Among all the countries in this world, India is the fastest-growing country in terms of the FinTech industry. People are adapting to this industry at a growing pace ever since it was introduced. It has simplified the way of making payments and other financial services very easy, fast, secure, and safe.
Before talking anything about the impact of current trends on the FinTech industry, let me explain what the FinTech industry is and everything about this system.
What is fintech?
Also known as Financial technology, FinTech refers to the amalgamation of Finance and Technology into one. In other words, the use of technology to render financial services to the clients/users/customers is termed FinTech. It simplifies and improves the work of companies, organizations, business owners to manage all their financial transactions efficiently with the help of specialized software and algorithms.
Examples of FinTech companies are Stripe, PayPal, Paytm, RazorPay, PineLabs, and many more. The fintech sector also includes Open Banking, Mobile Payments, Crowdfunding, Stock-Trading, Online Financing, Insurance, and many other financial services.
Statistics on the fintech industry
The FinTech industry was introduced in the 21st century, and ever since, it has grown tremendously. The demand for financial services via technology has gained a huge rise. Here are a few statistics regarding the FinTech industry.
- A report from Statista states that, in 2018, approximately 70% of senior banking executives said that teaming up with FinTechs to devise a new service with them was a vital opportunity for the banks and the banking sector.
- In 2020, Stripe was the most valuable fintech company in the US, with a net worth of $22.5 billion.
- Digital banking services are speedingly acquiring the market, and 46% of people make use of these digital channels for their financial requirements.
- According to a report by the Business Research Company, the global financial services market is estimated to reach $26.5 trillion in 2022.
- Statista states that the global fintech adoption rate by consumers for money transfers and payments is 75%.
More about the fintech industry
Fintech is not just limited to making financial transactions, but it also includes the development of cryptocurrencies like Bitcoin. The digital transformation of businesses has grown explosively and has made way for banks and trading firms to make use of the technology and provide better services to their clients and consumers.
People prefer to avail traditional banking services rather than the modern banking system since they want their data safe and secure, where cyberattacks are so common these days.
Fintech dvelopment trends
When stepping into the FinTech industry you should be aware of the trends that have taken over the industry and which every institution is adopting to skyrocket their ROI. If you want to be an unbeatable market giant you should be aware of all the market trends and technologies. Here are a few updates and trends that the FinTech sector is keeping up with to assist you with your questions and requirements.
- Blockchain Technology – We are all aware of the fact that blockchain technology is immutable, decentralized, and secured in nature. This is where it adds a bonus point for the FinTech industry because here where the data is very important, it is also important to keep that data secure. This will help the businesses to gain the trust of the consumers and also avoid data destruction and data breaches.
- AI Integration – Artificial intelligence is now among the trends that have boosted the ROI of these FinTech companies. Although artificial intelligence has driven sales, the capability that makes it stand out in the market is the ability to provide personalized recommendations to every customer accordingly. Now talking about how AI is helping the FinTech industry is that it makes these big industry giants calculate their credit scores, make suggestions regarding loans and business transactions so that no error takes place.
- Big Data Analysis – Big Data, is commonly referred to as the type of structured and unstructured data that financial institutions use to identify frauds and risks and manage them with ease. With the use of Big Data in the Fintech industry, one can easily predict the fraudsters that any human eye can’t and avoid all the risks. It is also used to understand human behavior and make strategies accordingly which benefit both businesses and consumers.
- Smart CyberSecurity – In this digital era where cyberattacks are very common and hackers are stealing and selling data, cybersecurity is an essential factor to take care of. For financial companies where data is the most valuable asset, it is important to safeguard it and keep it secure, implementing safety and encryption is very important. These companies have now majorly focused on investing in cybersecurity, to avoid money laundering and identity thefts. This will result in more security and stability in the customer’s personal information and money safe.
- Biometric Identification – According to a report from Statista, it is forecasted that the number of mobile banking users will increase steadily between 2020 to 2024 and is expected to reach nearly one billion by 2024. And as of 2020, nearly 1.9 billion people worldwide actively used online banking services with expected growth to 2.5 billion by 2024. With the growing stats of mobile banking users and the adoption of online banking systems, it is important to secure the identity of the consumers too. This implies the fact that these banking systems should adopt biometric authentication, face ID to prevent unauthorized access and avoid data breaches in this sector which also prevents money theft and laundering.
Impact of current trends in the fintech industry
The adoption and implementation of the trends in the fintech industry is an additional benefit for both parties. The services that the finance sector provides offline can be enhanced with the implementation of these trends and technologies.
- The elimination of intermediaries in blockchain technology enables peer-to-peer and decentralized transactions. It helps in making faster and safer transactions along with the settlements done in seconds.
- The implementation of technology in the financial sector will help in cost, risk, and fraud reduction.
- The amalgamation of finance and technology has speeded up the KYC and verification process, which earlier was time-consuming.
- It has also increased the chances of availing new opportunities and introducing new and updated banking models for the sector, with better wealth management techniques.
- The FinTech sector has also made the loan approval and distribution process easier, and also made the analysis and calculation of the credit score effortless for its customers.
The only negative impact that the FinTech sector might have is the risk of data and asset loss, which can be protected by the correct use and implementation of the technology.
Investment in FinTech is expected to reach a whole new level in 2022, i.e., from $127.66 billion to $309.95 billion, which is an important milestone for this sector.
FinTech has been in the limelight for the last few years and companies are positively investing in digitalizing their offline firms as it has made things easily accessible and manageable. Most importantly in the sector where security factors like personal information and safeguarding money are very important, it has also made it possible for the firms to establish the trust of the consumers.