Fintech is rapidly advancing. No matter who you are or what industry you’re in, it’s worth paying attention to the latest developments.
In case you aren’t already familiar, “fintech” is a combination of the words “financial technology.” It refers to any tech development that impacts the financial world in some way. It could mean a technology that facilitates payment, a breakthrough startup that offers a fundamentally new financial product, or modifications to financial products and services that already exist.
So, what are the most important technologies and developments shaping the future of fintech? Learn the developing features and benefits of fintech and prepare for a faster, more efficient world of finance at the click of a button.
Why Fintech Matters
It’s tempting to think that fintech is only relevant to a small number of individuals and companies, but this isn’t the case.
Big banks obviously benefit from fintech because it’s so tightly interlinked with their existing products and services. Tech startup entrepreneurs also have a vested interest, since they’re the ones creating novel technologies.
But the reality is that consumers’ use of fintech for banking, payments, and investing has reached mass adoption – nearly 90% of Americans now use fintech. Every business owner, investor, and consumer has the potential to benefit from fintech.
The Impact of Finance
Finance is present in almost every interaction, and it’s relevant to almost every area of every business.
If your business produces and sells anything, you need to think about your cost efficiency, how you’re collecting money, and how you’re turning a profit. As a consumer, you probably execute financial transactions every day or close to it.
Speed and Efficiency
From collecting payments to issuing loans, better fintech can make almost everything related to finance faster and more efficient. Whether you’re interested in maximizing your business performance or just saving a bit of personal time each day, this can be beneficial if you know how to properly harness new fintech developments.
Similarly, employing better fintech can help you save significant money. With lower financial transaction costs, higher efficiency, and improved cash flow, businesses and individuals can significantly improve their financial positions.
Regulations and Compliance
With our restrictive and challenging regulatory environment, it’s more difficult and expensive than ever for businesses to keep up. Improved fintech makes it much easier to keep records, audit behavior, and ultimately remain compliant.
Everything You Know, but Better
The biggest general trend in modern fintech is improving every aspect of our current financial landscape.
There are millions of seamlessly interwoven pieces in our financial ecosystem. Fintech masterminds are hunting down new improvement opportunities relentlessly. Piece by piece, new technologies will be able to completely transform our financial systems for the better.
For example, eCapital Corp. has recently announced collaboration with Visa that allows their clients to get paid faster and control capital management more efficiently. In their words, “The eCapital platform provides clients with direct connections to the funds in their eCapital accounts. A robust account management platform provides full transparency to track transactions in real-time, monitor balances and credit limits, plus generate detailed reports for auditing and tax preparation purposes. Through development and collaboration, the Company can offer clients new options for receiving funds through a commercial card and access a revolving line of credit to bridge the gap in day-to-day business cash flow.”
In other words, companies can use advanced technology to streamline capital management and stay cash flow positive.
Fintech companies are continuously developing advanced upgrades, meaning you’ll see endless improvements with minimal or nonexistent downsides. Greater convenience and efficiencies will emerge as financial solutions become faster, easier, and cheaper.
Purely Digital Banking: Neobanks
It's no secret that online banking has several advantages over in-person banking, at least for consumers. That's why the majority of people are now banking digitally more than visiting banks in person.
This growing trend is likely to continue, with some banks becoming purely digital banks, otherwise known as neobanks.
Neobanks are much more flexible, have lower overhead, and serve consumers in the ways they prefer. The prediction of a reality with no physical banks is a bold one. However, we're certainly going to see the rise of more neobanks in the near future.
We all know that security is highly important in the financial world.
If you aren't using a secure system, your money is going to be subject to theft or manipulation. If consumers have security concerns about your tools or products, they're not going to patronize you. That's why one of the highest priorities in fintech is security.
Banks and other financial institutions are doubling down on their cybersecurity. They are employing a host of new high-tech tools to validate identities and secure transactions. These include everything from multi-factor authentication to biometrics.
Big Data Analysis
Data is consistently growing in importance. Today's dominating businesses are those that are able to gather large volumes of data and analyze it to form meaningful conclusions about their customers and their business environment.
In the financial world, data is plentiful, but the number of businesses fully exploiting it is still somewhat limited.
Increasingly, we're starting to see the rise of startups that can properly gather and harness the full potential of big data, including startups that create robotic investment advisors and provide intelligent tools for financial decision-makers.
Machine learning, AI, and automation can maximize the value you get from big data analysis.
Most people are at least familiar with the term “blockchain” because of the rising prevalence of cryptocurrency. But you may not realize that the blockchain is useful for a wide range of different applications.
At its core, the blockchain is used as a decentralized way to validate transactions or engagements, using a public ledger. This has many benefits, including higher security, access to privacy, and greater autonomy for users.
Increasingly, banks and financial institutions are leveraging this technological tool to power their other innovations.
Though more on the business side of things, the fintech world is starting to adopt more white-labeled solutions.
In this context, rather than creating their own fintech products, companies can tap into the power of external, third-party fintech products and sell them to their end customers.
Why Fintech Is Set to Continue Growing
The fintech ecosystem is only going to grow to become more prominent and more important from here. In many ways, this is only the beginning of a long and complex transformation of everything we know about finance.
We can expect developmental acceleration for the following reasons.
Despite recent turmoil in the stock markets and the plunging value of Bitcoin stocks, long-term investment opportunities in fintech remain strong.
Remember, many fintech developments offer strict upgrades over their older counterparts. Because of this, they have the potential to be highly profitable and scalable. These powerful advantages have drawn many investors into the field, incentivizing them to dump billions of dollars into novel startups and promising opportunities.
It also helps that the general public is hyped about the developments in the fintech world. It's the whole reason why fintech has become a popular buzzword.
With every business owner clamoring for new fintech solutions and every individual consumer excited about the possibilities for the future, demand isn't likely to abate anytime soon.
Innovations and Responses
Innovations in a given field tend to attract other new ideas. As a simple example, when cryptocurrency began to grow popular, the blockchain technology that provided infrastructural support began to pick up attention and recognition. From there, many brilliant inventors and innovators have used blockchain to create their own unique solutions.
Fintech is one of the most exciting fields to watch since it has the potential to make our businesses and our lives simpler, more efficient, and more financially advantageous. It’s only going to get more interesting from here, so keep watch for new entrepreneurs, new startups, and new environmental pressures. That way, you can remain on the leading edge.
Article by Deanna Ritchie, ReadWrite