New realities have become a stimulus for the development of the financial industry, the development of financial software and digital services. Since the outbreak of the pandemic, many people are using at least one FinTech platform and developing financial software more frequently.
The global FinTech market will grow to $31.5 billion by 2026. That is almost four times as much as six years before. Investments in FinTech increased by 144% in 2021 compared to 2020.
The development of the FinTech industry depends on the technologies underlying financial products and services. Here are the top ten technologies and trends set to shape the FinTech world this year.
Open API or Open Banking works on the principle of sharing bank customer data with a third party with the consent of the owner. This format of information exchange is beneficial for the bank user.
Thanks to the open API, the bank provides information about the customer’s finances to insurance companies, shops and other organizations. They must verify the customer’s ability to pay before taking out insurance, granting credit, or allowing installment payments. Open Banking is changing the market, allowing users to pay for goods online in a few taps, pay for services with one swipe, and get credit in seconds.
The Internet of Things
FinTech companies are increasingly using connected devices to gather business-friendly customer insights and make more informed decisions. Increased interest in IoT will drive the wearables market to grow from $48.89 billion in 2021 to $118.16 billion in 2028. Connected wearables fulfill many useful tasks in the FinTech space, e.g. B. through mobile banking applications, financial institutions monitor customer behavior to decide which relevant services to offer. Mobile Point of Sale (POS) systems are replacing traditional POS systems. Smartphones, bracelets, smartwatches are used instead of a bank card to pay, while connected speakers and smart fridges order goods and pay for them independently.
RegTech is a platform that helps organizations comply with complex industry regulations. Regulatory technology finds irregular issues and makes them system-compatible. Special software automates repetitive tasks, monitors data security, warns bank employees and users of fraud. Given the relevance of RegTech, the value of the compliance software solution is expected to be $55.28 billion by 2025.
Biometric authentication is considered more secure than regular passwords and PINs. Users dislike multiple passwords and consider biometric authentication to be the best form of identity verification. You do not have to remember any combinations of letters and numbers, change the password once a year. Confidential information stays safe even if your smartphone or laptop is stolen.
With 93% of users citing financial account protection as the most important issue, FinTech is emerging as a priority biometric authentication technology industry. According to researchers, the global biometrics market will grow from $36.6 billion in 2020 to $68.6 billion in 2025.
Intelligent algorithms improve many processes in banks, credit and insurance companies. Artificial intelligence “examines” the typical behavior of users in a banking application. If a fraudster gains access to the platform, the AI will notice deviant behavior and warn the customer and the bank of the threat. Smart virtual assistants are created based on AI. These are chatbots that help customers solve problems 24/7. The technology analyzes user habits and offers personalized financial advice at more favorable conditions for the customer.
In the financial sector, banks are more actively implementing blockchain than insurance and credit institutions. Blockchain establishes processes within the bank and helps to automatically record data: how the money came, where it came from, how it was used and what it was spent on. It protects the bank from fraudsters as each transaction is recorded and cannot be altered. This means it’s easy to identify a hacker trying to commit a financial crime. It protects users from financial transaction errors as they are verified by all nodes in the network. Blockchain makes international payments and transfers faster and with minimal commission.
With the cloud, financial companies get scalable storage and large processing power at competitive prices. The cloud supports open banking and the digitization of the fintech industry. According to McKinsey, Edge Cloud, a cloud ecosystem that includes storage and computing resources; cloud container as a service (CaaS); cloud microservices architecture; and integration of artificial intelligence into the cloud are the trends to watch out for. Financial cloud services are forecast to grow at over 24 percent annually.
Virtual cards are becoming a guarantee for secure payment for goods and services on the Internet. The user pays for goods without providing the information of a physical bank card, but only a 16-digit number of a temporary digital analogue. Such cards are stored in a digital wallet on the phone. They are used for contactless payments in both physical and online stores. The card can be blocked freely without losing access to the main physical bank card. Virtual cards offer great benefits to financial institutions, including cost savings by reducing physical card issuance; Increased productivity as a result of reducing payment processing time and streamlining other operations; Protection of confidential information from fraudsters.
Robotic process automation
A “robot” takes on repetitive tasks when entering data; generates reports; manages financial information; checks the bank’s customer for solvency; handles insurance claims; manages inquiries and complaints from customers; registered consumer. RPA is key to FinTech success, predicting 400% revenue growth for the industry by 2023.
FinTech companies want to expand the use of digital assistants by introducing them to financial management. Voice biometrics should become a reliable protection of the user’s data. The owner can pay for goods, check the balance by voice command and do other things at the same time. Manual data entry is not required. Capital One Corporation is actively developing voice payments and has long introduced Amazon Alexa, which helps customers pay bills by credit card. Other FinTech companies are implementing voice assistants that serve as an alternative to chats, managers and call center operators, advising clients on complex issues. The trend is that the global market for voice and speech recognition technologies will almost triple by 2026