Over the past few years, the financial industry has continuously evolved by integrating technology in its processes. Financial technology or Fintech, as it’s commonly referred to, is helping financial institutions and their customers interact better with each other, streamlining processes for remote access, and enhancing security.
The technology is also benefiting customers by helping them track and regulate their spending and have a smoother remote banking experience. Looking back to the inception of Apple and Google pay in 2014 and 2015 respectively, one can see the significant strides made by fintech.
Fintech, which is neither a brand nor a specific software, is a collection of technologies focused on making the financial industry more efficient and accessible through multiple platforms. Take a look at these fintech trends that you need to get behind in 2021:
- Digital-Only Banking
The COVID-19 pandemic shook the banking sector and quickened its transition to more digitized services to cater to its customers’ demands. Initially, its focus was to use fintech mainly as a response to customer service issues. However, banks quickly recognized the need to automate and streamline their back-office procedures, thus making their services fully digital.
Digital-only banks help customers save time that would’ve been spent queuing in a bank to make a transaction. There’s no paperwork to be filled in and no one to ask questions. Because of this fintech trend, making peer-to-peer transfers, completing global payments, and buying XRP or other cryptocurrencies have become easier than ever.
A few years ago, no one would’ve imagined that a person could operate without opening a ‘physical’ account in a bank. This process included filling of forms and providing physical documents to prove one’s identity. Now a person can open and operate an account online without even stepping into a banking hall.
- Biometric Security Systems
Digital financial services, especially the aforementioned mobile banking, have risen in popularity over the past few years. This has raised the issue of security as cybercrimes increase by the day. This is why you should take full advantage of biometric security systems, which is another trend in fintech solutions. Developers will be moving towards securing the digital and mobile financial sector through more stringent access measures.
This will ensure that only the authorized person can access their accounts and other confidential information. However, some sensors that require physical contact may fall out of use soon. Contactless biometric registration is a growing trend in biometric security systems. The aim of this technology is to limit access to an account, thereby reducing the chances of a cyber-attack. For now, fingerprint sensors and facial recognition are the most common forms of biometric security systems.
- Blockchain Technology
Initially, the finance industry was a bit hesitant in accepting blockchain technology, but this fintech trend has become a game-changer. Today, using blockchain technology is not only more acceptable but has even become part of mainstream banking and finance institutions. Blockchain technology has three main uses:
- Security: These emerging technologies can help businesses predict and quickly identify issues. Using the technology to manage user identity protects both the institution and the customer. In addition, looking ahead, blockchain will be used to reduce incidents of fraud and to manage records for purposes of regulations and audits.
- Speed: Transactions through blockchain technology are quick and almost instantaneous, whether it’s transferring funds, investments, exchanges, or payments. Besides, the technology takes care of processing errors that lead to delayed processes.
- Cryptocurrency inventions: Now, markets are trying to find out how they can leverage cryptos to help them weather future markets. Industry insiders expect greater interest in digital asset management, with banks offering more options to manage cryptocurrency. Also, there’ll be more focus on stable coins with set prices that can be backed by either fiat currency or commodities.
With the growth and increase in the popularity of blockchain technology and cryptocurrency, financial institutions will become more receptive to digital currency. It won’t come as a surprise when they’ll eventually offer cryptocurrency lending services in the near future. Having seen how some cryptocurrencies have risen in value, you should consider getting behind this trend in 2021.
- Regulatory Technology (Regtech)
Regulatory technology is expected to change the way the financial industry is regulated through technological advancements. Regulations are vital in the industry, and regtech will enable companies and businesses to use software to make it easier for them to comply with the set regulations and procedures. The main areas of regtech are:
- Customer identification, specifically the Know Your Customer (KYC) guidelines
- Anti-Money Laundering (AML) and fraud regulations
- Customer data storage and privacy
- Risk and compliance issues
- Monitoring and reporting of transactions
Financial institutions and banks can use this technology to lower administrative costs through the automation of processes while still protecting customer data and privacy. Also, the technology is fast and accurate.
Final Thoughts
These fintech trends enhance services provided by financial institutions to their customers. The processes are more transparent, quicker, and secure. Consider following these trends going forward to move with the current technological advancements and trends, achieve faster services and seamless customer experience, and enhance customer privacy.