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FINTECH trends that are shaping the Financial sector
While the pandemic has brought the world to a standstill and has affected every industry’s growth and profitability, there is one industry that has reached new heights during this time - the FINTECH Industry. Even before the outbreak, it was clear that fintech will be the future of financial services but COVID-19 has created new opportunities and accelerated this process. According to CBInsights, funding increased 17% quarter-over-quarter (QoQ) to $9.3B in Q2’20. According to Market Insights, the fintech market in India was valued at around Rs 1,920.16 billion in 2019 and is expected to reach around Rs 6,207.41 billion by 2025, expanding at a compound annual growth rate (CAGR) of around 22.7 percent during the 2020-2025 period. All indicators confirm that investment in fintech and new technology has improved and automated financial services. Here are some Fintech trends that are shaping the future of Financial Industry:
Digital only Banks
Imagine having everything done without having to go to banks, without standing in long queues and without heavy paper works. Fintech has made this imagination come true. Digital only banks do exactly this, every service is provided online, from opening of accounts to transfer of payments.
Digital-only banking, along with being fast and convenient also offers great customer experience. Customers experience a virtual high-speed banking service that too at low transaction fees. It is gaining traction among global consumers. Even from banking institutions point of view digital-only banks are a bane. There is no hassle for opening new branches. Banks save money on physical infrastructure and hiring costs.
In 2021, this trend will see a rapid growth as post COVID-19 world is going to be a digital world. Many banks are now following this trend and are now digitizing their services.
Blockchain & Cryptocurrency
To know about this trend, we first need to understand what Blockchains are and how they work. As the name suggests Blockchain is a chain of blocks which contains information. They store information about transactions like date, time, amount, parties involved in the transaction and information that distinguishes it from other blocks. Cryptocurrency is one of the fields which uses this technology.
One might thing that Blockchains are a dead trend now but over the past decade it has refined and become more effective and secure. Its usage is now expanding from just cryptocurrencies to asset management, capital markets etc. Venture capital firms, private equity firms are facing demands to improve liability risk management, adapt more dynamic decision-making structures, and address the increasing complexity of ever-changing regulations.?Blockchain can effectively streamline asset and stakeholder management by allowing automated fund launch, Customizable built-in privacy settings for transaction confidentiality.
Due to such developments, the blockchain has open a whole new world of advancement and opportunities for the financial sector. With a little bit of luck and ingenuity, the rise of blockchain in fintech industry could pave the way to completely democratized methods of managing our money.
Innovations in payments
Go back into the time and think what were the options available for payments then? Cash, writing a cheque, credit or debit card. Now come back to this time and look at the payment options available now, you’ll clearly see how the payment sector has evolved over the years. Payments are now just a click away. Mobile wallets, UPI payments, QR Codes have made payments very easy and hassle free. You no longer have to carry your wallet everywhere.
Payment systems are growing increasingly secure and efficient, making them attractive for consumers and businesses alike. The industry which has benefitted the most from the fintech development is the e-commerce industry. This industry has evolved along with the evolution in payment methods. Development of Google Pay, Amazon pay, Apple pay, has led to faster payment check out and overall a better shopping experience for the consumers.
There is now doubt the digital and mobile payments are the future. 2021 will see in an upsurge in trends like ‘Buy now pay later’ option, biometric payment and mobile Point of sale (mPOS).
AI in Banking Industry
AI is changing the world more than anything in history of mankind. Even the Financial sector has been touched by the wave caused by Artificial Intelligence. It is changing the way how banks and other financial institutes used to work.
FinTech are relying on AI to detect frauds, facilitate credit requests and effective customer services. AI is being used to make better decisions. Most banks are now using AI driven chatbot and interactive systems. As per the survey by National Business Research Institute, over 32 percent financial institutions use AI by the means of?voice recognition?and?predictive analysis. Banks are using AI technology for enhancing the customer experience by giving it a personalized touch.
Realizing the humungous benefits by incorporating AI in banking, more and more banks all over the world are advancing their services to AI based. AI will be the most innovative and interesting trend to watch in 2021.
Sujata Mahajan, member ART Team, World V