Fintech refers to any innovation that aims to improve
traditional methods used in the provision of financial services. This emerging
industry seeks to automate financial activities in general through technology.
Some of the financial transactions for individuals are
mobile banking, investments through mobile apps. Credit card services and
cryptocurrencies are examples of custom software development services
The Fintech revolution has introduced mobile payment
applications, blockchain networks and online payment options commonly used in
today's global market.
What does Fintech mean?
The term Fintech is the abbreviation in English for
“financial technologies”. It is used to describe any company that applies
technological innovations to improve its financial activities with its clients.
Fintech includes any new processes, products, applications
or business models that make up financial services delivered over the Internet.
This greatly simplifies financial transactions carried out by companies or
consumers, making them more accessible.
The four key areas of Fintech are artificial intelligence,
blockchain, cloud computing and big data. Therefore, companies that use these
four key areas to facilitate highly secure transactions on their own internal
network can also be called Fintech.
Fintech describes a variety of financial activities, such as
transferring money, depositing a check with your smartphone, not going to a
bank branch to apply for credit, raising money to start a business, managing
investments, etc., generally without the help from a person.
In general, Fintech strives to optimize the transaction
process, eliminating unnecessary steps for the parties involved.
Main development trends for Fintech
The Fintech industry has grown over the years as a result of
various software development services. This growth is defined by the following trends:
1. Digital and open banking
Customers can manage their money, apply for loans and shop
safely through digital banking, making it easier to access than ever.
This facility drives further growth in this sector, and the
global digital banking platforms market is expected to grow at an annual growth
rate of 11.5% by 2026.
Additionally, thanks to open banking, a bank can provide
information about a customer's finances (with their consent) to businesses,
insurance companies and other organizations.
Open banking is transforming the market, allowing users to
buy products online, pay for services and receive a loan immediately.
2. Heyday of the Internet of Things
Fintech companies are increasingly using Internet-connected
devices to collect customer information, allowing them to make more informed
decisions.
For example, through the mobile banking application,
financial institutions can monitor how their customers proceed to decide what
relevant services to offer.
Mobile Point Of Sale (POS) systems are gradually replacing
traditional POS systems. Likewise, smart refrigerators can order products and
pay for them autonomously.
On the other hand, instead of using a bank card, you can now
pay using phones and smart watches.
3. Use of blockchain
Blockchain technology has been growing rapidly, and some
predict that this trend will continue as more industries turn to advanced data
encryption without the intermediation of a government entity or private entity.
With blockchain you can keep an automatic record of the
movement of data: how the money arrived, where it came from, how it was used
and what it was spent on. Therefore, it protects against fraudsters, because
each transaction is recorded and cannot be changed.
In addition, blockchain protects users from any errors in
financial transactions, because these are verified by all nodes in the network,
allowing international transfers and payments to be faster, with a minimum
commission.
4. Biometric authentication
Fintech is becoming a priority industry for biometric
authentication, as it is considered more secure than current passwords and PINs.
Users consider biometric authentication to be the best form
of identity verification because they do not have to remember letter and number
combinations or change their password periodically. Plus, sensitive information
remains safe even if your smartphone or laptop is stolen.
Voice biometrics are also likely to become reliable data
protection. The user can pay for items or check balances with voice commands,
without having to manually enter data.
5. Artificial intelligence (AI)
AI technology is changing the way fintechs redefine services
to customers. AI serves to reduce operational costs, increase the value
provided to customers and detect fraud.
Intelligent algorithms improve many processes of financial
institutions. Additionally, AI can “learn” how users behave in the banking app,
such that if a fraudster gains access to the platform, AI can notice
inconsistent behavior, alerting the customer and the bank to the threat.
Fintech creates a completely new and personalized experience
for users , through intelligent virtual assistants (chatbots), which provide
feasible solutions in real time by analyzing their habits.
6. Cloud computing
It refers to the availability on demand of resources of a
computer system, without direct management by the user. Banks can integrate
various cloud technologies to provide better services and stay up-to-date,
easily adapting to customer needs.
According to McKinsey, one of the trends to take into
account is the edge cloud, which is a cloud computing ecosystem with computing
and storage resources such as Containers as a Service (CaaS), microservices
architecture and the integration of artificial intelligence in Cloud.
7. Virtual cards
These cards are becoming a guarantee of secure payment for
goods and services on the Internet. The user can pay for products without
having to indicate the information of a physical bank card, but only a 16-digit
number of a temporary digital card.
Virtual cards provide great benefits to financial
institutions, such as cost savings by reducing the issuance of physical cards
and increased productivity by reducing payment processing time, as well as
protecting confidential information.
Author Bio:
Glad you are reading this. I’m Yokesh Shankar, the COO at Sparkout Tech, one of the primary founders of a highly creative space. I’m more
associated with digital transformation solutions for global issues. Nurturing
in Fintech, Supply chain, AR VR solutions, Real estate, and other sectors
vitalizing new-age technology, I see this space as a forum to share and seek
information. Writing and reading give me more clarity about what I need.
