Technology trends in financial services
- Technologies that are currently used for FinTech products (Paid GP)
- Technology trends in financial services
- What is Fintech or Financial Technology?
- Top Technology Trends in Financial Services Industry
- Machine Learning Technology and Artificial Intelligence
- Blockchain Technology is Disrupting the Industry
- Financial Institutions leverage Chatbots and virtual assistants for Better Customer Support
- Biometric Technology to Secure User Data
- Robotic Process Automation (RPA) Technology
- The Rise in the Adoption of APIs in the Financial Services Sector
- Internet of things (IoT)
- Peer-to-peer (P2P) Transaction Technologies
- Summary
What is Fintech or Financial Technology?
The combined use of finance and technology is coined as Fintech or Financial Technology. It enables the vendors to offer robust financial software development services that enhance business operations. Fintech provides advanced solutions in the form of software products and services using the latest technology trends. All these together disrupt the traditional financial methods processes and establish more efficient ways. Fintech is proficiently implemented in offering services related to online lending, cryptocurrency, crowdfunding, automated investment or Robo advisors, and mobile payments.
Top Technology Trends in Financial Services Industry
Machine Learning Technology and Artificial Intelligence
If there is any technology that is used the most in fintech then that is none other than ML and AI. Also, it doesn’t have any limited role to play because with the advancements in the industry, the potential of these technology trends becomes more crucial for software development. Artificial Intelligence and Machine Learning technology are executed in fintech software for regulatory compliance, credit scoring, wealth management, and fraud detection.
Offering personalized services was not possible for banks in the past. They were trapped with the traditional model including savings, checking, and loan management. But now, banks can pull the data on specific customers and provide them a personalized solution, that too in real-time.
The new-age banks are leveraging artificial intelligence technology to develop and deliver personalized financial solutions to particular customers. This technology trend is not only helpful in detecting or preventing the increased number of financial frauds but also helps you speed up the loan approval processes. AI and ML effectively improve the customer support and services that the customer retention rate of the bank also increases.
Blockchain Technology is Disrupting the Industry
The online and mobile payment industry has come so far and now it is further revolutionized by Blockchain technology. The application of this technology is increasing rapidly in the finance industry. Blockchain is used to eliminate the intermediate parties in the transactions to minimize the costs but most importantly, it is used to secure the payments made on mobile devices, online gateways, etc. A report from the World Economic Forum suggests that by the year 2025, blockchain technology will contribute 10% to the global GDP.
You should also know that, unlike other industries, financial organizations and banks don’t have to radically transform their operations to implement blockchain technology. It was already adopted and applied successfully by the financial institutions for cryptocurrency and then went on to execute it in integration with traditional banking processes.
Smart and secure payment procedures, fraud detection, independent client verification, automating the trading processes, and more benefits can be availed with the use of Blockchain in the finance industry. Robin Hood, We Trade, and Stellar Ripple are some of the most popular fintech that leverages blockchain to offer robust financial solutions.
Financial Institutions leverage Chatbots and virtual assistants for Better Customer Support
There is an application of AI that has opened up a new and better way of providing financial services. The increasing use of mobile devices and better network connectivity has allowed AI to easily imply virtual assistants and chatbots in finance software. Alexa and other smart virtual assistants are already being used by financial institutions. For example, this fintech uses Alexa to create educational content for customers. This is necessary and it proves to be very useful for the consumers because most of them are not so financially literate and are looking for some kind of guidance.
Before this, there were human finance consultants and other advisors who would help the customers understand their financial situation and the options they have. It doesn’t matter how much the situation seems different from consumer to consumer, however, they all have the same line of questions.
Financial services organizations and banks have always tried to guide people and give satisfactory answers to the customers’ questions by simply putting an FAQ page on the website. But due to its length, this page becomes hard to navigate making it completely ineffective. After the advent of AI, the financial services sector has now started using virtual assistants and chatbots to help customers guide through their website, providing helpful content, and even offering solutions to their queries. These chatbots are placed on the home page and sometimes they pop up so that visitors can find them easily and can use them effectively. For instance, Liberty Mutual is among many financial institutions that use Alexa to render advice related to home and insurance problems to the customers. And Capital One uses Alexa to allow their customers to pay their bills.
Biometric Technology to Secure User Data
The most secure way to protect your data is to guard it using biometric technology. Such technologies use the physical features of a person like a retina, face, voice, fingerprints, and more. If any individual uses such unique features or other forms of recognition then they can be able to enhance the data security and improvise the identity verification process. With cyber threats on the rise, banks have also started using smart devices and smart sensors to protect user data against any kind of cyber-attack or identity theft.
Robotic Process Automation (RPA) Technology
There are many repeatable and mundane processes in the financial services industry that take up a lot of the working time of humans. As a result, not only does their overall operational efficiency decrease, they can’t give enough time to the more important business operations. In such cases, it is highly recommended that financial services organizations must apply Robotic Process Automation or RPA technology to their repetitive tasks instead of performing them manually. The most important benefit of executing RPA is that it streamlines the workflows of financial institutions. Regulatory compliance processes management, transaction management, collecting stats and other data, communicating and marketing via chatbots and emails if necessary are some of the functions performed using robotic process automation.
The Rise in the Adoption of APIs in the Financial Services Sector
APIs or Application Programming Interfaces are used as some kind of shortcuts to creating new apps as well as imply new features and services into an existing application. A study carried out by Mckinsey suggests that almost 91% of APIs developed by banks and financial institutions were held back privately in 2018. But now the reality has changed, open and partner APIs are now seen rising in the financial services market for more than a year now.
Along with other reasons, one of them might be credited to the PSD2 compliance in the case of many open-source APIs. The rise in the worldwide adoption of APIs has created new opportunities in fintech for banks and other financial institutions. These financial services providers can now join their forces and share their technologies to extend their network.
Looking upon the example of the Open Bank Project initiative, financial institutions have now started believing that APIs can indeed disrupt the future of the financial industry. This single initiative only had approximately 350 various APIs available to use and over 11,000 software developers around the world to apply them all efficiently.
Internet of things (IoT)
To put it simply, the Internet of Things is nothing but a connected network of different types of smart devices. Deloitte suggests that though there aren’t many financial institutions that have employed IoT in their systems, there are indeed many opportunities waiting out there to get exploited. The more the devices are connected to the internet, the more advantages and more opportunities arise for financial institutions.
For example, a fintech company employs a smart device to gather information related to insurance telematics. They can later use the same data to offer consumer insurance coverage. So whenever a claim has been made, your company’s IoT devices can provide more accurate data at your service so that you can make a faster, and an informed decision about the claims.
In short, if you deploy IoT services in fintech companies then they would be able to offer faster services, and the consumer can take the benefits of cheaper prices.
Peer-to-peer (P2P) Transaction Technologies
Zelle and Venmo are some of the Peer to peer digital payment methods whose market shares are constantly growing. This shows that consumers have started using these fintech technology trends on a daily basis. Financial firms initiated this trend thinking that the younger generation will easily adapt to emerging technologies like P2P payment. But now the people of older age are too seen using these technology solutions for daily transactions. Removing the middlemen and minimizing the transaction costs is the biggest advantage of using this innovative technology.
Summary
Fintech is disrupting and causing many changes in the traditional operations in the financial sector. New technologies including online payment, mobile banking, biometrics, RPAs, and more have completely changed the way consumers interact with a financial institution or bank. Cryptocurrency and blockchain have been popular for many years now, they have been the reason behind some major shifts in the industry but their true disruptive potential is yet to be seized. There are some other fintech solutions too which are less popular but have the potential to change the fundamental business model of the banks. If you want to stay ahead of your competition and don’t want to leave behind in the wave of time then you must adapt and imply the technology trends that we discussed in this blog.
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