The world of financial technology — fintech — is growing, and with it, the excitement levels of the different markets, especially the finance and tech sectors, are rising. And it makes sense considering that these new technologies pave the way for innovative transaction systems and add convenience to our lives.
For an industry insider, keeping a pulse on the latest developments is paramount. Unfortunately, people like bankers and other finance industry professionals — including those who work in IT — have a tightly packed schedule.
This makes it difficult for them keep track of what technology is being released at what time. Thankfully, we’ve gathered all the trends that have the finance and tech markets buzzing in one place for your perusal. Check them out below:
1. New bank products
The advancements made in the fintech industry will inevitably lead to the creation of new bank products catering to the highest-profit segments. An overview of the banking sector will display a contraction in the overall revenue of big banks, especially the trading divisions.
So, banks will turn to consumers and wholesale divisions with the intention of recouping part of their earnings. What’s more, banks will be more than likely to double down on their best profit products, including wealth management and mortgages, to offset the difference.
2. Cryptocurrency diversification
While cryptocurrencies came into existence almost a decade ago, their impact wasn’t felt until the past year or so. They have become big businesses, with currencies like bitcoin raking in the moolah.
This has led to the trend of people releasing their own version of cryptocurrency thanks to initial coin offerings (ICOs). So, financial professionals and tech consumers alike have more options than ever when it comes to deciding which cryptocurrency they should go for.
However, one needs to watch out for fraudulent cryptocurrencies and other scams that are released by con artists and fast buck merchants to fool naïve investors. But till now, the pros outweigh the cons.
The cryptocurrency market is still in the early stages of development, but judging from the reception it has received from the finance and tech people, we are in for a wild ride.
We can’t mention cryptocurrency without mentioning blockchain, which is a fairly new development in the Fintech world but one that is slowly becoming a driving force in the industry.
So what’s a blockchain? Basically, it is a decentralized ledger that is available digitally and can be distributed across a wide user base. So, no single entity is in charge of the data and the ledger cannot be altered in any way once the data gets recorded.
This kind of technology has broader applications including in the field of banking, where it could be used for the purpose of storing client records while making them accessible to different providers. At the same time, it holds the potential to disrupt the existing finance market.
For instance, the way houses are bought and sold may undergo a complete overhaul since blockchain can hold the individual record of each property. Banks might use this detail when deciding if someone should receive a mortgage or loan.
4. Greater regulations
As the fintech industry continues to shift and change, regulators are trying their best to keep up. It’s only a matter of time before regulations are placed on the technology with bigger governing bodies and institutions placing more emphasis on the regulation of hardware and software.
After all, the tech and finance industries are both high-profile and require stringent security measures.
If deployment goes correctly, regulation is capable of strengthening the industries and adding an extra layer of security, thereby improving the confidence of the consumers and professionals. And once the confidence of the people involved in these markets shoots up, a corresponding surge in innovation and uptake in the fintech industry becomes more likely. Thus, the demand will impact the supply.
NFC, or near field communication, is revolutionizing the way we make payments. Various nations have already enabled the system of contactless payments so people have the option of holding up their bank cards to a reader. And if that’s not all, most modern technology and smartphones now possess this technology.
The next step involves people surgically implanting NFC tech in their bodies so they can pay for banking or other services with a flick of their wrist.
Although this sounds like something out of a “Black Mirror” episode, the trajectory which NFC is following should allow for interesting uses in the near future. And, as more wearable devices get introduced in the market, NFC and its applications in the tech and banking sector might find mainstream success sooner rather than later.
6. Number of financial firms to increase
Traditionally, the fintech market has been the domain of startups that have surpassed the worldwide giants to innovate at their own pace and shape the perceptions of the public. That trend is still ongoing, but now the same startups are competing against larger, more established organizations that have finally got the hang of these new technologies.
And this change bodes well for the finance industry because the bigger firms tend to possess more resources and expertise while the smaller startups are more attuned to public sentiment (well, Facebook is paying more attention to public sentiment now, that is for sure!).
All of this competition will eventually lead to better innovation, forcing the companies in the finance market to give their best performance. While this might put a lot of burden on the innovators, it should have a favorable impact on the tech and finance sectors as a whole.
7. Advanced chatbots
Major banks worldwide are slowly implementing chatbots that allow for smoother customer interactions. These chatbots already have the intelligence level comparable to a 2- to 3-year-old, and unlike humans, machines will no longer experience learning or physical fatigue.
So, the chatbot revolution will be more exponential compared to linear and we can expect a lot more chatbots to be released with greater response speed, interactions, and accuracy in decision-making.
Fintech is the future, and both the banking and tech markets will no longer be the same. And we have front row seats to witness this historic change in the making. As more fintech goes mainstream, it’s only a matter of time before everybody enjoys access to better banking service and more financial offerings.
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