Five trends shaping the future of Fintech (2024)

Fintech is a growing industry with seemingly limitless opportunities to improve our financial systems.

Fintech, or financial technology, refers to the integration of technology into financial services offerings in order to improve their use and delivery to customers. It is a growing industry that employs technology to improve financial activities. The phrase refers to a fast expanding industry that serves both consumers and businesses in a variety of ways. Fintech offers a seemingly limitless number of uses, ranging from mobile banking and insurance to cryptocurrency and investment applications.

While the COVID-19 pandemic and lockdown pushed fintech services into the mainstream, there are a number of other factors that are influencing the fintech industry’s future like global adoption of fintech services, awareness of fintech, focus on new technology and many more. These factors will have a significant impact on how banking will evolve in the future. Fintechs are at the frontline of this new financial order all over the world. The Indian fintech industry has emerged as a major player. As the fintech industry undergoes a major transformation, Here is a list of five significant trends that will likely define the future of the fintech industry’s future.

Mobile Banking and Cashless Transactions

The fintech industry includes a substantial portion of mobile banking. Consumers have increasingly requested simple digital access to their bank accounts, particularly on mobile devices, in the field of personal finance. With the rise of digital-first banks, or “Neobanks” almost all major banks now provide some form of mobile banking. In this pandemic-stricken economy, the desire for cashless transactions is projected to increase, providing additional opportunities for digital wallet providers. According to a new report from ACI Worldwide, more than 70.3 billion real-time payments transactions were processed globally in 2020, up 41% over the previous year. Digitally linked transactions will not only help to increase transaction volume, but they will also aid the business in data collection. The information gathered can then be used to develop new services. As a result, new revenue streams are created, unlimited data offers are provided, and cost-effective business setups are built.

Budget 2022 proposes that India’s post offices be integrated into the core banking system. This will enable financial inclusion and account access via net banking, mobile banking, and ATMs, as well as online fund transfers between post office accounts and bank accounts. This will be especially beneficial to farmers and senior citizens in rural areas, as it will enable interoperability and financial inclusion. The move would also allow unbanked customers to receive direct transfers of government subsidies, bringing them into the formal banking system.

With easy access to post offices via ATMs, mobile, and net banking, this will improve the overall banking experience.

Cryptocurrency and Blockchain

The emergence of cryptocurrencies and blockchain is developing in combination with fintech. A cryptocurrency is a digital or virtual currency that is protected by encryption, making counterfeiting and double-spending practically impossible. Many cryptocurrencies are built on blockchain technology, which is a distributed ledger enforced by a distributed network of computers.

Blockchain is the technology that allows cryptocurrency mining and marketplaces to exist, and both blockchain and fintech are responsible for improvements in cryptocurrency. The fintech market is embracing blockchain, and it’s here to stay. According to Market Research Future, “global blockchain in the fintech market is expected to expand from USD 231.63 million in 2017 to USD 6700.63 million by 2023, at a compound annual growth rate (CAGR) of 75.2 percent during the forecast period.”

Though blockchain technology and cryptocurrency are distinct that can be considered outside of the world of fintech, both are theoretically required to develop practical applications that advance fintech. One of the most significant announcements by the Finance Minister Nirmala Sitharaman’s fourth Budget speech was the proposal to introduce the Central Bank Digital Currency by issuing digital rupees using blockchain technology.

This digitisation push for the fintech sector will see an increased demand for digital payments and other financial services.

Fintech and the wealth management industry

Fintech companies have transformed the wealth management industry in a short period of time, generating wealth for investors at a low cost and in a timely manner. India, along with China, has the world's fastest-growing fintech market and the greatest adoption rate. The wealth management business is an important part of this growth narrative. It has been marked by the spectacular appearance of startups that have challenged old business models and introduced breakthrough technologies, as well as greater use of mobile and digital platforms. As a result, rapid progress is seen in the field of digital wealth management, with much more potential in the future. Trading and Machine Learning

The Pinnacle of finance is being able to foresee where markets will go. With billions of dollars on the line, it's no surprise that machine learning is becoming more popular in fintech. The strength of this AI subset rests in its capacity to process huge amounts of data using algorithms designed to detect trends and risks, giving consumers, businesses, banks, and other organisations a better knowledge of investment and purchasing risks earlier in the process.

Insurance

While insurtech is rapidly becoming its own industry, it nevertheless falls under the fintech umbrella. Because insurance is a late adopter of technology, several fintech businesses are teaming up with traditional insurers to help automate operations and increase coverage. The industry is facing a lot of innovation, from mobile car insurance to wearables for health insurance.

Fintechs will also have to work on creating trust and consumer engagement as more consumers join the digital board. Communication is one of the most important factors in achieving this level of involvement. Giving customers regular updates, presenting clear information about policy changes, and providing polite customer care are all examples of communication. Transparency in communication will aid in the development of a brand that will be valued for years to come. In order to interact with a rising majority of consumers in India, fintechs should explore adopting regional or vernacular. The more they employ technology to their advantage, the stronger the brand will become, allowing them to weather any storms.

Fintech is a growing industry with seemingly limitless opportunities to improve our financial systems. The rise of robo-advisors in stock trading, the application of blockchain in anti-money laundering efforts, the deployment of alternative credit reporting, and the decentralisation of global payments are also some of the fintech trends we’ll witness in 2022.

As the demand for financial transactions, payments, and banking grows, the user experience and the ability to respond quickly to regulatory changes will become increasingly important. It’s only a matter of time before we see how and at what scale fintechs will continue to flourish.

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