Fintechs, as we know it, are a solution for lending companies looking to leverage technologically advanced business functionalities and financial processes. The massive popularity of digital payments, digital lending, insurance, wealth management, or Robo-advisory, Fintechs offer lucrative avenues to lending businesses that aspire to lead the industry. In 2019, Fintechs are revolutionizing the way companies operate across sectors. The year 2020 holds favorable prospects for the lending businesses, wherein markets can expect significant changes in the way businesses spend, manage, and access money.
Here are significant fintech trends to watch out for in 2020:
Trend 1# Robotic Automated Processes
Robotic Process Automation is a favorable trend for the industry as knowledgeable workers can dedicate their time to more complex operations that do better with a high level of human intervention. While ‘automation’ on itself is nothing revolutionary in the lending market, Robotic Process Automation allows developers to organize automated processes to work seamlessly with their human counterparts.
In 2020, more businesses are likely to allocate monotonous tasks to Robotic Automated Processes and leverage their employees’ time, energy, and attention on subjects more evaluable. Lending companies can seamlessly integrate their automated processes with those that are still done by humans, resulting in reduced processing times and increased efficiency. It is likely to be a competitive scenario as lending businesses attempt to design and implement a future-proof organization model that creates a free-flowing synergy of complementary capabilities of robotics and human workforce.
Trend 2# AI-Powered Lending
Fast-paced innovation technology is exceedingly transforming the customer experience each passing day. Lending institutions are fine-tuning their AI solution strategies to reduce operating costs and escalate user experience. Commercial lending businesses can easily automate lengthy processes with AI. While AI-based chatbots interact and solve problems of the customer mimicking a help desk personnel. Using stored data along with machine learning algorithms, enhance its efficiency. Tedious tasks like identifying fraud, detecting money laundering, and making customer recommendations can be accomplished with minimal human intervention.
2020 presents a vivid opportunity to financial lending companies to lure customers with enhanced personalized attention thanks to AI. By carefully assessing client behavior, lenders can predict product/service suitability on a per-client basis with AI. Artificial Intelligence thus makes it possible for lenders to offer clients solutions tailored, especially them – both in terms of advertisement and product offers. Wait for AI tech to explore new sources of information about customers and data collection methods.
Trend 3# Payment Innovations
A quest for excellent user experiences drives payment innovations. We see more and more lending firms working on ‘single-click payments’ systems, a payment approach with fewer action points, and enhanced emphasis on user’s data security. Given the intense competition in the market, only a satisfied customer translates into a successful business. Research shows that many digital platforms lose potential customers when they let them undergo a long process of authentication and manual data input. Improvements to the transaction process can turn around the user experience on the whole and garner better returns for lending firms.
In 2020, expect multiple payment channels, integration of biometry like securing transactions with facial and voice recognition, contactless payments, mobile wallets, smart speaker systems, and identity verification technologies, etc. to be on the forefront. Not only will these innovations add to the convenience of applying for a loan and but they also facilitate repayments.
Trend 4# Healthy Collaborations Over Competition
While new-age digital-only lending startups are likely to face consumer concerns and will suffer the pressure of complicated financial regulations, other more traditional financial institutions lack desirable technological innovations to ease the process on the whole. While both kinds of lending businesses have something unique to offer, both lack on certain fronts. This will bring us to a market scenario with more collaborations between traditional lending institutions and Fintechs. Most traditional institutions are still trying to operate under the same old standards. They are oblivious to the latest marketing strategies and product offerings. Productive collaborations with Fintechs can lower the cost of sale for the business when it comes to back-office solutions and ancillary services.
2020 will bring forth Fintech mergers and collaborations in the banking sector. Expect a revamp of existing processes to smarten the legacy systems into something advanced. We can expect more co-development and joint ventures to pop up in the lending industry.
Trend 5# Advancements in Blockchain Tech
The global financial market is underway a massive makeover, thanks to the empowering outreach through a fast-decentralized system and low processing fees of the financial transaction through blockchain tech. The distributed ledger technology is likely to attract investors due to its decentralized approach, freedom from regulations, and relaxed fees. The year 2020 dictates faster absorption of the blockchain tech into various industries, including the lending industry. Most financial services companies are increasing investments to catch up with blockchain innovations, as they roll out.
Integrating blockchain tech into lending arrangements can strengthen the relationships between financial institutions and their customers, thanks to trust and transparency. Improvement of fund transferring operations, KYC/ID fraud prevention, and risk scoring are few initial benefits of incorporating blockchain into the system. Blockchain technology requires the readiness of businesses involved to share crucial data.
Being tech-centric by virtue, Fintechs seek to outdo themselves at every given moment. Add to that, the need to stand out amidst intense competition, the growth of Fintechs in the near future, is going to be unparalleled. 2020 is likely to bring synergies of financial services and technology for the benefit of both individuals and economies.
While the digital culture has brought forth massive changes in how the lending environments function, constant ongoing innovations make it possible for lending firms to disburse loans with greater efficiency and earn higher returns. Come 2020, and the investment will be made in tech that eases the lending process, help achieve economies of scale, and enhance the user experience. The five fintech trends mentioned above outline the most significant changes that are going to shape the future of the financial services in the upcoming year.
If you are looking to adopt the tech route for your lending lifecycle management, Finezza is future-ready and just a click away. Get in touch with us here!