Tag: Financial technology

Digital technologies are evolving at an unprecedented rate. Major innovations, such as artificial intelligence tools, machine learning software, cloud computing resources, and big data, have already reshaped the landscape of countless industries and actualized new financial concepts such as blockchain and cryptocurrencies.

As business leaders apply these technologies to their digital transformation initiatives, many focus on functions like sales, customer support, and demand forecasting. While these are mission-critical functions, finance must be front and center during any digital transformation discussion.

Whether your team manages a standalone financial business or is responsible for overseeing an organization’s financial functions, you must embrace the digital world. Let’s take a closer look at the financial technology (FinTech) landscape, identify some ongoing challenges facing the financial industry, and shed light on some tech trends you can adopt to strengthen your competitive advantage.

Read more: Top Ways Business Intelligence In Finance Can empower CFOs Today!

The Financial Business Technology Landscape

FinTech is primarily responsible for the evolution of the financial business landscape, and over the last few years, the FinTech sector has exploded. As of 2023, there are more than 26,000 FinTech startups globally, as well as hundreds of pre-established FinTech developers.

The growth of the FinTech market has largely been supported by venture capital (VC) funding. Though numerous FinTech sectors have received significant financing from VC rounds, three stand above the rest.

Between 2016 and 2021, the following three sectors received over $5 billion in VC funding:

• Capital markets ($8.07B)
• Payments ($6.03B)
• Wealth management ($5.43B)

Digital lending, FinTech tools for small-to-medium-sized businesses, and banking-related projects also received significant funding, though these amounts fell below the $5B mark.

The Top Challenges Facing the Finance Industry

The modern financial business landscape has largely been shaped by uncertainty, market volatility, rapidly shifting consumer trends, and the emergence of increasingly sophisticated technologies.

Businesses in virtually every industry continue to face disruptions and supply chain challenges, hurdles that have placed an additional burden on finance teams, as they are tasked with helping their organizations prepare for the unexpected. Unfortunately, antiquated solutions and strategies don’t provide the agility necessary to promote adequate resilience.

From the financial business perspective, the digital world has led to the development of two new core challenges: accessibility and racing to keep up.

First, consumers expect to be able to access services, accounts, and support on their terms. To meet this demand, financial businesses must develop user-friendly mobile apps that increase the accessibility of their services and work to empower consumers.

The second challenge is interconnected with the first: New technologies are arising so rapidly that some businesses need help to keep pace. Those that struggle fall behind in the digital arms race will cause financial organizations to lose valuable market shares, potentially fading into obscurity.

Read more: Technology in Finance: What to look out for in 2023!

Changing Finance to Thrive in the Digital World

Fortunately, organizations can overcome these challenges by adopting finance technology trends and implementing robust new software solutions.

Organizations committed to reinventing themselves must develop a cohesive digital transformation strategy. As part of the process, business leaders must identify any functions and processes that need to be retired, updated, or improved. From there, they can then begin exploring solutions to enhance the agility and versatility of their business.

Conducting extensive market research is also essential to digital transformation. Financial businesses need to step into the minds of their audience and determine what features, capabilities, and tech services are at the top of their priority lists. Only then can businesses strategically invest in new technologies and solutions that will align with the needs of modern consumers.

Read more: Data Analytics in Financial Services and Banking

Finance Technology Trends that Can Give Your Business an Edge

If your organization is on the precipice of a digital transformation but is still determining where to focus its efforts, examining current FinTech trends is an excellent place to start. A few of the trends in the finance industry include:

1. Self-Service Tools

Most consumers lead hectic lives, which means that many of them don’t want to have to stop in a branch or waste precious time seeking phone-based support. Instead, they’d prefer to have access to user-friendly self-service tools so that they can access support or manage their account whenever is most convenient for them.

Therefore, you should implement customer-facing tools and features that empower your consumers. The easier your services are to access, the better, so make sure that clients can reach these tools via various channels, including desktop and mobile devices.

2. Sophisticated Mobile Apps

The rise of digital-only banking has forever changed customer expectations regarding financing. Digital financial institutions have shown consumers that managing every aspect of an account is possible without ever setting foot in a branch.

While you do not necessarily have to transition to a digital-only business model, you need to provide your consumers with access to a high-quality mobile app that is easy to navigate, simple to use, and reliable.

3. Embedded Finance

The embedded finance technology ecosystem has become too big to ignore. By joining this growing sector, you can create new revenue streams and expand your organization’s reach within the finance industry.

Of the various types of embedded finance solutions, “buy now, pay later” (BNPL) has become especially popular. It is a sales model that allows customers to make purchases immediately but pay for the goods via a set number of more-affordable installments. In 2021, BNPL transactions totaled over $120B, and they are expected to reach a value of $576B by 2026.

Read more: How Embedded Finance will Transform the FinTech Landscape in 2023!

Reinvent Your Finance Business with Fingent!

According to Deloitte, the rapidly-growing FinTech industry will reach a market size of $188 billion by the end of 2024. This statistic illustrates how bank executives and business leaders across the financial industry are embracing digital transformation. In fact, 66.7% of bank executives believe FinTech will “impact wallets and mobile payments globally,” according to Statista researchers.

If your organization wants to keep pace with forward-thinking financial businesses, it must reinvent itself for the digital world. Fingent can help you do that via our financial software development services. We develop highly-secure, purpose-built solutions, such as cash management software, mobile and internet banking apps, digital finance and accounting tools, and other applications that will enable you to thrive in this rapidly evolving industry.

The Future of FinTech Looks Promising: Here’s Why!

The COVID-19 pandemic has caused significant disruption and has also cast doubts on the future and growth of the FinTech industry. Despite the devastating impact of the coronavirus pandemic on the global economy, FinTech leaders remain cautiously optimistic about the industry’s growth. They forecast that as people, businesses, and leaders tackle the ongoing outbreak of the pandemic, market fluctuations will experience stability. As soon as the crisis situation is settled, the market is forecasted to start experiencing growth. FinTech solutions are foundational to how we transact in the current scenario and tackle the future market. It is vital for financial institutions to up their game to deliver smarter, quicker, and safer solutions. 

What are the upcoming FinTech opportunities that will impact everything in the financial ecosystem? 

The ‘Digital-Only’ Era

1. Digital payment services 

The coronavirus crisis has brought the significance of cash management to the forefront. There are massive technical and fundamental shifts taking place that are quickly becoming the new normal. Digital-only banks are one of the many such shifts and they increase efficiency and convenience. Nobody is expected to visit the bank physically, stand in long queues, and go through a lot of paperwork. With digital-only banks, you can create an account or transfer money at a location and time convenient for you. Some of the amazing features of digital-only banks are a quick review of account balance, account transaction history, bill payments, and real-time analytics. They offer P2P payments with no transaction fees. They also offer Ethereum and other cryptocurrency transactions. Digital-only banks have a deep connection with technologies such as blockchain.

Read more: How Digital Finance Could Boost Growth in Emerging Economies 

2. Digital lending 

Digital lending is one of the FinTech opportunities that’s prospering while shutdowns and layoffs across the globe resulted in a cash crunch for most individuals and households. Governments have provided some help. However, it is largely left up to financial institutions to provide loans to individuals and businesses. Fintech companies perform better than their traditional counterparts in the lending segment by leveraging AI technology. They can use AI to screen applicants and rate their credit-worthiness. It allows loan applicants to secure loans quickly and conveniently. 

Financial institutions must partner with FinTech application development service providers to leverage self-service, multi-channel digital lending processes. This includes loan processing, screening, collection, and credit scores. As an end-to-end process, it will provide customers with a smooth onboarding and approval lending experience.

3. Digital investing 

Retail investors around the world are more active in the stock market now than ever before. Access to information that was previously restricted to more advanced investors, has fueled an exponential increase in retail investing. This trend will continue.

Read more: FinTech Innovation: What Is In-Store?

The Era of Blockchain Technology 

Identity theft and fraud have been the bane of financial institutions for many years. Blockchain technology plays a crucial part in saving the industry from these problems. The rapid growth and adoption of blockchain is making it an integral part of financial institutions’ operational infrastructure including digital payments, trading shares, smart contracts, and managing identities. Blockchain features such as global reach, speed, and security are motivating its faster adoption among financial institutions. 

Companies must build trust and display transparency in contracts and the supply chain. Using blockchain helps them gain visibility throughout the supply chain. It also takes care of quality control and performance benchmarks. It is crucial that financial services quickly adopt blockchain into their systems and search for opportunities to increase FinTech partnerships. 

Read more: Leveraging Blockchain Technology to Transform Supply Chain Industry 

Impact of Regulation

Regulators are needed to balance innovation with customer interests. Regulators have been proactive in helping businesses deliver greater customer value by defining data privacy rules. This has fueled a massive shift in how people spend, buy, save, borrow, and invest. Given the enormous innovation in this sector, the FinTech arena is divided into five broad categories:

• Deposit, lending, and capital raising
• Payments, clearing, and settlement
• Investment management
• Insurance
• Market support

We know that compliance with regulations will become mandatory for banks. This makes it important that banks adopt a flexible and robust digital strategy in order to solve regulatory challenges. Leveraging digital transformation and FinTech innovation will help banks to evolve as a modular body that becomes highly responsive to political and social pressures.

Read more: Digital Transformation in Financial Services: All You Need to Know!

Robotic Process Automation

Robotic Process Automation (RPA) can automate repetitive processes in banking, insurance, and other financial services. This will lower the risk of common errors and inefficiencies while increasing productivity and ROI. RPA does not require programming. Efficiently programmed software robots can automate repetitive processes. Intelligent automation technology goes a step ahead to observe human actions and automate directly, the entire process. IA can be effectively used in the administrative section for the customer onboarding process, risk assessment, data analysis, security checks, and more. 

Read more: How Robotic Process Automation Is Revolutionizing Industries? 

What must you do to take advantage of these opportunities? 

Here are a few things you can do to leverage the massive opportunities made possible by the digital-only era:

1. Infrastructure

Financial institutions must invest in the right technical infrastructure. With multiple technology options available in the market today, it is imperative for financial institutions to make the right decision based on the company’s needs and objectives.

2. Market proposition

Develop a clear market proposition. You must partner with FinTech companies to develop robust and scalable apps. Having them as trusted advisors will help you retain your customer base. 

3. Partnership

Before partnering up with FinTech companies, you must examine their needs and plan on how they want to execute them. This will help you derive greater benefits from the partnership.

4. Product hierarchies

Incorrect product or service information can damage the good reputation of your company. Have a clear definition of products and services and outline their use and cost. This will minimize reputational risk and maximize the opportunity to retain and acquire customers. 

5. Switching 

Most bank customers may want to switch their accounts. You must allow switching and help your customers to switch seamlessly between products. 

6. Educate your customers

Your customers may not be aware of the digital services you provide. Hence, it is important that you educate your customers regarding the use, safety, and implications of your digital technology. 

Read more about our Case Study: How Fingent enabled NEC Financial Services to take advantage of the FinTech revolution?

Explore FinTech opportunities

Access to data presents new opportunities for growth. With continuous technology penetration, financial services will see steady growth resulting in the expansion of FinTech. In many ways, FinTech contributes to the revolutionization of the financial sector and the way customers interact with your business. It offers your customers a hassle-free experience and helps your employees to be more productive. 

Read more: FinTech: Safeguarding customer interest in the post-pandemic world 

FinTech will help you keep your focus on customer experience and personalization that can drive user loyalty. For a technology partner who will get you to reach new heights in this new era of Fintech, call us! 

What Is Next For Financial Technology Innovation?

User Experience is the King. The more demanding UX gets, the higher is the rate of fintech innovation. Until recent years, the FinTech industries had seen growth in mobile banking and increased technology investments. For instance, Mastercard is a rapidly evolving FinTech innovation, and its overall investment is estimated to be $16.6 billion. 

In this regard, it is required that Governments take up a holistic approach to create business environments to enhance FinTechs. FinTech firms not only provide new market solutions but also increase the efficiency of the banking and financial industry verticals.

Regulatory Barriers For FinTech Innovation

Hedge funds, personal loan providers, and many other firms in the financial sector can be developed by preventing regulatory barriers that slow down FinTech innovation. In the recent past, the following were some of the potential barriers to the growth of FinTech innovation:

• Technology – For a company to be successful, it needs to know which technology would be beneficial for them. For instance, online trading provides people with access to their profile from their smartphones or computer systems. This is an example of a trial and error method in technology solutions that can be a potential barrier to some industries.
• Capital – Emerging markets need good investors. Top investors hesitate to invest in new markets. The market in which you operate is another key factor. There must be a streamlined system of funding to disrupt this barrier.
• Degree of Market Play – It is important to get a significant level of trust in the market in order to get close enough to banking institutions. Such high entry pressure is another potential barrier.
• Numerous Mobile Banking Services – There are multiple mobile banking applications on the rise that allow account management and other financial transactions online. This becomes difficult to choose between the lot.
• Increased Technology Investments – According to recent research on FinTech Global, the investments have doubled from $19.9 billion to $39.9 billion. FinTech attracts numerous investors who are interested to invest in the latest technology trends.

Related Reading: Check out the future of Artificial Intelligence in Investment Management. 

FinTech Innovation: What’s In Store For The Future?

The future of FinTechs largely relies on technology breakthrough ideas. Let us look at the major drivers for FinTech Innovation:

• ‘Regulatory Sandboxes’ To Understand Regulatory Boundaries

The idea of a ‘Regulatory sandbox’ was initiated back in 2015 in the UK. The purpose was to speed up the product development of FinTechs. The purpose also included establishing quick launch cycles. Companies allow testing of their solutions in a controlled environment. These regulatory sandboxes allow testing for a specific duration, say 6 months and is performed without the regular imposing of regulatory costs and difficult procedures immediately. 

With this, the innovators can test their solutions and see the possible regulatory boundaries that evolve. This can also help firms make critical decisions on regulating new solutions and services in the future. 

Some countries like the UK promote additional environments for sandboxes such as tax policies for creating business solutions, tax deductions, training, regulation, protection of rights to do business, etc. 

Right Solution: Enabling FinTech innovations, need the solving of numerous challenges by market governments. FinTech can be supported directly. Early adoption of FinTech and incorporating policies, improving digital connectivity, implementing payment channels, etc., can be done to create a FinTech enhanced environment. 

• Customer Service With Better Technology For Increased Value

Firms that provide global services require the help of technology to increase their efficiency and largely reach their customers. Financial establishments require a medium for easy communication with their customers to provide a better user experience. 

Different industry verticals can look up to technology for operating with reduced costs and better business processes. This brings upon good prospects for FinTech innovations. 

Right Solution: Providing good customer experience requires technology implementation. It can help streamline various business workflows and also increase business value. 

The best solutions that can be leveraged from technology is as follows:

1. Artificial Intelligence: Customers need better UX. Businesses have realized that chatbots and other AI integration in their services increase value. In addition to reducing the workload of employees, optimizing expenses, managing resources, and many other huge benefits, it also gathers large volumes of data to provide critical insights for businesses to make important decisions.

2. Blockchain: To be able to record transactions without the intervention of a central authority is the power of most of the cryptocurrencies. FinTechs on Blockchain has been the most disruptive technologies in the financial industry verticals. Blockchain is the most suitable medium in which (AML) Anti-Money Laundering can be applied. Blockchain technology offers faster transactions, greater anonymity, and better data management.

3. BigData: There is no bigger tool than BigData that banks can leverage to provide a better service to customers. There is approx. 2.5 quintillion bytes of data being generated across the globe. FinTech companies can leverage BigData for use in customer segmentation, managing risks, detecting fraudsters, better compliance and by offering personalized services. 

• • Digitizing Industries For Increased Value

FinTech Digital Revolution provides new innovations with the digital offering for financial services. Current technologies have proven to be very effective and powerful to safeguard transactions. Another benefit is that the transaction costs are considerably lower with the decentralization of blockchain which has made FinTechs reasonable. 

Cryptocurrency along with the evolving FinTechs shape the whole economy by building layers of new business models.

According to the latest Statista reports, FinTech adoption rates were as huge as 69 percent back in 2017 which is 2018, the total investments touched $111.8 billion. 

• Sharing Of Technical Know-How Among Various Industry Verticals 

Financial Institutions and FinTechs can both benefit from sharing of technical knowledge. Financial service companies can scale and traditional banks can improve innovation and also reduce costs out of leveraging technology trends. 

Related Reading: Increase efficiency and streamline workflow to improved customer service.

Traditional banks can leverage their huge data assets which in many cases remain unutilized. Data sharing can be performed with transparent terms that can help manage risks, provide enhanced customer service and provide cost-effectiveness. Banks thus obtain the chance of increasing revenue and FinTechs get access to a huge customer base. 

There are many more strategies that FinTechs have to improve their customer base and operating efficiencies. To find out how many more aces FinTechs have up their sleeves, drop a call to our IT experts and strategists right away!