In the past few years, financial technology (“fintech”) has proven itself an increasingly popular trend across multiple industries. From completely online banks to financial institutions using AI to help manage consumer finances, there are many aspects of fintech just waiting to be adopted.
Whether you’re a business owner or consumer, it’s important to stay up-to-date with what the banking industry is doing. While you might be hesitant to embrace some fintech trends, this is where our world is going.
In fact, 64% of consumers have used at least one fintech platform. Sixty per cent of consumers now choose banks based on whether they provide a single platform, such as a mobile banking app. If you haven’t explored fintech’s possibilities, it’s time to get started, beginning with these six trends:
1. Digital Banking
Digital banking was already expected to grow, but the Covid-19 pandemic expedited that growth. With banks closed and customers more or less forced to manage their finances online, digital banking quickly became a necessity.
Digital banking focuses on two important areas: online and mobile banking. In online banking, the institution offers a website where consumers can securely view their accounts, pay bills, transfer money, etc. In mobile banking, the bank offers the same website functionality via an app that can easily be downloaded to a consumer’s device.
Digital banking offers consumers easy access to their funds and enables them to manage their money anytime, anywhere. From opening a high-interest savings account to applying for a credit builder card, there’s likely some way to do that online at this point in time.
2. Autonomous Financing and Robotic Process Automation
In the last decade, it’s become clear that we humans are becoming more reliant on technology than ever. Tech both makes our lives easier and helps ensure that things are done correctly. Many tasks, such as financial planning, can be time-consuming and stressful. To meet this challenge, autonomous financing can be leveraged to streamline the process.
Autonomous financing helps automate the financial decision-making process. By using AI and machine learning, autonomous financing can handle every part of a consumer’s finances. From paying a gym membership to investing money in a profitable stock, this fintech capability saves consumers and bank employees time and energy.
Robotic process automation is another aspect of fintech that automates portions of the financial process so employees can focus their time elsewhere. RPA technology works by eliminating specific human touchpoints. For example, when a consumer calls seeking account information, RPA can provide the answer without a bank operator having to hop on the line. Consumers can get answers much more quickly.
3. Financial Education
Education is an important aspect of fintech that’s not always discussed. During the Covid-19 pandemic, many people struggled financially as they experienced job losses and health scares. In many cases, a lack of savings made these hard times even harder.
While there are many reasons why someone might not be able to save, lack of education is one of them. Not all consumers are aware of best practices when it comes to spending and, more importantly, saving money. This is something that financial institutions are realizing and starting to take seriously.
Providing consumers with financial literacy is critical, which is one reason why we’ve seen a rise in fintech apps offering financial guidance. From facilitating budgeting to automatically putting money aside, these apps can help people improve their finances.
The fintech industry has also launched investment tools so consumers can plan for their future. The more consumers learn about saving and investment, the less likely they are to court financial disaster.
4. Open Banking
Open banking provides third-party applications with access to consumer banking and financial accounts. Open banking practices make it easier to share financial information electronically in a secure manner.
According to data from the U.K.’s Open Banking Implementation Entity, open banking payments are on the rise. In 2020, there were more than 4 million of these transactions. This fintech trend has been growing for years now, as it paves the way for improved financial services for consumers.
For example, lenders could use open banking to assess a potential borrower’s risk level before granting them a loan. Open banking apps could help consumers understand exactly how much of a down payment they could put on a house. Open banking makes it easier for consumers to be more transparent with their assets as they consider future expenditures.
5. Enhanced Security
With the rise in digital banking comes a corresponding rise in security protections. With so many transactions taking place online, banks run an increased risk of being hacked and having client information stolen. Thankfully, there have been several innovations to increase security in the fintech sector.
Multi-cloud storage is one of them. MCS uses multiple clouds in a single network, meaning information is distributed across multiple storage locations. This makes it far more difficult for any hacker to gain access to every piece of information needed to compromise an account.
Blockchain is yet another way to enhance security using fintech. Blockchain offers a flow of systems that record information in a way that makes it difficult to hack. Many people refer to blockchain as a “digital ledger” of transactions.
Information is stored in blocks that are chained together. Whenever new information is added, that data is encrypted into a new block. One of the most distinctive features of blockchain is that no one party has control over it. It can’t be changed. The fintech industry also uses blockchain as a way to speed up financial transactions while also preventing errors.
6. Consumer Benefits
One of the most popular aspects of fintech is its convenience. And while fintech can definitely make life easier, consumers want even more benefits than instant access to their money. They want faster turnaround times on financial transactions, quicker responses from their bank, and more opportunities to achieve financial freedom.
With so much competition, financial institutions need to ensure they’re offering additional benefits. Most consumers want better control over their finances, and this is precisely where fintech can offer an edge.
The fintech industry is only going to grow in importance. Not only does fintech streamline financial transactions, but it also provides consumers easy access to their assets. By embracing the trends above, everyone from business owners to consumers can move one step closer to achieving their financial goals.