The Covid-19 pandemic has increased the speed with which the financial services industry is changing to keep pace with innovations occurring in response to the lockdown and social distancing measures.
Services once only available via a bricks and mortar bank, or financial institution, are now available at the touch of a button on a mobile device from virtually anywhere in the world.
And this is just the beginning.
Financial technology (Fintech) companies are constantly finding new ways to deliver and adapt financial services and improve customer experience and engagement. Online credit card applications, digital payments, cryptocurrencies, mobile banking apps, and automated statements are already the accepted norm but there are more advances in the pipeline.
The Fintech sector was worth an estimated $127.66 billion in 2018 and is projected to reach $309.98 billion (an estimated growth of almost 25%) by 2022.
With this growth comes a new set of evolutionary trends that are likely to shape the future of the industry.
Some of the potential advances and challenges facing the world of Fintech are outlined below:
1. Borderless Transfers and Transactions
With the rise in online payments goes a need for transactions and transfers to cross borders.
These payments must be regulated and managed via international agreements ensuring that the speed of transactions isn’t delayed or interrupted.
Collaboration between established companies, emerging Fintech start-ups, government regulators and ultimately, consumers, must work together to improve customer experience, cybersecurity and innovation so that potential issues can be overcome.
Using cutting edge technology and advances in AI should ensure a smooth integration.
2. Customer Experience and Technology
Customer experience is one area where technology was seen to be lacking.
However, the recent addition of chat bots has revolutionised the customer experience but this still needs further exploration.
Platforms that use data analytics and human experience combined are showing the best results so far in this area.
For example, companies that offer online credit checks and references are now using technology that utilises the best advances in AI and Machine Learning (ML) alongside a human final check for concluding decisions.
New lending linked to current trends such as, the vegan industry, can’t easily be assessed by AI as there is limited historical data available on the potential for this type of business, so human intervention and knowledge are required to assess the potential risk.
This human input may well be eliminated in the future if (or when) technological advances are made in this field.
3. Legal Sector and Technological Advances
The legal sector is often thought of as antiquated – its roots lie in dead languages and many laws have remained unchanged for centuries – but, this is changing.
There is demand for increased responsiveness and new technology that will allow legal firms to manage financial transactions and payments for clients with greater speed and security.
Clients’ expectations and firms’ needs are driving this change. Clients want a touchscreen signature option or digital contracts and law firms that can’t accommodate these requests are likely to be left behind.
4. Online Fraud and Cybersecurity
The past few years have seen a massive surge in mobile payments and online borrowing.
Ensuring customers (and their money) remain safe from fraudsters trying to use fake IDs requires AI generated models that evaluate risk assessment and identify malicious activity through behaviour analysis models.
Advances in this area is likely to grow in the near future to ensure that there is reduced risk for both firms and customers.
The new technologies linked to the financial sector are changing almost daily with multiple advances in AI, mobile technology and Machine Learning.
Understanding human behaviour, expectation and psychology is vital in order to progress in these fields and ensure that FinTech aligns with human requirements.