When was the last time you were in a bank? If you find that hard to answer then it is because of fintech – the application of technology to financial services. Fintech has changed almost everyone’s life in the last few years, cutting down massively on the amount of time and effort needed to manage our money. And new developments keep on coming, disrupting the industry further and opening up more opportunities.
This article will look at some of the latest trends in fintech and what they mean for businesses and consumers alike. It will also explore how these changes are affecting the way people interact with money and financial institutions. So if you’re interested in staying ahead of the curve in the world of fintech, read on!
1) Personalisation
App-based banking is starting to take us back to some of the best facets of old-fashioned banking. Now, instead of your bank manager, an algorithm will offer you advice specific to your situation. MoneyLion for example uses gamification to help you manage your money better and even enjoy budgeting or ‘goal setting’ as they call it. The app will flag up if it looks like you are likely to run out of funds and ways that you could be making savings. This type of fintech for small businesses is data-driven and draws on the experiences of millions of customers to help nudge users towards better financial outcomes. Other types of fintech for small businesses also allow you to track your spending and set up budget categories. Alongside this they offer traditional and novel products like cashback rewards, round ups, and a product that allows you to receive instant cash advances.
2) Blockchains
A blockchain is a digital ledger that records transactions. Blockchains are a secure way to record transactions. They are also transparent, which means that everyone can see the transactions that have been made.
This type of technology has enabled the massive growth of cryptocurrency, it underpins Bitcoin and Ethereum and has enabled them to develop and expand as non-centralized alternative currencies.
What’s less well-known is that blockchain is increasingly being used in mainstream banking and finance as well. The security, transparency and distributed nature of blockchain means that it is increasingly being applied to international payments, smart contracts, and syndicated loans. Blockchain technology is being used to help prevent fraud, manage regulatory adherence, and ensure rigorous and transparent auditing.
3) Biometric Authentication
Fraud is a huge problem for financial services. Individuals and banks lose billions every year from online theft. As a result, there has been a boom in fintech developments in cybersecurity and anti-fraud innovations. For example, every bank now uses 2-factor authentication as a matter of course.
Alongside this, there have been leaps forward in the area of biometric authentication. This is a type of security that uses your biological characteristics to verify your identity. This can include things like your fingerprint or iris scan.
This type of security is becoming more popular as it is more secure than traditional methods like passwords. Biometric authentication is also convenient, as you don’t have to remember a password or carry around a physical token. This type of security is already being used by some banks and financial institutions, and it is likely to become more widespread in the coming years.
4) Artificial Intelligence
Artificial intelligence is another trend that is being used in the fintech industry. This type of technology is used to make decisions and carry out tasks. AI uses big data to make decisions about specific situations. And it keeps on learning and improving in response to the outcomes of those decisions. AI essentially mimics human intelligence but in a way that is much more efficient, quick and accurate.
Not surprisingly, artificial intelligence is an area of massive investment and development in the financial services industries. It is being used in customer services and even in investment advice. If you are communicating with a financial services provider online, chances are that you are talking to a robot and not a person. It is now hard to tell the difference.
Artificial intelligence is also being used to assess risk and creditworthiness. It looks beyond standard credit scores to many other data points and patterns. It’s also being used in fraud detection where AI power can more easily process routine work and spot anomalies, allowing fraud analysts to focus on higher-level cases.
As you can see, there are many new developments in the fintech industry. The financial services industry is undergoing a massive technological transformation. If you have a bank account, this affects you, so stay informed and aware of the opportunities and challenges those changes might present.