CURRENT INNOVATIONS IN FINTECH
Today we explain which new technologies are disrupting the financial services industry and drive material change in business models, products, applications, and customer user interface. We examine #openbanking, #regtech, #neobanks, #biometricsecurity, and #bigdata as some of the important technical changes influencing financial services in the next decade.
What is fintech?
Insights and solutions for both financial services and organizations, as well as start-ups introducing new technology, are combined in one of the hottest technology areas called "fintech." To put it simply, #fintech is about using technology to deliver financial services with the help of data collection, data architecture, data analytics, and computing architecture.
With the aid of artificial intelligence (AI) and machine learning, service providers can now better understand their clients or perform due diligence on a scale that was before impossible. Cloud computing and quantum computing have made it possible to handle huge amounts of data at the architecture level with the scale, flexibility, and speed needed.
Many people are, in fact, familiar with these technologies. The rollout of 5G and the growth of technologies like AI, machine learning, Web 3.0, and Metaverse are part of their lives.
Which countries are in the lead?
The biggest market for fintech is the United States. By 2030, US fintech is expected to reach US$1 trillion in throughput and US$200 billion in revenue. (Source: Fintech News)?It is also expected that despite strong regulation, this country should maintain an attractive fintech center. Also, the United Kingdom might remain the undisputed top hub for fintech startups. Southeast Asian nations that have prioritized digitalization as part of their regional growth strategies are also expanding. Member nations have prioritized digitalization in the ASEAN ICT Masterplan 2020 by fostering a digitally enabled, secure, and revolutionary economy. With an estimated 125,000 new users joining every day thanks to official efforts, ASEAN is the region with the fastest Internet market growth. (Source: ASEAN Fintech Group)
Which area is the fastest growing?
Accordingly, it is anticipated that financial technology will play a significant role in the digitalization of business, particularly in the areas of payment and accounting, sales, and procurement, and that it will offer accessible, affordable access to reliable data. Until now, fintech has had the most success with payments. Most of us now transact funds in a totally different manner than we did a few years ago. Any transaction must involve payments, so it seems natural that advancements are occurring in this field. There is a lot of discussion regarding central banks setting up accounts for everyone at the central bank because payments are linked to money (and the central bank's digital currency). However, finding a technique where payments can cross networks without friction, which is important, is still left to be done in the upcoming years.
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Five areas to watch out for in fintech.
As the financial landscape evolves rapidly, there are five exciting opportunities that have the potential to revolutionize the fintech sector in 2023 and beyond.?
(1) Open banking is based on the expectation that the market will regulate itself through its competitive and collaborative forces. Only the most pertinent and in-demand services will prevail and seize the market due to competition, which will shape the open banking ecosystem. Major market players have already teamed up in cooperative attempts to establish industry standards, the majority of which are API-related.
(2) Regulatory Technology offers innovative regulatory and supervisory technology, tax reporting products, and services along the regulatory value chain. RegTech is more than just a trendy term; it's a serious phenomenon that is already affecting how regulations are followed.
(3) Neobanks are direct banks that provide mobile apps so that new clients may access services and so that they can offer affordable, entirely digital services. The predictions for neobanks are positive, as the market for business accounts in neobanking is expected to increase at a rate of above 45% through 2028, driven by the rising desire for corporate clients' banking procedures to be managed with less complexity. (Source: Forbes)
(4) Biometric Cybersecurity never loses its importance, as financial data is sensitive and extra vulnerable to cyber threats. Even though fingerprinting is currently one of the most used technologies, consumers are searching for new contactless methods to protect their data and establish their identities. Systems that can identify a person's voice, retina, ears, vein pattern on the hands, and even DNA, will advance by the end of 2023. It is anticipated that the number of industry-specific biometric solutions will increase as well. For mobile banking, for instance, financial companies now take into account multifactor biometric authentication. Mobile devices will simultaneously recognize the user's voice and face using this sort of identification. Higher security and the impossibility of impersonating a legitimate user will arise from this.
(5) Big Data in finance refers to vast arrays of structured and unstructured data that banks and financial institutions use to predict consumer behavior. Huge volumes of data are continuously received, processed, and produced in the financial sector. Structured data is information that is kept in-house by a business to provide important information for decisions to be made at the appropriate moment. An ever-increasing volume of unstructured data is gathered from diverse sources, offering great analytical possibilities.
Fintech businesses will create a new financial ecosystem in the near future that will transform every financial industry, from stock trading to insurance. Decentralization advocates claim that because it will no longer depend on a small number of powerful institutions for the financial stability of entire nations, it will lessen the likelihood of severe financial crises. The blockchain should, in theory, be the key technology for developing such a system. Blockchain technology offers transparency, anonymity, and transaction security for all participants because the data it stores cannot be altered or destroyed. Ultimately, technology cannot resolve all monetary and economic problems. Managers and customers should first take into account their fundamental demands and incentives before evaluating the advantages of technical advances and solutions, including fintech.