Top 5 Major Trends Impacting the Fintech Revolution
In the past few years, finance has been one of the last areas of business to experience distraction, but at least it’s catching up quickly.
Here are the five major trends impacting the revolution of fintech and how they affect businesses.
Considered as the revolution leader of fintech, blockchain is currently creating momentum in the industry. However, there is still some apprehension surrounding it.
Now, the big question is will this blockchain soon take over for banking in the finance industry? So far, it is yet unknown but one thing is certain, it is set to improve to create a better and more efficient transactional system.
Meanwhile, we rely on a dated financial system that deeply depends on paper and outdated software. It is pretty expensive and totally open to fraud and crime. By being a real-time updating digital ledger that cannot be modified, blockchain is disrupting the current bank system, and this takes paper and fraud out of the picture.
With the use of bitcoin, wire and transfer fees will be reduced. Clearing and settlement can be done quickly while loans and credit applications can be easily assessed and consumers will have an immediate access to their funds.
Nowadays, industries are obviously impacted by automation in some way, even the banking industry. McKinsey predicted that a subsequent wave of automation and AI will develop in the next few years where machines are expected to perform up to 10 to 25 percent of bank works.
With simple procedures being automated, bank personnel and other employees in the finance industry will have sufficient time to focus on higher-value tasks that make use more of human brain ability. Consumers may expect a faster banking experience and lots of self-service options.
Enhanced Technology for Complete Adoptions
Absolutely, before complete fintech adoption can occur within the banking industry in the future, technology must be enhanced first. Today, banks are already paving way to digital and cardless payments, mobile transactions and other self-service banking options.
Nowadays, people opted to pay using their smart watch or mobile phones more than their credit cards since they found it an easier and more convenient payment option as it is ready to use anytime at an increasing amount of location all over the country. Nevertheless, banking and other financial institutions need to observe suit, prioritizing the offering of debt cards and others options suitable for mobile transactions. Banking and other financial institutions that take advantage of this new trend will definitely see an increase in productivity and a decrease in overhead costs.
Apparently, data is a very important thing in all industries. However, there is a big change taking place with the financial industry when it comes to data gathering from consumers, and the evolution of lending data is one of the biggest changes. In today’s FICO credit score, the number that determines one’s financial health is already outdated and actually no longer present a great view of true standing. Now, through the use of data analytics and the IoT, banks will be able to collect data to replace the current FICO score, to provide consumers more financial options.
Secondary investors will prefer to appreciate other lending data that will pave way to better credit models.
Enhanced Fintech Regulations
After all the changes, new regulations will also come along the way. It is understandably that finance is one of the most regulated industries. As financial institutions start to use new technology, data is being collected in multitudes and self-service is becoming a norm. Therefore, it is just natural for its regulations to be enhanced. Consumers would feel safe being on-board with regulations that keep money and important personal data safe and secured.
Regulations are not actually a negative thing. Obviously, a stronger and secure finance industry only develops confidence between the consumer and the institution itself. Therefore, if people are really into fintech revolution and want it to go further, trust is very vital between consumers and institutions to continue to nurture.
Our modern technology has brought us to where we are right now – a well-developed industry. And, as an industry with a strong yearning on technology, consumers may expect a more rapid and frequent changes.
With the revolution of fintech, being the new disruptor of option, the banking and financing industry together with its consumers will need to hold on for the future. It might take some time for this technology to gain sufficient speed to become widely accepted, but will definitely be on the skyline. Meanwhile, this is only the beginning.