Last Updated on 25/12/2023 by Deepak Singla
Financial Technology, otherwise known as Fintech, is gain traction not only among common banking users but even the conventional banking organization have started embracing the concept to beat the competition and attract a new customer base, especially millennials that drive the largest number of digital transactions.
Online banking and branchless banking served their purpose for a good many years but now Fintech has caught the imagination of a tech-savvy generation that is more reliant on their smartphones rather than outdated method. Fintech companies were able to process $3.5 trillion in global transactions by 2017 and this number is expected to go as high as $8 trillion by 2022. This annual growth of 18% is not only exceptional but points toward a trend where fintech companies will have to scale their operations to create a frictionless user experience.
So here are the 4 hottest Fintech trends that will rule this sphere of online transactions in 2019
Mobile Will be the biggest Driving Force
If industry stats are to be believed, Mobile phone-based transactions and payment platforms hold the biggest promise for fintech businesses. It is estimated that as high as 52% of Fintech transactions will originate from mobile devices. Already mobile payment apps like AliPay and We Chat have a billion plus users for mobile payments and are responsible for processing 2/3rd of global mobile payments.
Fintech based mobile apps are the 3rd most used apps on a smartphone after social media apps and weather apps as 31% smartphone users admit to having used such mobile payment apps. 91% of banking clients prefer mobile apps over visiting physical branches.
ROI to jump up in 2019
Fintech startups are mostly in the development phase and most of these modern companies rely on venture capital to perfect their services and introduce a new line of products. But according to a recently released survey, Return on Investment (ROI) for these products and companies is expected to jump as high as 20% which means that more money will be invested in these Fintech products, so we can expect more innovation when it comes to Fintech based products and how they are marketed to a global audience.
Fraud Protection
Unlike conventional banking operations, Fintech comes with more innovative and full proof solutions to protect identity theft and online fraud prevention. Some of them offer real-time KYC & AML to their customers in order to not only identify their true identity while also checking for any potential financial risk attached to their incoming users. Each transaction is vetted and any attempt of money laundering or financial scam is easily detected.
As user trust is being eroded from legacy financial services, Fintech solutions have been quick to administer a holistic change in the banking models. With the concept of Open Banking introduced through real-time APIs, the Fintech products have been quick in identifying the true identity of their incoming users. Some use biometric verification, others require a handwritten note for consent verification to authenticate transactions beyond a certain limit. ID Verification is also utilized as a form of full proof KYC at the time of customer onboarding in order to authenticate the personal information provided by a user such as the Full Name, Date of Birth and other user credentials.
In order to deter identity fraud attempts, KYC service providers even offer the service to check the authenticity of the identity document provided for user verification. Most of them are limited to a small list of countries but Shufti Pro is one KYC service provider that has the ability to verify the identity of citizens from 230+ countries of the world. Shufti Pro even offers identity verification not only with the help of ID cards but also with the help of passports and driving licenses as well.
Several Fintech products have partnered up with services such as Shufti Pro to check the credentials of their incoming and existing customers. This has brought down the ratio of account takeover, digital scams and online frauds to a significant low.
Blockchain-based Tech
Last but not least, blockchain based tech will be soon a norm in Fintech as it provides both data security and centralized control to these service providers. Transactions will become more secure and the threat of unauthorized access or payment fraud will be reduced to a minimum. Several fintech based projects have already started submitting a list of patents in 2018 and the trend is going to become more mainstream in 2019. Billions of dollars are expected to be pumped in the adoption of blockchain technology in Fintech and it is expected that regulatory compliance of Fintech will enable blockchain to gain more popular traction and audience, while at the same time adhering to compliance regulations.
Digital only banking entities are also focusing on taking benefit from the blockchain technology and competition from Fintech is one of the major reason for the large scale adoption of the blockchain.
Not to forget that frequent data breaches that have haunted the financial landscape for a large time now, blockchain can turn the tide on that as well as only a secret key and encrypted data will be the only way of accessing information, both personal and financial, will become the accepted business norm. Fintech startups, unlike their other large banking competitors, are more open to the idea of blockchain based services. 77% of them believe that they will be integrating Blockchain in their operations in the near future.
Conclusion
2019 promises to be the year when Fintech finally come of age and start flexing its muscle beyond simply payment gateways and online transaction mediums. After all, it has been quoted by several sources that by 2030, the biggest bank in the world will be a tech company. Apply pay and Ali Pay are the 2 potential competitors for this post and their business model hints towards a futuristic landscape where most of the transaction is not only processed through the digital medium but more secure as well.
Digitization of the financial landscape is only logical when seen in the context of anticipated consumer needs and aspiration of new fintech firms to leverage insight and data for better service delivery and swift transaction processing. Not to forget, the removal of friction from user experience that has been made possible by experimenting with multiple technologies.
