The fintech industry in itself is relatively a new technology for the conventional banking and financing industry. When Fintech came into the market, it was seen as a competition to the banks and other financial institutes. Whereas, it became a method now financial institutions to work. Moreover, customers accepted this change more excitingly as it gave tremendous convenience to them. Especially, at the time of the Covid-19 pandemic, people got more comfortable with the technology that offers banking and financing services.
However, it is not the end of the innovations in the fintech industry. Technical specialists are still researching a lot to provide more convenient, secure, and affordable services to the customers as it is one of the sectors that cater to everyone. Be it an individual or an organization. So let’s talk about some of the expected future innovations in the fintech industry.
Latest Financial Technology Trends
To date, people have understood that ‘technology’ is not going to stop its innovations for sure. Thus, let’s discuss the anticipated future trends of the fintech industry.
1) Artificial Intelligence (AI) To Expand Global Valuation
Indeed, it is an existing technology that is doing wonders for multiple industries (almost all). Yet it is expected that AI can drive in more value creation. It can generate up to $1 trillion additional money for global banks annually.
Through AI and machine learning (ML) the fintech industry can outperform as it helps with automatic factor discovery, knowledge graph and graph computing. Also, AI plays an essential role in building associations and identifying patterns across complex financial networks.
Learn six ways AI is changing fintech.
2) Blockchain Will Change The Existing Financial Protocols
All parties involved in the banking service require complete information about the transactions, records, and other relevant data. Distributed Ledger Technology (DTLs) offers to record and shares the data across multiple data stores. Also, it is used for transactions to be recorded, shared and combined to form relevant information in a distributed network including parties at the same time.
DTLs use blockchain, cryptographic methods and algorithmic methods to perform all these tasks and record the data in an immutable manner across the network.
Here are some prominent and customer-loved blockchain applications:
- Real-time settlement of transactions
- Authentication ecosystems on the basis of zero-knowledge proof
- Decentralized finance (DeFi)
- Digital asset support services
It is expected that DeFi (based on blockchain technology) is forming a new way of opportunity, changing established traditional value chains and structures. According to financial policies and regulations, DeFi will massively expand in the future.
3) Cloud Computing Will Guide Financial Players
According to McKinsey, cloud computing effective use can improve the efficiency of migrated application development and maintenance by 38% and will increase the infrastructure cost-cutting by 29%. Also, the downtimes of migrated applications could be reduced to 57% approx. leading to a reduction in technical violations expenses by 26%.
Moreover, cloud security has been considered way better than other shared networks. Thus, it provides less technical risk with a constant, cross-environmental technology stack.
It is foreseen that banks will also adopt cloud-based microservice architecture at a decent scale in the near future. In this, APIs will unlock machine-to-machine communication. The future of the core banking applications will be influenced by the microservice-driven architectural transformation in the banking sector.
On top of that, cloud technology is expected to account for EBITDA (earnings before interest, tax, depreciation, and amortization) above $1 trillion among the world’s top 500 companies.
4) Mobile Banking To Improve The Ways Of Banking
Mobile banking has been with us for a long time. From SMS banking to smartphones, we have seen exponential growth in mobile banking services. However, it is still not the end.
In the future, the usage of mobile banking is about to rise dramatically as the technology developers are working hard to provide a safer and more secure platform to the customers where they can perform almost all banking chores.
The future of mobile banking is quite bright. More transactions and fewer fraud cases are foreseen.
5) Regulatory Technology (RegTech) Will Evolve With Fintech Innovations
RegTech is a technology that with the use of IT improves the regulatory and compliance processes. The increase in data breaches, cybercrimes, and other fraud activities have called for RegTech.
Using machine-learning technology and big data, regtech provides data to the companies’ compliance departments on money laundering activities conducted online. This helps a lot to create automated secured platforms which further establishes customer trust.
In the coming years, the fintech industry is expecting more automation, simplification and standardisation among industries and organisations by regulatory technology.
The Bottom Line
The fintech industry has been with us for a long time and it will not go anywhere due to its offered services, convenience and security. In this blog, we tried to cover the potential of the fintech industry in the coming future. Yet we do not afraid to say that there is a lot more there in the loop. Soon many more technological advancements will be unfolded and the fintech industry will take a boom in the world. Keep following us to stay updated on all trends shaping the fintech future.