As technology advances, changes ripple across all industry sectors. However, one industry sector that is particularly interesting is finance. Taking a closer look at the industry, fintech is heavily affected by technology advances. Fintech is the mashup word of “finance” and “technology”. It refers to the way that financial services have merged with technological advances and created a whole new platform of service for customers. There are technological advances continued to be explored and will be emerging more so in the next coming years. So, what are these emerging trends in fintech and how will they affect the future of finance? Read-on to find out!
What is open banking?
Open banking is an emerging trend in fintech that has started to come about in the recent few years. But you are probably wondering, what exactly does open banking mean? The way it works is that major banks must share data with third party financial providers. And if customers give their permission, banks can share customer’s financial data with other financial institutions. Meaning this may change customer service industries in a variety of ways.
What are the benefits of open banking?
Through open banking, fintech start-ups will be able provide innovative solutions and modern financial products to customers. This ability to have open access to people’s financial data means new and more efficient payment services can be developed. As open banking continues to progress it will allow fintech firms to play a larger role in the financial services industry and create competition with major banks, hence they must rethink some other their strategies.
What is insurtech?
The word insurtech is a word mash with “insurance” and “fintech” that refers to the innovative technologies in the insurance industry. Insurance companies are very old; they have traditionally favoured those with the most money and those with a long experience in the market. Innovations in insurance however, have the potential to offer ultra-customized policies and dynamically price premiums based on observed behaviour.
What will be the impacts of Insurtech?
Research is being done into the potential game changers such as training AIs to replace the task of brokers. Using apps can also help to pull multiple policies into one platform that can easily be monitored and managed.
What is regtech?
It is a blended word which describes the emerging trend of regulatory technology. It’s a new trend in finance that has come about because of regulatory challenges in the financial services sector. Since the 2008 financial crisis, there has been an increase in financial regulation. As a result of breakthroughs in technology and regulation, the rise of the fintech industry came about. As a result of these breakthroughs in the finance sector, it has led to the need for “regtech”. It is a more efficient way to help banks to comply with the rules set out by financial authorities.
PSD2 and fintech
What is PSD2?
Another emerging trend in finance is something called PSD2 which stands for the Second Payment Services Directive, and was designed by countries in the EU. Basically, PSD2 technology will allow players, other than the big banks, to have access to account data and payment options than was ever previously possible.
What are the benefits of PSD2 and fintech working together?
The following is a list of the key changes that will come with the use of PSD2.
- It will allow merchants such as amazon to receive data directly from customers’ account (with their permission) it will cut out the middleman such as Paypal or Visa.
- It can help by stopping merchants from adding hidden fees.
Next Gen Chatbots
What are Chatbots?
So, what exactly are chatbots? Chats bots are the new generation of customer service. They will allow customers to make inquiries and be answered immediately with an automated and helpful advisor. They may end up replacing the traditional customer service advisors, who could become a thing of the past.
What are the benefits of chatbots?
Chat bots will allow businesses to decrease costs, because instead of employing people to answer customer enquiries, this can all be done with an advanced chatbot. This can help business to increase their productivity and cost efficiency.
It will also improve the experience for customers, since these days waiting on hold to speak a customer service advisor can sometimes take hours. Chatbots could reduce the need for people to waste this time on hold, and get their questions answered immediately.
Interesting fact about chatbots
In fact, chat bots aren’t a new creation they have been around since 1966. However, the next generation of chatbots will incorporate enhanced artificial intelligence capabilities. The new experience customers will have with chatbots will be a complete hybrid creating personalised experiences. Chatbots can enhance the customer service experience across all industries, including fintech businesses.
Australian companies pioneering chatbot technology
Australian companies have already begun to invest in the future of chatbot technology. Sydney investment company, Stockpot, utilises chatbots to minimise human conflict of interest in wealth management. Stockpot use an algorithm to match customer risk requirements to the ideal ETF. Nifty is soon entering the world of chatbot technology with our very own chatbot! It’s here to serve your every finical itch. Keep a lookout on Nifty next week and get some one-on-one time with our chatbot.
Fintech and social media
How does fintech integrate with social media?
What this means exactly, is that while fintech has been on the rise, so has the use of different social media platforms. And another emerging trend is the integration of both social media and fintech technologies.
What are the benefits of the integration of fintech and social media?
Well, in the last 10 years the rise of social media and its impact on our lives has been unprecedented. Having social media accounts is almost a necessary part of socialising in the modern era. This has also come hand in hand with the rise in use of smartphones especially amongst millennials. Hence, fintech start-ups have been driven to pioneer a new era of financial services. Some of these services include being able to get a loan, or some form or credit, or even open a bank account.
Social media has also represented a new platform for marketing, whereby social media marketing has become a useful platform for fintech start-ups to advertise their products and services.
One fintech start-up that is challenging the status quo is DenizBank. DenizBank allows users to link their Facebook and bank accounts so they can organise money transfers and monitor their spending. Revolutionising and expanding our use of social media.
What is blockchain?
Blockchain technology is a new technology that was created as a platform to support the Cryptocurrency bitcoin. However, the ability to support cryptocurrencies is not the only use of block chain technology. In fact, it represents the possibility for a whole new type of internet. Basically, instead of data being centralised or contained in one place, it is distributed across multiple users. This allows for information to be distributed and not copied.
What are the benefits of blockchain technology?
Essentially the information held on the database is public so can be assessed by anyone on the network. The other great thing about this system is that it is virtually incorruptible. This would especially useful in the finance industry. Blockchain technology would allow financial parties to work together, even if they didn’t fully trust one another, to provide the best possible user experience for their customers.
What is digital lending?
Digital lending is essentially borrowing money from a financial institution. Traditionally, you would borrow money from a bank, but digital lending marks the dawn of a new age of money lending. It allows you to apply for a loan or credit online, receive the money into your account, without ever physically going into a bank branch. It also refers to doing things in a paperless way. New technologies mean that lenders can verify your identity and financial information without any messy paperwork.
What are the impacts of digital lending?
Digital lending is what kick started the fintech movement. Since consumers and businesses have moved more of their activities online, it has created a massive amount of data. Online lenders have then have been able to use this data to make underwriting decisions and lend people money in a much more efficiently than ever was previously possible. However, the big retail banks are picking up on the new fintech trends of digital lending, and are gradually starting to digitalise their activities.
What are biometrics?
This is a new and exciting emerging technology that could have an impact on fintech too. Basically, what biometrics are, is that rather than banks authenticating you by a password or piece of information that you know, they will start to recognise you by something that you are. Some of biometrics technology works is voice recognition, iris scans, facial recognition, fingerprint scan it can even include some behavioural biometrics such as voice recognition. Smartphones have already begun to integrate this technology for everyday use, such as unlocking your phone or approving a payment.
What are the benefits of using biometrics technology?
Government agencies and even apple is making use of these technologies, to make a more user friendly and personalised experience for the customers. However, biometric technology could also be used in fintech, allowing a more secure and personal experience for customers using financial products and services. Biometric technology can be used to log into personal financial accounts and much more.
What is Artificial intelligence?
AI is an exciting one! Artificial intelligence and machine learning often inspires images of talking robots. But, artificial intelligence covers a whole variety of different types of intelligent computer systems. For instance, it can include a simple computer program that plays chess, or it could be as complex as a driverless car. Another function of AI is machine learning. Machine learning involves teaching a computer program how to learn to find patterns within data.
What are the impacts of Artificial intelligence?
So how will artificial intelligence have an impact on the fintech sector? AI includes chatbots, virtual assistants, customer care representatives, marketing executives and even sales people. In fintech AI technologies can increase security by being able to analyse larger volumes of data. It can help companies to identify fraudulent behaviour, suspicious transactions, and potential future attacks.
AI will also help fintech companies to reduce processing times, which requires brain power. It will also eliminate the space for human error. It can help pick up mistakes and save time, ultimately increase productivity. Artificial Intelligence will also help to increase levels of automation. For instance, this could work by automatically generating expense reports . It would be done efficiently and without errors.
Internet of things (Iot)
What Is the internet of things?
The internet of things is defined as the digital networking of physical devices otherwise referred to as “connected devices”. These physical devices that are embedded with electronics, software, sensors and network connectivity that enables these objects to connect and exchange data with one another. One of the great benefits of the internet of things is that you will be able to monitor the devices from a remote location.
The internet of things is already surprisingly quite prevalent and you may have already been exposed to it. For example, cars that can connect to the internet with a GPS device, or if you use a fitness tracker. Both things get connected to the internet and are apart of the world of internet of things.
What are the benefits of the internet of things?
The aim of Iot is to transform things that are stationary, become engaging and smart. This will enhance the customer experience and ultimately, help the brand to differentiate themselves. The way the internet of things may benefit the fintech sector is by improving the customer’s experience with the ATM that can be connected to smart devices. It could also help with customers to manage their household and home insurance. It could also help to improve the efficiency of the information exchange in the banking industry.
MoneyBrilliant: Your personal financial assistant
This Sydney startup has grown in value and statue over the past three years. The startup is a budget management platform to help users map out their finances. Does it sound like magic? Well, it is, and the wand is fintech technology. MoneyBrilliant connects users to over 200 financial institutions, it can set up your money properties and simplify your banking. Always forget to pay your bills on time? Never fear, MoneyBrilliant collects all your current bills and notifies you when of the date due and payment amount. MoneyBrilliant helps Australian’s stay on top of their money, with budget creators, finding tax deductions, and providing all financial records for your accountant. The young startup represents a change in how we handle our finances and gives us a bright look at the future.
In summary, the changes made in technology are going to have a revolutionary impact on fintech. It means that the user experience for finance will be enjoyable, efficient and secure. If you are interested in learning more about the future of fintech check out the following articles. They go into a bit more detail about the emerging trends in fintech.