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Financial services used to be an industry with its own culture that required constant meetings, networking, and specific corporate rules. 2020 was defined by an unexpected and quick move to digital engagement caused by the impacts of the pandemic. As a result, face-to-face meetings eventually became online. Trading switched to remote mode, mobile banking transactions increased significantly, personal trading apps put records on transactions, and call centers provided customer support by working from home.
Despite the pandemic outbreak, the fintech industry was able to adjust to the new conditions and continue its operations. To build trust, today financial institutions have to implement security, improve accessibility and deliver convenience. Looking ahead to 2021, here are key emerging technologies in financial services industry.
AI helps financial businesses manage risks, detect frauds, and identify data patterns that enable them to make decisions with minimal human intervention. Worldwide revenue from the AI market is forecasted to reach $125 billion by 2023. In the future, most AI apps will be developed using technologies such as machine learning algorithms and predictive analytics. It also helps consumers customize financial products and services, perform budget analysis, obtain saving advice, and realize the best of digital payment and mobile banking experiences.
Today, it is not enough to simply provide customer service in any industry. You need to understand who your clients are and sometimes predict their needs. Since more people use smartphones and mobile apps to receive services, financial institutions can use big data to study thousands of their customers’ data from sources like mobile banking history, social media, etc. Providing a high-quality user experience is a key to success in a competitive marketplace. Some of the information is unstructured and must be processed using analytics tools to identify important trends and potential risks that can help financial organizations make better strategic decisions. Managing all of this information more efficiently will be a fintech technology trend in 2021 because access to data insights is important for identifying opportunities and optimizing products and services.
Moving forward, robotic process automation (RPA) new financial technology that impacts fintech services in terms of increasing their efficiency and effectiveness. Generally speaking, these are software bots that can be trained or programmed to identify, learn, and minimize human interactions with a digital system. Juniper research states that the revenue from Robotic Process Automation in Fintech is expected to grow by $1 Billion by 2023. Practical process automation applications include risk assessments, security checks, data analysis and reporting, compliance processes as well as most other repetitive administrative activities. This gives financial institutions more time and workforce to perform their core responsibilities.
Blockchain is one of the most promising fintech technology trends that provide security and accountability in product and service delivery. Other benefits include high-level security, lower operation cost, quick transactions, better transparency, etc. Blockchain is mostly used as a means of recording cryptocurrency transactions, but it also has other applications.
How blockchain can be used in the financial sector:
Blockchain excludes traditional bureaucracy and fees and makes the money transfer process easier.
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If you have once registered on some financial services, there is no need to register everywhere else for if service providers are connected to the blockchain, one-time registration is applicable everywhere.
With the help of blockchain, there is no need to communicate with brokers at the stock exchange market to buy or sell the shares and stocks anymore. Blockchain allows stakeholders to validate transactions and provides high levels of security.
Although blockchain is still a new technology, we believe it is one of the financial services technology trends that will innovate the industry and attract tech-savvy clients.
One of the latest trends in banking technology industry is the move to digital, especially mobile banking. This industry will increasingly become a full-fledged channel of access to all banking products, operations, and services with different roles that are necessary to conduct all operational activities without being tied to an office, using a smartphone or tablet. According to the analysis, 97% of millennials use mobile banking daily. Features of the mobile banking app include 24/7 access to your account and customer support, security and fraud alerts, loan payments and bill payment alerts, etc.
User’s behavior and habits of the fintech market have changed dramatically since the beginning of 2020. And switching to non-cash payment methods to avoid the spread of the coronavirus probably was one of the reasons.
Vice President of Government Relations, Banking, and Financial Services, Leon Buck states:
“Health experts say there is no clear evidence that COVID-19 is transmitted by cash or credit cards but retailers are putting health and safety first and have rolled out a variety of no-touch payments… While mobile payments and contactless cards have accounted for a minority of payments in the past, the pandemic has clearly driven consumers to change their behavior and retailers to accelerate their adoption of the technology”
The level of popularity of various payment methods such as contactless payments, e-wallets, and even voice payments has significantly increased. The report forecasted that global contactless transaction values would triple from $2 trillion in 2020 to $6 trillion by 2024. In the United States alone, transaction values would grow from $178 billion in 2020 to $1.5 trillion in 2024. A National Retail Federation (NRF) survey states that 19% of people made their first contactless payment in May, with 57% predicting they would continue to use contactless payments after the pandemic. The Bank of England published a paper around the introduction of a Central Bank Digital Currency (CBDC) a new digital payment instrument that could be used to make payments by households and businesses.
According to a report, there was $8.9 billion worth of transactions from mobile wallets in 2020. This is expected to reach nearly $14 billion by 2022.
By integrating payment methods with mobile wallets this process becomes convenient for both buyers and sellers.
This increase in adoption, driven by the need for contactless payment solutions, will continue in 2021 as more and more customers are exposed to the convenience they enjoy when using these solutions.
The speed at which the financial services industry transformed to help their customers through the pandemic is the speed at which they will continue operating in 2021. To remain competitive, financial institutions are partnering with software developing companies to reach new customers and engage with existing clients over new channels and platforms. Contact us to get insights on how we can implement your fintech ideas together.