The advances in financial technologies continue disrupting business landscapes, from retail to banking. To make a transaction and receive experts’ advice, customers search for more accessible and digitized ways to satisfy their needs. Financial technologies, or fintech, enable enhanced financial services that can serve the rising demands of modern customers.
According to the State of Venture Q3’21 report, fintech investments have set a record-high $91.5 billion in 2021, almost double overall investments in 2020. With the help of blockchain, artificial intelligence, machine learning, and other technologies that power innovation in financial products and services, businesses can boost efficiency, cut expenses and offer more choices and possibilities to customers and partners.
Over the years, the business world has experienced how financial software development solutions have become a vital part of the industry. Let’s look at some fintech trends that are here to stay and transform the future of industries.
1.Blockchain streamlining and securing transactions
Blockchain technology monitors and records a vast number of transactions within a network. The decentralised nature of blockchain technology has the potential to eliminate the need for a third party to verify a transaction.
Moreover, blockchain contains sets of information linked with each other chronologically. The data recorded in the block and blocks’ order is almost impossible to alter. Therefore, all the sensitive information is hard to access by malicious actors. The enhanced security provided by this technology attracts banks and financial institutions to benefit from blockchain implementations. It is estimated that financial organisations have invested around $552 million in blockchain-driven projects.
Another area blockchain is expected to revamp is cross-border payments. The current system involves banks and Society for Worldwide Interbank Financial Telecommunication, or SWIFT, to process a transaction. It leads to the high number of checkpoints a transaction is undergoing and the increased process time. Blockchain can streamline a transaction by verifying and transferring all the data financial entities need.
2.Biometric technologies to improve security
Biometric authentication technologies use a person’s characteristics and features for identification, including fingerprints, face recognition, and many others. It is a promising solution for financial companies that can result in better security and enhanced simplicity. According to Help Net Security, biometric technologies in the banking and financial services market are predicted to constitute $8.9 billion by 2026.
Biometric technology used as an alternative to or combined with traditional security methods such as PINs and passwords can simplify the customer verification process. Here is the list of most commonly used types of biometric authentication across the finance industry:
- Voice recognition – uses unique features of a customer’s voice to verify the identity. The financial institution can gather voice samples from usual conversation so that customer does not have to repeat any prerecorded phrases.
- Fingerprint recognition – probably the most well-known authentication method. It uses a unique print on a person’s finger for identification.
- Face recognition – powered by 3D sensors and computer algorithms, this technology can identify a person by facial features. However, this method is still to be perfected since changes in appearance such as hairstyle change, lighting, or glasses can lead to erroneous results.
- Iris recognition – uses the approach that recognises complex patterns of a person’s iris. This biometric method minimises the chances of false matches. Image acquisition works best from a distance no longer than two meters, so this technology can be especially useful for mobile banking or accessing the account via ATM.
3.AI to keep driving fintech growth
According to Mordor Intelligence, AI application in the global fintech market is predicted to increase from $7.91 billion in 2020 to $26.67 billion in 2026. AI-powered chatbots can deal with a massive amount of regular requests and free employees’ time that can focus on dealing with more complicated tasks. Such process automation will help financial institutions conduct more efficient business operations and boost overall performance.
In today’s competitive business environment, customer satisfaction is one of the critical drivers of success. AI-embedded chatbots are accessible round the clock, and their response time minimised to seconds, improving customer experience and engagement.
Apart from handling customer communication, AI algorithms can be applied to the credit score system. Most of the credit systems use age, marital status, and other not that relevant information to decide whether a person can get a loan. Such systems are already obsolete. AI can analyse a specific customer’s behaviours, credit history and make a data-driven decision about when a person will pay back the loan.
Global digitalisation has changed the way companies across many industries conduct their operations, and financial services are not an exception.
From digital banking to blockchain and machine learning, there is a wide range of digital solutions that financial institutions can leverage. These advanced technologies provide many possibilities for companies that strive to meet modern customers’ demands, increase security and streamline business processes.
Author: Olha Zhydik
Olha Zhydik is a Content Marketing Manager at ELEKS, a global custom software development company. Olha has been working in the IT industry for over 10 years, including 6 years in marketing. Thanks to her diverse experience, her writing offers a fresh perspective on how technology can help businesses not only innovatively solve problems but also gain a competitive edge. You can connect with Olha on Linkedin or Facebook.
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