FinTech innovation is something that has been on the cards globally for the last decade. As user experience becomes the base of every success formula, the banks and other financial institutions were affected by UX fever as well.
Mobile solutions, transaction speed, bonus offers to attract additional customers and more - this is the reality right now. But as the rapid development suggests, there is much more to come. FinTech innovation still has some aces up its sleeve, and it's time to look into the future, trying to highlight the most significant things to come.
Financial institutions have been around for a while and, with the amount of responsibility they carry (especially banks), one would think that they should always be up to date with newest tech trends and use innovative solution. However, that was not the case until recent years, when the industry was disrupted by technology advancements and need to present more value to their customers.
Let’s take a look at where the industry and financial technologies supporting it have gone so far.
Mobile banking on the rise. The digital world has gone mobile and forced banks to do the same. Mobile apps that allow simple payments (bills, tickets) and transactions, as well as personal account management, have become a common sight. Furthermore, they continue to improve.
Openness became a habit. Once closed societies and places of very unpleasant meetings, banks have turned their attention to becoming more open to their customers. More smiling faces, less officiality, simplification of the processes using tech advancements and so on. User experience fights its way through, and it will continue doing so further.
Entry threshold has lowered. To get close to banking or other financial institutions, startups had to earn a significant amount of trust or become a respected market player as well. Today, as innovative solutions get more valued regardless of the industry, an unknown company or a group of people can snatch a top deal and become a partner of the world's largest institutions. The idea outweighs money and reputation today.
Tech investments have increased. Just from 2014 to 2017, global FinTech investments doubled from $19.9bn to $39.9bn. According to Fintech Global, the first half of 2018, has already seen the investments beat their previous record. At the end of H1, 2018, FinTech has attracted $41.7bn of investments. Large companies and banks are interested in innovation, and they are willing to pay for it.
The industry is interested in becoming faster, cheaper and more efficient. Vast sums are spent on innovation and research, preparing a solid ground for a large-scale frontal assault.
All aspects mentioned above are at the core of the future of FinTech, and below we will cover areas, either technological or conceptual, that will shape the financial institutions and their ecosystem in the future.
Well-funded, secure and eager to adopt breakthrough ideas from industrial visionaries. This is a summary of a vast field, and we'll try to break it down step by step, focusing on the most critical areas.
The primary criterion of a lasting successful business or institution (regardless of the niche) is the value that it provides to the customers. Competition and better technology push the business forward or drown it instantly.
Financial establishments, particularly banking companies, are facing more significant challenges to create value than they were before. Limited to local areas, the customer had to use the only available service around his area. Today, to conduct financial operations, the client doesn't even have to be on the same continent as the company that provides services. Prime examples of that are Paypal, Skrill, Payoneer, ePayments, etc. These companies provide services globally and are known worldwide, each to their extent.
As it gets harder to win the fight for the customer, technology offers a solution for better user experience and more value presented to the clients. Therefore the strive to make the value of a company count on a large scale, will in its turn fuel financial technology startups and visionaries, creating even brighter prospects.
Increased value and better experience require more spendings; therefore companies will look to exploit technologies to reduce costs and optimize internal processes. We will cover the technologies that can enhance fintech today in the last paragraph of this article.
More than 50% of online sales have gone mobile, as of today. We can be confident in drawing a parallel line between this fact and the increased growth of online banking, insurance, loans, etc.
Digitizing industries create more efficient means to handle the increased demand of the aspects mentioned above, causing an effect called digital disruption. It forces the legacy companies to either evolve or go down.
Disruption makes financial institutions go innovative route, investing more in fintech and reaping benefits of advanced technologies. Fintech will naturally evolve, basically forcing the businesses of all sizes to play along in the race for value and user experience. Statista has conducted a report on fintech adoption rates that leaves no doubts - the community is ready to embrace innovations and will follow those who do it first.
As all subjects of one big industry, financial institutions got used to sharing knowledge within their “closed club” and, occasionally, with the outsiders offering breakthrough solutions.
As technology becomes more accessible to access, improve and modify, people with ideas and without close ties with financial sector are more likely to get themselves a contract than they were before.
Co-innovation and we agree on that with Accenture, will become a crucial concept within the industry. This type of collaboration means changing the culture and collaborating with new startups offering better technologies. Furthermore, cross-industrial cooperation must become a reality for financial institutions and those providing tech services for them.
To win the race for the most significant value provided to users, the companies must establish a partnership with other industries for better innovation and better customer experience. The areas of implementation are as diverse as it can get. Whether it be digitized life insurance processes, more open and easy to manage health coverage, logistics, or anything else - the large market players must be ready to embrace fresh blood and their ideas.
Fintech trends circulate among powerful technologies that we just began to explore. AI, Big Data and Blockchain were once discussed by niche experts only, but soon we will face the time when these terms are our reality when it comes to financial services. Let’s evaluate their use cases and try to forecast the evolution they may cause.
AI is heavily involved in making financial services better both for users and employees. It is already used to create advanced chatbots for more efficient customer service. The AI recognizes text language, determining keywords from the users' questions and is capable of providing solutions to simple issues. It lifts the major part of the workload of the customer support staff, allowing them to focus on more complex matters or VIP clients. Optimized expenses and human resource management benefit from it the most.
AI is also used in stock markets. The technology of today allows it to come up with a visualization of possible stock behavior, thus offering significant aid for the analysts of the investment sector.
Artificial intelligence can also gather large amounts of data and turn this massive set of numbers and parameters into easy to read the narrative. It results in simple reports that provide immense help for human workers and allows better data management.
A customer-centric approach is built on audience segmentation to provide a unique experience for each. Big Data innovations allow collecting large chunks of data and analyzing it, preparing the company to provide excellent services.
Big Data is also responsible for highlighting customer behavior, determining the patterns of use and tackling the most pressing issues. Besides that, it is also capable of aiding with better fraud protection and risk management. The software can pick untrustworthy subjects or suspicious transactions out of the enormous flow of information, helping to evaluate the situation and eliminate the threat.
This technology offers a range of opportunities, many of which are directly connected to finances. The blockchain-based solution offers better anonymity, provide faster transactions and help with data management.
Blockchain projects can already help banks to increase financial security. Data stored in blockchain can be easily accessed by authorized employees, resulting in better response to threats or opportunities and so on. The blockchain platforms allow enthusiasts to build their solutions that would assist in tackling the world's most significant problems, finances included. We can expect the tech to be improved further as its potential is largely unexplored, as of today. Same goes for other innovative technologies that will inevitably boost fintech and make its presence even stronger in the financial sector.