A technical content writer who loves to pen down her thoughts and share her insights about the latest trends
According to technological growth statistics, there are approximately 4.88 billion mobile phone users across the globe as of January 2021. Mobile phones are owned by 62% of the world’s population and people use them even for their financial transactions since after the pandemic outbreak.
Since the coronavirus struck, people are more prone to mobile payments and digital transactions to avoid physical contact, resulting in tremendous evolution in the Fintech industry. Over 69 million people use mobile payment services. Not only this but also in the United States, in-store mobile payments are set to reach $128 billion in 2021. Financial technology is a novel advancement that is attaining prominence all around the world by substituting traditional financial services in numerous sectors including payments, wealth management, banking, electronic commerce, social commerce, and much more. Infrastructure-based technology in application programming interfaces and open platforms is revamping the future of the financial service industry as the operational advancements provided by robotic process automation (RPA), distributed ledger technology (DLT), and chatbots offer sufficient precision, efficiency, and agility.
The fintech industry is majorly influenced by revolutionary AI/ML algorithms as well as blockchain technology. Let us lay our eyes on some of the most evolving fintech trends that are influencing financial infrastructures and this Earth.
1. Autonomous Finance
Autonomous finance takes off the burden from customer’s shoulders by automating the financial decision-making process with the acquisition of artificial intelligence algorithms. This technology helps customers to come up with instant decisions regarding their finances such as where to invest them, what to do with the overdrawn account, or how to approve the loan with more favorable interests.
Automated finance initiated from robo advisors concerned with mutual fund management and software-based financial planning. Growth-based organizations expect an enhancement in customer experience with autonomous finance. Moreover, growth-based companies believe that customers will benefit from enhanced financial wellness as well as proactive customer service, resulting in company stabilization and developing a technical foundation with automated processes and digitized automation.
According to the study called “State of the Connected Customer”, 68% of the customers have higher expectations from the digital capabilities of companies because of the pandemic, but only 27% have handled the pandemic effectively by utilizing their autonomous finance capabilities. Hence more advancement is expected in autonomous finance over time in parallel to the advancement in cognitive technology.
2. Voice Technology
AI-powered voice technology has advanced to be able to play songs or tell weather forecasts and this technology is playing a very promising role in enhancing finance-related tasks.
The evolving voice technology is capable of streamlining infrequent transactions as much as frequent transactions, allowing users to reroute funds among accounts or transactions via platforms such as Monzo, PayPal, Pingit, Square Cash, etc.
According to certain estimations, the progression in voice technology is expected to evolve from 8% to 31% by the year 2022. Also, it is estimated that robo-advisors are capable of managing an incredible $2 trillion in assets.
3. Embeddable Infrastructure
Embedded finance is the fastest evolving market and companies nowadays are embedding pre-built fintech solutions in their software through the latest APIs. It is an impeccable combination of changing financial services into non-financial services. Businesses are rapidly collaborating with companies that offer financial services. Embedded Finance Infrastructure effectively lessens the hurdles for online platforms to provide financial services to their customers.
It authorizes business in MSME, B2C, and B2B segments to immensely increase their customer acquisition, legitimize customer foundation and help in scaling their product offers. According to recent studies, it is said that it is more than a $ 7 trillion market. As it is growing with the speed of light, it is expected to generate total revenue of $230 billion by 2025 only in the United States.
4. Open Banking
Blending banks and Fintech together, open banking enables data networking across financial infrastructures. The second payment services directive(PSD2) emphasizes financial institutions to release their information in a secure and standardized form. Open baking permits users to share their information effectively, efficiently with ease, flexibility, and security. After the generation of approximately 2 billion pounds, the landscape of open banking was noticed in 2019. By hitting approximately 7.2 billion, the open banking sector has succeeded in quadrupling its worth in only a year.
In 2019, open banking has generated a revenue of $7.29 billion and it is estimated that it will surpass the figure of $43.15 billion by the year 2026. Financial infrastructures require Fintech and Fintech needs credit unions and community banks. Open banking partnerships can offer customers a consolidated view of their bank accounts so that they can manage them effortlessly and efficiently.
5. Machine Learning and Artificial Intelligence
Private players and public sector initiatives have enabled user-permitted access to financial data such as cash flow or payroll. Presently, organizations are analyzing this information with the help of revolutionary artificial intelligence algorithms and the latest machine learning techniques. To attain deep insights into business metrics as well as customer behavior.
Predictive capabilities prove to be a game-changer for any company, but such capabilities are highly beneficial in the finance industry. Such capabilities play a pivotal role in the enhancement of security protocols of financial infrastructure. According to certain studies, machine learning and artificial intelligence in Fintech were worth almost $8 billion in 2020 and are estimated to bypass the figure of $26 billion by the year 2026.
What’s Coming Ahead?
Given this trajectory, it is crystal clear that evolution and progression in financial technology or Fintech will not stop anytime soon and will continue to become immensely embedded in almost every aspect of digital tools that we use regularly.
Fintech will continue to make financial services accurate and efficient with effortless access to them. Considering the tremendous evolution in the fintech industry, the global fintech market is expected to reach a market value of almost $324 billion by the year 2026, growing at a CAGR of about 23.41% from 2021 to 2026.
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