Financial technology (better called Fintech) is described as a new technology that aims to improve and speed up the provision and utilization of services in the financial sector. In essence, Fintech is used to help businesses, as well as business owners and consumers, manage their financial processes, operations and lives using special software and algorithms employed on computers and more and more smartphones. Fintech, as the term suggests, is a blend of "financial technologies."
When Fintech first emerged at the turn of the century, it was initially used to refer to the technologies used by the back-end systems used by established financial institutions. Since then, there has been a shift towards more consumer-centric services and thus an increasingly consumer-oriented definition. Fintech is now a broad term that covers a variety of sectors and businesses, such as education crowdfunding, retail banking, and non-profit and investment management, among others.
Fintech also encompasses the creation and use of cryptocurrencies, for instance, Bitcoin. While that segment of Fintech may see the most headlines, big money still lies in the traditional global banking industry and its multi-trillion-dollar market capitalization.
Why Banks are Investing in Mobile Financial?
Before the outbreak, traditional banks were rushing to enhance their customer's mobile banking experience in the face of increased competition from Neobanks. COVID-19 heightened that need for speed. In mobile banking channels, the channel is now the primary way to engage customers and growth in revenue.
When it is done right when done well, investment solutions can add value to the lives of customers at the time they require it. It can, for instance, save customers from a trip to the bank by allowing them to open an account with digital identity verification. A fantastic mobile experience could help users to apply for credit cards or loans by pulling information from the verification procedure to fill out an application.
Grow Revenue and Cut Costs
Advanced security technology expands the kinds of services banks can provide via mobile devices, which extends beyond the ability to transfer funds and check deposits via mobile pay bills as well as check balances of accounts and even request a new debit card. Additionally, as per Fiserv, mobile customers make transactions more frequently, experience lower attrition rates, and generate higher revenue. A study by Bank of the West and Fiserv discovered that "following the enrollment process in digital banking, the monthly revenue of each client increased 10.7 percent, compared to an increase of 4.5 percent for non-digital customers in the same time."
Currently, fintech start-ups haven't considered the widespread disruption to the entire financial sector. McKinsey's analysis of a small sample of data from start-ups indicates that most start-ups tackle the retail banking sector, and only 11% focus on large corporate banking services. Payments are the most popular segment to conquer. Lending is the highest-paying segment of banking, based on the revenue targeted.
The way banks respond moment to disruptions from Fintech is crucial due to the present stage of the industry's emergence. Fintech start-ups primarily focus on disaggregating banks, providing one kind of service or product, and are focusing on doing it very efficiently.
Banks are Investigating New Forms of Biometric Authentication
As we can see in the contactless section earlier, the importance of strong authentication is paramount. PINs and passwords can provide some security. However, they are broken - and many people forget to use them.
Numerous card companies and banks are looking into using facial recognition to provide a method to verify a customer's identity. MasterCard has already introduced its "Identity Check Mobile" feature, also called 'self-payment.' The cardholder can confirm their identity by using facial recognition technology built into the phone. This eliminates the requirement to keep track of passwords for online transactions to verify.
This type of authentication isn't just secure. And it's also speedy. It will reduce the lengthy procedure of creating a brand new account to 10 minutes.
Invest Now to Save Later
Fraud increases the cost of doing business every year. The losses from fraud amount to billions every year, but the direct prices are just the top of the cape. As per Crowdfund Insider, "For every dollar of fraud that was lost in the period before COVID, Financial service firms in the US were able to incur $3.78 in costs related to the fraud that is up from the $3.35 in expenses resulting from fraudulent actions in the previous year."
Upcoming Trends for Fintech Application Development
The world is in the midst of rapid growth and uncertainty. The rapid expansion and abrupt disruptions are two key issues that pose significant obstacles for the fintech app development in 2022. Although we can't accurately predict Black Swan events that may occur, here are the three most important issues that technology will overcome soon: COVID-19, Open Banking, and regulation.
These elements determine the direction of the fintech tech trends in 2022 to develop high-end financial services in the context of social distancing, which is secure and in compliance with traditional banking regulations.
Artificial intelligence is a technological capability that has been utilized in a wide range of industries. Fintech is not unfamiliar with AI for applications. AI can be used to bring human-like interfaces and technology to fintech apps. AI will enhance the way users interact with the framework of an app. The user experience offered by Fintech solutions could be improved using AI features and integration.
In the modern, 24/7 online world, making payments using direct Debit simply doesn't work for the modern-day consumer. Instant, instantaneous interactions are a crucial part of Fintech's success story. There's a reason banks such as Monzo as well as Starling have attracted millions of customers in the past five years. They're at the forefront of technological advancement and have a service well ahead of traditional competitors.
Autonomous finance, also known as "self-serving money," is an AI-powered invention that allows the user to design and implement the financial plan of an app. Users must enter their own goals and balances. The digital assistant will assist them in saving, investing, and transferring funds to charities. Because of these features, the autonomous financial system is poised to change the face of personal finances.
The Key Takeaway
The days of ATM, money transfers through the bank branch, and banking in person is ending. We are entering a new age of mobile technology, which ranges from Apple Pay to Zelle. With all the changes, the customers are demanding better mobile banking as well as rewarding the banks who succeed in implementing the right features.
Consider yourself in your customer in their shoes. Imagine how much easier it is to prove your identity in a matter of seconds, regardless of where you're, simply by using your smartphone. What a comforting feeling it is to be able to electronically sign a document that is time-sensitive simply by pressing a few buttons, even just five minutes before a crucial deadline. And, of course, security, knowing that your bank will go an extra mile to secure your data, identity, and life savings with the use of multi-factor authentication (MFA) using fingerprints and facial biometrics.