Research and statistics confirm that fintech investments are skyrocketing and Mckinsey and Company have expected that the investment will exceed USD 30 billion by 2020. The investment will trigger operational efficiencies in financial services.
Many financial institutions players have already invested in technology to strengthen their financial services. By building their IT infrastructure, these financial service providers have enhanced customer expectations and are setting up a new trend in the market. Almost every financial service providers are becoming more customer-centric to improve their service delivery and customer retention.
One such example is MoneyLion. It is a “neobank” that not only offers free checking accounts, paycheck advances, and debit cards but also offers managed ETF portfolios. It caters to more than six million users and has made a first appearance on the Fintech 50 for 2020.
Following are the latest trends that will drive the growth of fintech in 2020:
1. Hyper-personalization using AI and Big Data
It is certain that the personalization of services improves customer satisfaction and loyalty. And every marketing expert suggests focusing more on retaining your existing customers over finding new ones.
Thanks to disruptive technologies such as big data and artificial intelligence that are helping businesses extracting meaningful insights out of customer data. Due to the power to know the customers better, the hyper-personalization of services is unprecedently feasible for financial institutions.
2. Blockchain embrace Security
Since identity theft and fraud cost billions of dollars to the financial institutions annually, blockchain is coming to the rescue. By 2023, Investment in blockchain technology is expected to reach USD 6,700 million.
Those who still don’t know what is blockchain, it is a computer program that facilitates the decentralization of information. The information in a blockchain-powered fintech solution is distributed and cannot be altered.
The current applications of blockchain in fintech are digital/mobile payments, smart contracts, identity management, and trading.
3. Conversational Interfaces using Chatbots
Gartner predicts that almost 85% of the customer to service provider interactions will happen via chatbots. The financial sector is very keen to adopt chatbots to reduce their operational costs by eliminating human involvement for basic customer interactions. In fact, a report by Deloitte states that chatbots save over four minutes on every customer interaction.
Chatbots have become trending since technology has evolved with natural language processing. Since the learning curve for the customers doesn’t seem slow as these conversational interfaces provide instant responses and quick complaint resolution. The finance industry has also started to utilize chatbots to get customer feedbacks economically.
4. Rapid service delivery via RPA
Robotic Process Automation (RPA) was the biggest trend in 2018 and now has become feasible enough to deploy with the fintech ecosystem. By implementing RPA, companies can streamline their data aggregation and processing to offer better customer service. RPA brings efficiency in financial operations by automating specific tasks such as:
- Onboarding Customers
- Customer Identity check and verification
- Data Analysis and Reporting
- Compliance Management
- Risk assessment and more
5. eWallets facilitating Mobile Payments
Ewallets are the next big thing in the financial technology industry. The capability of payment via mobile devices has empowered the customers to pay on the go. The growth of eCommerce and internet accessibility has paved the way for online payment popularity.
Mobile payment applications outcast traditional payment methods even the debit/credit cards. Though to make payment via mobile applications the user is required to draw cash from his/her bank account still, the mobile payment method is more convenient as the Ewallet applications can store bank and card details for faster payments.
The popular mobile payment applications like Google Pay, Samsung Pay, Alibaba continue to roll out advanced features such as biometric access control and NFC. Ewallets are the driver to the growth of fintech as the global digital wallet transactions are supposed to reach USD 13,979 billion by 2022 from USD 4,296 billion in 2018.
There are some challenges too
Though the future of fintech seems so bright, financial institutions face a considerable amount of challenges while digitizing their offerings. Here are some of them:
When it comes to money, there are a lot of regulatory compliances that governments across the world require fintech businesses to abide by. These compliances are both consumer-based and financial transactions related.
Lack of Customer Trust
Research by YouGov states that almost 43% of smartphone users don’t trust mobile payment applications. And almost 38% of them are afraid that they won’t be able to make payments as they fear that someone might steal their money.
Most of the smartphone users aren’t properly informed about the perks of accessing financial services such as e-wallets via their mobile devices. Fintech development service providers are coming up with advanced AI-powered push notifications to address this issue.
Many customers avoid adopting e-wallets just because of the risk of fraud and money loss. There are huge risks of hacking and data theft vulnerabilities associated with mobile wallets and web portals. To address these concerns, the financial institutions are suggested to go with a GDPR compliant IT service provider that can help them safeguard their customer’s data.
Financial institutions are finding a way to get the fastest ROI from their IT infrastructure investments and getting a fintech app developed comes with a cost. You might want to know how much will it cost to get a fintech app? Well, it depends on many variables including the features and functionalities.
The future of fintech seems very bright as many disruptive technologies are leading the way. However, there are several challenges the fintech business faces while acquiring new customers. When it comes to money, it’s not easy to ask your customers to rely upon you for their monetary transactions as the modern customer is aware of data theft and piracy.
The financial institutions seem way ahead of these security challenges as most of them are keeping cybersecurity as a primary concern for their IT infrastructure. Technologies like blockchain and AI are helping fintech companies to optimize their data security.