The fact that technology has surpassed mankind has become painfully clear. Technological developments and inventions are transforming the entire planet. Everything is on the verge of being digitised. As of January 2021, there were around 4.88 billion mobile phone users worldwide, according to technical progress figures.
Mobile phones are owned by 62 percent of the world’s population. People have been using mobile devices for financial transactions since the start of the pandemic.
Watch Out for These Fintech Trends in 2021 and Beyond
People are more likely to use mobile payments and digital transactions after the coronavirus hit. The goal of this technique is to prevent physical interaction, which has resulted in significant advancement in the Fintech industry. Mobile payment systems are used by over 69 million people. Not only that, but in-store mobile payments in the United States are expected to exceed $128 billion by 2021.
Financial technology is a new development that is gaining traction around the world by replacing traditional financial services in a variety of areas, including payments, wealth management, banking, electronic commerce, social commerce, and more.
Infrastructure-based technology in application programming interfaces and open platforms is reshaping the financial services industry’s future, as robotic process automation (RPA), distributed ledger technology (DLT), and chatbots give enough precision, efficiency, and agility.
The fintech business is being influenced by revolutionary AI/ML algorithms as well as blockchain technologies. Let’s have a look at some of the most rapidly emerging fintech trends that have an impact on financial infrastructures and the planet.
1. Finance with autonomy
Autonomous finance relieves customers of the stress of financial decision-making by acquiring artificial intelligence algorithms to automate the process. Customers can use this technology to make immediate judgments about their finances, such as where to invest their money, what to do with an overdrawn account, or how to authorise a loan with lower interest rates.
Robo advisers, which deal with mutual fund management and software-based financial planning, are at the forefront of automated finance. Autonomous finance is expected to improve the customer experience for growth-oriented businesses.
Furthermore, growth-oriented businesses feel that improved financial wellness and proactive customer service would benefit customers, resulting in firm stabilisation and the development of a technical basis with automated procedures and digital automation.
Because of the pandemic, 68 percent of customers have increased expectations from firms’ digital skills, according to the research “State of the Connected Customer.” Even then, just 27% of those who used their autonomous finance capabilities to deal with the pandemic were successful.As a result, analysts and academics anticipate greater developments in autonomous finance over time, as cognitive technology advances.
2. Voice Recognition Technology
AI-powered voice technology has progressed to the point where it can play music and provide weather forecasts, and it is showing great promise in improving financial activities.
Voice technology is growing to be able to stream uncommon transactions as well as regular transactions, allowing users to reroute funds between accounts or transactions using platforms like Monzo, PayPal, Pingit, Square Cash, and others.
By the year 2022, voice technology is predicted to have progressed from 8% to 31%. Furthermore, robo-advisors are predicted to be capable of managing $2 trillion in assets.
3. Infrastructure that can be embedded
Embedded finance is the fastest-growing area, with companies now using the latest APIs to integrate pre-built financial solutions into their software. It’s the perfect example of transforming financial services into non-financial services. Businesses are increasingly partnering with financial services firms.
Embedded Finance Infrastructure efficiently lowers the barriers to providing financial services to customers for online platforms.It enables businesses in the MSME, B2C, and B2B industries to significantly enhance customer acquisition, establish customer bases, and scale their product offerings.
According to recent research, the market is worth more than $7 trillion. However, because it is growing at the speed of light, analysts anticipate that it will generate $230 billion in revenue in the United States alone by 2025.
4. Banking in an open environment
Open banking brings together banks and Fintech to facilitate data networking across financial infrastructures. The second Payment Services Directive (PSD2) highlights the importance of financial organisations releasing their data in a secure and standardised manner. Users may share information effectively and efficiently with convenience, flexibility, and security because to open baking.
The open banking sector has quadrupled its value in a year, reaching around 7.2 billion dollars.Open banking generated $7.29 billion in income in 2019, and it is predicted that by 2026, it will have surpassed $43.15 billion. F
intech necessitates financial infrastructure, and Fintech necessitates credit unions and community banks. Customers can get a consolidated picture of their bank accounts through open banking agreements, making account administration easier and more efficient.
5. Artificial Intelligence and Machine Learning
User-permitted access to financial data such as cash flow and payroll has been enabled by private businesses and public sector initiatives.Organizations are currently using breakthrough artificial intelligence algorithms and cutting-edge machine learning approaches to analyse this data.
To gain a deeper understanding of business data and customer behaviour.Predictive capabilities are a game-changer for any business, but they are especially useful in the banking industry. These capabilities are critical in improving the security procedures of financial infrastructure.
Machine learning and artificial intelligence in Fintech are expected to be valued about $8 billion in 2020, according to some estimates.However, analysts believe that by 2026, these developments will have surpassed the $26 billion mark.
Final Thoughts: What’s Next?
Given this trajectory, it seems evident that financial technology, or Fintech, will continue to advance in the near future. In addition, this progress will continue to be deeply ingrained in practically every part of the digital technologies we use on a daily basis.
Fintech will continue to improve financial services by making them more accurate and accessible.The global fintech market is predicted to reach a market value of over $324 billion by 2026, rising at a CAGR of roughly 23.41 percent from 2021 to 2026, owing to the industry’s remarkable expansion.
As a result, advancement in the fintech industry will occur in tandem with the development of embedded infrastructure. Fintech is also undergoing change as a result of the acquisition of cutting-edge artificial intelligence and machine learning algorithms.
Fintech evolves as a result of organisations’ efforts to bring these elements together to build a stronger foundation.This broader basis provides financial access to a new generation of users while also propelling rapid innovation.