Fintech is at a fascinating stage as it has reshaped how we view finances. What’s impressive is that fintech companies’ innovation has compelled the government to change its reforms. This is a disruption in action. The finance industry is no longer restricted to financial solutions; it has rather evolved with technology-backed solutions that make financial services convenient and your life easy.
Internet is a significant part of our lives now, and the drastic adoption led to the rise of fintech companies. These companies have brought financial solutions to our doorsteps. Banking solutions, investment, payments, insurance, you name it, and it can now be done in a few steps. All the credit goes to financial technology, aka fintech.
Watch Out For These Top 5 Fintech Trends
Looking back a few years from now, we have come a long way and redefined multiple financial processes. Let’s now peek into what the future of the finance industry would look like and trends that would set the traction.
1. AI and ML
Pandemic has given digitisation the right push, and we now live in a world of cashless payments and banking. The banking sector advanced multifold with the help of Artificial Intelligence (AI) and Machine Learning (ML). The data processing ability of banks has streamlined efficiency, cutting through manual labour and extended steps.
Banks can now process a vast set of data to draw quick and concise outputs that facilitate the process of decision making—improved ability to recognise and decipher real-time patterns led to the advancement, which has not only cut process time but also costs.
AI and ML have reduced the workload and stress level of the workforce, thereby increasing productivity by 59%. Besides improving the process of banking, they have also made online banking safe and secure. Technology is set to empower the workforce, equipping them with efficiency.
The kind of data AI processes reduces loan default and many other complicated notions of banking. This includes fraud detection processes, customer service, credit, and loan decisions. However, a major portion of AI and ML remains unexplored, and Fintech firms are ramped up to disrupt the traditional practices.
2. Neo Banks
We relate to physical establishments, coming across the mere term – bank. But we have moved past this traditional assumption; a physical presence for banks is now ancient. Neo banks have challenged the monopoly of banking sector players and successfully established a stature. Neo banks have one vision, to make banking more accessible and convenient.
They are building a banking ecosystem that does not rely on physical branches, where banking is open for everyone. Neo bank’s cheap and convenient products are the best alternative to the present market dominant brands.
Neo banks leverage technology and their aspects such as artificial intelligence, biometrics, cyber security, and online banking to create bespoke solutions. Customers can access data relating to their accounts or just any banking products at their fingertips. They are the major hubs for mobile banking and cashless transactions.
Neo banks are not yet certified as independent establishments under RBI but have found a way to coexist with traditional or legacy banks. Some of the prominent names we have already come across are YONO by SBI, Kotak 118, RazorpayX, Jupiter, and NiYO.
The terms blockchain and cryptocurrencies rely on each other’s presence. But, blockchain need not necessarily be limited to crypto. Banks are now aware of this technology’s potential and plan for mass adoption in its workflow dynamics.
Blockchain technology is highly secure, and one of the trusted technologies. Therefore, integrating it into the banking ecosystem would ensure safe transactions.
Since the banking system is unfortunate to experience major frauds and attacks now and then, blockchain would help create a secure environment free from fraud, thereby complying with regulatory requirements. In addition, blockchain can host quick, convenient, and precise transfers, payments, and investments.
4. Wealth Management
Investments and wealth management were concepts only the privileged sections of the society were familiar with. Now, almost everyone is educated about the probable potentials of compounding and investment.
Previously, the risk profiles of wealth management would scare investors. Though risk is still a part and parcel of the wealth management industry, we have also come to visualise low-cost methods and frequent returns.
India’s fintech market is one of the fastest-growing markets in the world, and wealth management is a part of it. The major drivers of the wealth management industry are startups. Startups have challenged the well-established traditional business models to only shatter their confidence. Moreover, the technology competence these startups have is inevitably their greatest strength.
People are now aware of these startups and also the upsides of investing in such companies. Trading is now being adopted by people of all ages and has got them hooked to investment.
AI is still the primary determinant of this industry’s future. It has already grown up to be able to process gigantic amounts of data, analyse it, and reliably forecast trends based on it. There are special algorithms designed to make the experience and process of investment highly rewarding and risk redundant.
Insurance and coverage are a major part of financial discussions, especially since the pandemic has hit us hard. While the relevance and significance of insurance remain the same, fintech companies still have a role to play. They are partnering with potential and high-profile insurance brands to help them create an easy and automated process of approval and funds disbursal.
The flagship products of this industry are term and life insurance. It was, however, not limited to life insurance and grew up to include mobile, car, health, wearable, covid insurance, and more.
The technology advancement would help brands to better engage with their clients. Brands can clearly establish their communication lines and convey any updates duly. Technology would also lend a hand to the customer service executives, thereby improving customer retention.
The fintech industry is evolving at a fast pace, and anticipating major disruptions is only obvious. The future has a lot of disruption in-store. It is only a matter of time before trends become fads and new disruptions hit the market. As per the present scenario, some of the major drivers are Robo advisors, blockchain, a better lending landscape, globalised payments, secure banking, wireless transfer, digital and cloud banking, chatbots, automation, financial inclusion, and more.
The present fintech landscape is all about the survival of the best. This demands you to stay in sync with the hot trends of the industry. We recommend you stay abreast of Finezza spaces to stay on top of the Fintech trend that would take the market by storm.