The history of fintech is a long and complex one, but up until recent tech-driven years, the realm has been dominated by a handful of major, trusted financial institutions that set the stage of the entire industry and its evolution. Today, however, the “tech” portion of the industry has become more relevant than ever, enabling changes and innovations to reshape the financial ecosystem of the world. Banking today has become a seamless, efficient experience driven by the need of its customers who lead mostly hectic, fast-paced lives.
In the effort to make the service even more effortless on the consumer end of the interaction and to make it quick and error-free for banks, loaning institutions, and other financial businesses, technology has advanced financial operations to new heights. The latest emerging trends in the fintech industry will not only shape 2020, but even the years to come, as they will enable fintech companies to keep up with upcoming tech solutions and provide them with the competitive advantage they need to stay relevant.
#1 AI-driven customer engagement
The perception that the customer should always come first is not waning in relevance at all, if anything, it’s becoming one of the key driving forces for fintech innovation. This customer-centric approach has given rise to the use of AI-driven chatbots as well as virtual assistants designed to provide top-notch service, guidance, and experience to any customer that arrives at your digital doorstep. For example, the vast majority of fintech companies would always make a person your final point of contact before giving you a, let’s say, bank account proposal or a health insurance policy proposal.
Today, with the help of machine learning and AI, fintech companies can use advanced algorithms to provide personalized assistance to their customers. Chatbots based on AI are used to help customers find the information they need so that actual bank employees can take care of more hands-on tasks. Research conducted by Accenture suggests that over 70% of customers are more than happy to receive automated support instead of talking to an agent when they need to decide which bank account they should open. That fact alone is enough to inspire fintech companies to push for greater use of AI-based tools.
#2 Streamlined migration to the ISO 2022 standard
For a very long time, the Single Euro Payments Area initiative (or SEPA for short) reigned supreme as the latest and most ingenious payment transfer advancement, at least within the EU. Today, we’re looking at the ISO 2022 standard as the one to take over the throne with its aim to streamline the exchange of payment messages between banks and other financial institutions. Although the standard alone is complex, it aims to simplify the exchange of messages, their core language structures, and the systems that carry them.
However, this is so much more than yet another IT-related upgrade to a more refined payment communication system, it requires fintech companies to adapt their entire infrastructures as well as their business models to accommodate the shift. This is where tech once again steps in to help with the ISO 20022 migration, as companies can now adapt their legacy systems with specialized digital solutions that serve to simplify the transition. Such solutions behave like invisible translators, as they don’t delay the transaction, nor do they introduce security risks, on the contrary, they prevent them while they allow companies to retain their existing infrastructure and comply with the latest ISO standard.
#3 The diversification of cryptocurrencies
Bitcoin may be the most famous of the bunch, but it’s certainly not the only or the only profitable one on the market. If you have followed the development of cryptocurrencies and mining in general, you have noticed that many have profited greatly from investing in this form of portfolio diversification, while predicting crypto-related trends has become quite an art form. Add to that the staggering development of mining hardware paired with the Blockchain, and we now have a surge in the number of currencies accepted by the market.
Of course, it makes perfect sense that Mark Zuckerberg would introduce another game-changer into the digital world inspired by this crypto hype. Introducing Libra, Facebook’s own stablecoin will be meant for making simple payments online through their platforms, including Facebook, Messenger, Instagram, and WhatsApp.
#4 Digital currencies on the rise
Side by side with cryptocurrencies, there’s another fintech trend that has the potential to change the way banks and all major financial institutions operate: the abandonment of cash. More people are naturally switching to digital currency exchanges, and very few across the globe predominantly rely on cash altogether.
As a result, Sweden intends to introduce its own digital currency to correspond to the current one, named “e-Krona”, abolishing the use of cash by 2023 entirely, as a way to live in a completely cashless society. The perks of the switch would be manifold, from increased security measures, greater convenience, to long-term environmental benefits, leading the way towards a world without cash.
Fintech is quickly advancing towards a more streamlined, efficient future of financial transactions that will be more secure and easier to manage on all ends. These are currently the most notable trends that are shaping the world of finance as we know it, and hopefully, they will make way for more creative innovations that will only allow us further improvements in the world of fintech.