Important technologies and developments shaping the future of Fintech
Fintech is developing rapidly. No matter who you are or what industry you’re in, it’s worth paying attention to the latest developments.
In case you’re not already familiar, “fintech” is a combination of the words “financial technology.” It refers to any technological development that affects the financial world in one way or another. It could mean a technology that simplifies payment, a ground-breaking start-up that offers a fundamentally new financial product, or modifications to financial products and services that already exist.
So, what are the key technologies and developments shaping the future of fintech? Learn the evolving features and benefits of fintech and prepare for a faster and more efficient financial world at the touch of a button.
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Why Fintech is important
It is tempting to think that fintech is only relevant to a small number of individuals and companies, but this is not the case.
Big banks obviously benefit from fintech because it is so closely tied to their existing products and services. Technological start-up founders also have a vested interest, as they are the ones who create new technologies.
But the reality is that consumer use of fintech for banking, payments and investing has reached mass adoption – nearly 90% of Americans now use fintech. All business owners, investors and consumers have the potential to benefit from fintech.
The impact of finance
Finance is present in almost every interaction, and it is relevant to almost every area of any business.
If your business produces and sells something, you need to think about your cost efficiency, how you raise money and how you make money. As a consumer, you probably conduct financial transactions every day or close to it.
Speed and efficiency
From collecting payments to issuing loans, better fintech can make almost everything related to financing faster and more efficient. Whether you’re interested in maximizing your company’s performance or just saving some personal time each day, knowing how to properly utilize new fintech developments can be beneficial.
Cost savings
Similarly, using better fintech can help you save significant money. With lower financial transaction costs, higher efficiency and improved cash flow, businesses and individuals can significantly improve their financial positions.
Regulations and compliance
With our restrictive and challenging regulatory environment, it is harder and more expensive than ever for businesses to keep up. Improved fintech makes it much easier to keep records, audit behavior and ultimately stay compliant.
Everything you know, but better
The biggest overall trend in modern fintech is to improve every aspect of our current financial landscape.
There are millions of seamlessly interwoven parts in our financial ecosystem. Fintech masterminds relentlessly hunt for new opportunities for improvement. Piece by piece, new technologies will be able to completely transform our financial systems for the better.
For example, eCapital Corp. recently announced partnership with Visa that allows their customers to get paid faster and control their asset management more effectively. In their words, “The eCapital platform provides customers with direct connections to the funds in their eCapital accounts. A robust account management platform provides full transparency to track transactions in real-time, monitor balances and credit limits, as well as generate detailed reports for auditing and tax preparation. Through development and collaboration, the company can offer customers new opportunities to receive funds through a commercial card and access a revolving line of credit to bridge the gap in day-to-day business cash flow.
In other words, companies can use advanced technology to streamline capital management and keep cash flow positive.
Fintech companies are constantly developing advanced upgrades, which means you’ll see endless improvements with minimal or non-existent downsides. Greater convenience and efficiency will emerge as financial solutions become faster, easier and cheaper.
Purely digital banking: Neobanks
It’s no secret that online banking has several advantages over personal banking, at least for consumers. That is why the majority of people now bank digitally more than visiting banks in person.
This growing trend is likely to continue, with some banks becoming pure digital banks, also known as neobanks.
Neobanks are much more flexible, have lower overhead and serve consumers in the ways they prefer. The prediction of a reality without physical banks is bold. However, we are certainly going to see the emergence of more neobanks in the near future.
Robust security
We all know that security is very important in the financial world.
If you don’t use a secure system, your money will be vulnerable to theft or manipulation. If consumers have safety concerns about your tools or products, they’re not going to protect you. That is why one of the highest priorities in fintech is security.
Banks and other financial institutions are doubling down on cyber security. They use a number of new high-tech tools to validate identities and secure transactions. These include everything from multi-factor authentication to biometrics.
Big Data Analysis
Data is constantly increasing in importance. Today’s dominant businesses are those that are able to collect large amounts of data and analyze it to form meaningful conclusions about their customers and their business environment.
In the financial world, data is plentiful, but the number of businesses that fully utilize it is still somewhat limited.
Increasingly, we are beginning to see the emergence of startups that can properly collect and exploit the full potential of big data, including startups that create robo investment advisors and provide intelligent tools for financial decision makers.
Machine learning, AI and automation can maximize the value you get from big data analytics.
Blockchain
Most people are at least familiar with the term “blockchain” due to the growing prevalence of cryptocurrency. But you may not realize that the blockchain is useful for a wide range of different applications.
At its core, the blockchain is used as a decentralized way to validate transactions or engagements using a public ledger. This has many advantages, including higher security, access to privacy and greater autonomy for users.
Increasingly, banks and financial institutions are leveraging this technological tool to drive other innovations.
White-labeled solutions
Although more on the business side, the fintech world is starting to adopt more white-labeled solutions.
In this context, instead of creating their own fintech products, companies can leverage the power of external, third-party fintech products and sell them to their end customers.
Why Fintech is set to continue to grow
The fintech ecosystem is only going to grow more prominent and important from here. In many ways, this is just the beginning of a long and complex transformation of everything we know about finance.
We can expect development acceleration for the following reasons.
Continued investment
Despite recent turmoil in stock markets and falling value of Bitcoin shares, long-term investment opportunities in fintech remain strong.
Keep in mind that many fintech developments offer stark upgrades over their older counterparts. Because of this, they have the potential to be highly profitable and scalable. These powerful benefits have drawn many investors into the field, encouraging them to dump billions of dollars into new startups and promising opportunities.
Public hype
It also helps that the general public is hyped about developments in the fintech world. That is the whole reason why fintech has become a popular buzzword.
With every business owner clamoring for new fintech solutions and every consumer excited about the possibilities of the future, demand isn’t likely to slow down anytime soon.
Innovations and responses
Innovations in a given field tend to attract other new ideas. As a simple example, when cryptocurrency began to gain popularity, the blockchain technology that provided infrastructure support began to gain attention and recognition. From there, many brilliant inventors and innovators have used blockchain to create their own unique solutions.
Fintech is one of the most exciting fields to watch as it has the potential to make our businesses and lives easier, more efficient and more financially beneficial. It’s only going to get more interesting from here, so keep an eye out for new entrepreneurs, new startups and new environmental pressures. That way, you can stay ahead of the curve.
Article by Deanna Ritchie, ReadWrite
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