The FinTech industry has seen major transitions with a turbulent economy. However, the sector matches the latest digital transforms, which are big shifts.
The transformation is still helping companies to thrive through technological developments. The finest FinTech shifts are taking place that show the upcoming tendencies for both businesses and customers.
FinTech is Shifting from Growth to Cost Savings
The FinTech industry is evolving speedily. The shifts are big and constant throughout the years after the pandemic. The most massive shift has been from the growth mindset to cost savings. Many financial and bank firms now invest in durable technologies that help reduce workload and produce more services and products.
The move today focuses on solutions that help companies manage their operational efficiencies and provide excellent services to users and customers. Companies can eliminate technology debt and adopt B2B FinTech SaaS solutions.
As the economy changes, FinTech companies will focus more on investing better to cost cuts, optimizing expenditure, and improving financial stability. That makes sense as the pace of finance technology developments is faster.
Mergers and Acquisitions (M&A) Become a Strategic Step
Mergers and acquisitions have become a strategic move among FinTech firms, banks, and financial institutions to improve or expand business. Especially for companies that need more balance and a sound operational framework to acquire more market share.
Businesses can expand most through acquisitions or mergers. This will help accelerate strategic planning, increase business valuation, technology sharing, and production of the latest products. These will help companies to accelerate competitive positioning in the market to thrive in the future economic state.
These ideas will boost the developments in FinTech, which is equally profitable for companies and banks. Some of the finest developments can take a major share in the customer base, and businesses grow to have good ROI. However, there are more developments to happen in the FinTech landscape.
Here are those FinTech developments taking place:
The concept is not new but is revolutionizing the payment landscape in the digital era. With the help of Open Banking API, many financial and non-financial firms now offer banking services efficiently.
Embedded finance services boost customer engagement. Embedded finance is powerful today due to the easy integration of digital financial products. For example, digital wallets, accounting software, and AI-based payment platforms are rising.
BAI’s BAI Banking Strategies Executive Report says that 35% of financial services leaders delivered excellent customer experience digitally through embedded finance.
Also, BAI’s 2023 Banking and Consumer Trends report says that 61% of consumers expect their banking and financial activities to be fully digital by 2024.
For instance, Google Pay and Apple Pay have embedded payment options that fully offer convenient modes and digital experiences.
Buy Now, Pay Later 2.0
The concept is gaining popularity and is also revolutionizing FinTech payment trends. The idea contributes to long-term customer loyalty as it allows flexible payment options.
The BNPL 2.0 approach aims to bring more advanced ways of paying along with digital infrastructure. Automated payments will be faster and more accurate.
The transition of BNPL 1.0 to BNPL 2.0 will deliver more sustainable growth as new business models and FinTech evolves. This will encourage providers to bring more profitable possibilities with new customer-focused revenue streams. For instance, Apple Pay, Zip, and PayPal’s BNPL services are popular among customers.
AI and ML Integrations
AI-based Chatbots are among the rising FinTech developments grabbing the attention of businesses. Financial, banks, and insurance firms are using them to allow customer self-service at scale. The development is thus reducing the customer support workload and increasing major engagements and data collection.
Machine Learning models analyze multiple factors to identify potential data, target data, and also fraudsters. In this case, these technologies frame high-security walls to keep all customers and firms’ financial history and data safe.
Plaid is a FinTech solution provider using AI and ML models to mitigate risk and prevent fraud. It has built real-time fraud detection models that work with unique patterns. The patterns help analyze constant transactions and reduce fraud possibilities.
Biometrics is one of the finest FinTech shifts taking place for many reasons. First, firms provide the technology to improve customer experience by using FinTech app security, making transactions securely, and making instant payments.
The current biometrical identification banks and financial firms use fingerprints, facial recognition, and retina detection. It also includes voice recognition patterns, palm geometry, keystroke dynamics, and Touch IDs.
These methods are a part of two-factor authentication. They provide much stronger security measures than simple passwords. For instance, Deutsche Bank has integrated biometrics into its personal finance app development. Apple has integrated Touch ID with their apps in the payment options.
Distributed Ledger Technology (DLT)
It’s also termed as DeFi (Decentralized Finances). This is where Blockchain meets FinTech. Blockchain-based transactions are instant and secure. They do not require supervision and can’t be tampered by threats.
It includes applications such as InsurTech software and open banking APIs for innovative banking services. Also, digital wallets, distributed data storage and exchange, zero-knowledge identity proof, and smart contracts drive the finest FinTech developments.
Autonomous finance is also a prime building block in the FinTech industry. It is remodeling consumers’ ways of interacting with digital finance management and having financial services of their choice.
The technology assists in making immediate financial decisions, including approving loans at reasonable rates, the right ways to invest money, handling transactions, and more. With the help of robo-advisors installed with software-based financial strategies, customers can use more precise financial services.
Autonomous finance uses Artificial Intelligence and Machine Learning to handle users’ money. Other business-related use cases include:
- Virtual assistant processing financial transactions
- Cloud-based financial analytics
- Blockchain-enabled audits of financial activities
- Identification and organization of financial data
- Predictive financial analytics
As the technology depends on self-learning algorithms, the technology and financial heads need technical planning. They will also require a new thought process to drive the transformation successfully.
Gartner studies in CFO’s Guide for Achieving Autonomous Finance that 64% of CFOs believe autonomous finance will become authentic within the next six years. But finance leaders must focus their digital investments on building the key blocks related to autonomous finance.
Globe Newswire report Contactless Payments Market Size says the global contactless payments market was valued at USD 2,235 billion in 2021.
It is estimated to reach USD 12,245 billion by 2030. The growth forecast period is suggested from 2022 to 2030.
Contactless payments are the newest and emerging payment innovations in the FinTech landscape. It includes mobile payments, wallets, innovative speaker systems, AI and ML for security, and identity verification technologies.
In this space, Gen-Zs will be the major drive of payment innovations. Offline payment through Wi-Fi and digital cards will rule out contactless payments among customers. Voice payment sets to emerge and expand at a CAGR of 10.9% from 2022 to 2030, says Grand View Research’s Voice-based Payments Market Size, Share & Trends Analysis Report.
Next Stages of FinTech
Different phases of FinTech are evolving, which anticipate new changes as technologies and tools are integrated. For the industry, AI applications benefit both businesses and customers. The potential use cases such as improving optical character recognition (OCR), language translation, and analytics are building a secure future.
The next phase will bring more banks to partner with FinTech firms to use the above-mentioned technologies and drive ideas to thrive. The market will experience re-positioning, where customers will play a major role. Thus, financial institutions seek to maintain their competitive advantage, enhance customer satisfaction and increase revenues. All of these are possible only when companies match with the shifts in smaller or bigger ways.