customer” (KYC) to “know your data” (KYD) procedures. Data centric nature of RegTech has the potential to prompt a shift from digitization of money to monetization of data. Banking industry has placed keen interest in regtech as it automates complex tasks and ensure substantial savings and efficiencies. On the other hand, RegTech is also aimed at helping policymakers monitor those they are regulating.
Insurance Technology or InsurTech is another subset of FinTech that addresses the existing challenges and opportunities of insurance industry. Providing coverage to a digitally savvy customer base, insurtech enhances customer experience, creates cost savings, ensures great convenience, saves time and boosts process efficiency.
Quantum Computing for Improved Security
Banking and financial firms have been leveraging quantum computing
to increase the speed of transactions, scale their processing with less costs and reduce risks. Since this technology is based on quantum theory, it process highly complex analytical tasks in parallel and compute much faster with the existing resources. Quantum cryptography is one of the major applications of quantum computing that could be harnessed to confer greater efficiencies, lower fraud, better trading decisions and reduced risks. Security solutions backed with quantum computing can be used to safeguard the security and privacy of critical data.
Traditional banking and financial service providers have been investing in FinTech innovation
, as it holds greater potential to transform the industry for the better. Are you ready for the brighter future of FinTech? Share your views on FinTech use cases and applications in the comments section.