It’s no secret that the COVID-19 situation is causing havoc in the financial sector; numerous businesses are tallying their losses and implementing cost-cutting measures. Others are completely revamping their offerings to keep up with changing customer needs. ( Innovative Fintech Business Solutions to Know in 2021)
On the other hand, several businesses are introducing new financial startup app concepts for the post-pandemic age. The use of apps in finance is assisting various financial firms in their transition to a digital-only structure, which is vital to their survival. Previously cautious to adopt new technologies, established financial institutions are now competing with startups in finance app development.
According to ResearchAndMarkets, the financial app sector will reach $305 billion by 2025, with a 20 percent compound annual growth rate. Because of the COVID-19 problem, which has thrown up a slew of new business opportunities, fintech is now one of the world’s fastest-growing businesses.
As we get closer to post-crisis recovery, incumbents in the finance industry will embrace digitization more and more, putting them in direct competition with fintech companies. On the bright side, analysts believe the fintech industry will be able to take advantage of new opportunities created by the COVID-19 issue. Continuing social distancing needs, for example, are driving demand for digital payments. Nations are in a rush to adopt national legislation for the expanding digital wallet industry.
This is just one example of how advances in fintech app development are propelling the fintech industry to new heights. Take a look at the most recent finance technology trends.
Major Fintech Innovations for Businesses
The following trends are not necessarily new, but they are currently in the spotlight due to their higher adoption rate, which has expanded quickly in recent years, particularly during the pandemic era.
The term “blockchain” is all the rage these days
To keep up with future startup competition and minimize financial losses, several large banks are rapidly investing in blockchain FinTech solutions. They’re employing blockchain technology, which improves system performance, eliminates middlemen, and keeps data in the cloud. As a result, better data gathering and storage, as well as increased security and cost savings, are conceivable.
Cryptocurrency users realized that using blockchain technology, sending and receiving digital payments around the world can be done with little or no fees and with a minimum of banking rules. Another reason to switch to blockchain technology is that it ensures secure money transactions and is impervious to tampering.
As blockchain technology advances, demand for investment advisers and wealth managers will decrease, while demand for compliance, regulatory, financial policy, and accountants and tax professionals will increase.
Digital-Only Banks are becoming increasingly popular
When a bank that only exists in the virtual world offers global payments, peer-to-peer transfers, a contactless MasterCard with no transaction fees, and the capacity to purchase and sell cryptocurrencies, the financial world takes notice.
There’s no need to go to a real bank; there won’t be any lineups to test your patience, and you won’t have to deal with any boring paperwork. You can reset pins from the comfort of your own home, pay bills with a photo, use simple cost management tools and speedy balance review capabilities, and get real-time data when you use digital-only banks.
RPA is a quick way to automate
Robotic process automation is a sort of process automation in which software robots or digital employees are used to automate processes that would otherwise be handled by humans. In the financial services business, RPA has previously been used to cut costs and improve overall efficiency.
RPA digital employees have also been utilized by financial institutions to automate a number of back-end office functions, such as security checks, customer onboarding, account management, and closing, trial balance, credit card and mortgage processing, and more.
The fundamental benefit of RPA is that digital workers can accomplish these tasks more efficiently and quickly, allowing financial institutions’ personnel to focus on other vital tasks like customer service. AI and machine learning are causing significant disruption in the banking industry.
Attempts are being made by banks all around the world to incorporate artificial intelligence into their operations. AI will slash 22 percent of a bank’s operational costs by 2030, according to an Autonomous study. In other words, banks may save up to $1 trillion by deploying AI.
Furthermore, AI and ML help banks and financial institutions to provide high-quality automated services by processing data quickly. They also offer client support services like personal digital assistants and AI-based chatbots, as well as improved security.
FinTech companies can improve their customers’ financial literacy by offering advice on how to spend, save, or invest using FinTech solutions such as voice assistants, reducing the need to write long messages and improving their customers’ financial literacy by offering advice on how to spend, save, or invest using FinTech solutions such as voice assistants.
The next major thing in banking is Neobanking 2.0
With over 75 challenger banks throughout the world, the market for virtual alternatives to branch-based banking. They allow for digital account opening without monthly fees is getting saturated.
As a result of competition, the desire for distinction among neobanks is expanding. Apps concentrating on financial recommendations and credit-building, as well as niche-specific platforms, are being offered by the next-generation digital-only banks, in addition to debit cards and basic checks. Non-FinTech companies with a steady client or employee base. That could benefit from banking services will be a part of this evolution.
Traditional lending methods are being surpassed by digital lenders
Traditional banking institutions fall short of customer expectations in one area: digital lending. The processes are mostly slow and paper-based, and they haven’t evolved much over the years. Borrowing money through a traditional bank or credit union is complicated and time-consuming in an age when consumers expect all of their digital interactions to be simple and rapid.
As a result of this broken process, specialized lenders have emerged, making the processing of mortgages, auto loans, personal loans, student loans, and even credit cards far more efficient than before. This has resulted in a significant shift in market share away from traditional banks and toward fintech competitors who offer digital loans on a large scale while focusing on experience, cutting-edge technology, marketing expertise, and low-cost acquisition techniques.
Open Banking is leading the way in terms of innovation
This has become one of the most important global fintech trends. The concept, which originated in the United Kingdom, lowers barriers to entry for alternative financial services providers. And promotes the likelihood of innovation by requiring incumbent financial institutions to share financial data through APIs.
While the breadth of regulated sharing differs by nation, the potential for new products and services both within and outside of traditional financial services is enormous. The ability to leverage customer data to create tailored and contextual solutions has also allowed developers. To create solutions with entirely new revenue models that aren’t based simply on financial items, allowing for unique collaborations.
Smart Contracts are removing inconvenient situations
Without delving into the fundamental technological, legal, or philosophical foundations of contracts, smart contracts. They simply digitalize trust in a way that makes transactions strong, safe, and enforceable anywhere. Fintech is the driving force behind the financial technology industry’s progress.
Smart contracts are able to accomplish this in a number of ways
Consider the situation where two people are involved in a transaction. Traditionally, they would employ a lawyer to draught the contract terms on two sheets of paper. And invite witnesses to ensure that the signees faithfully carried out their commitments under the agreement.
They can take legal action if there are any violations. In smart contracts, parties sign a smart contract using cryptographic keys as a digital signature. Contracts are written in computer code rather than on paper, making them highly impervious to manipulation, exact, and repeatable.
Final Verdict
Apps’ position in finance technology is changing all the time. As we move forward into the future, all of the aforementioned Fintech trends and predictions will improve financial services. These developments will result in increased transparency, faster transaction processing, better client service, and broader financial data accessibility.
Due to the industry’s rapid expansion and development, we do not anticipate this scenario will go away. More FinTech trends are expected to emerge in the future, and we believe they will be here to stay. Whatever the case may be, finance app development is currently undergoing a time of fast expansion.
If you want to take advantage of this, you could create a top-tier FinTech service. It allows customers to handle their money in a secure, simple, and convenient manner. An excellent place to start is by contacting a prominent FinTech solution vendor. Keep reading us for more information. Goodbye!