The integration of technology with financial services keeps modernizing the finance sector every day. And the rise of innovative technology will help the fintech industry dominate the market soon.
A Statista report states that the Americas had over 10,755 fintech startups in 2021. A region with the most fintech startups in that year globally. Statista also reports that the number of digital payment users will increase to 307 million by 2026.
The COVID pandemic increased the need for digital payment and delivery service apps. And many mobile app development services saw a rise in their clientele as a result.
It also led to the growth of fintech services/companies as contactless payments and remote financial operations became a necessity.
A Forbes article highlights the major fintech companies in America like Stripe, Klarna, Kraken, and Chime. These companies are currently dominating the American fintech industry by adopting the latest fintech trends.
Top Fintech Trends in 2022
Here are some of those progressive fintech trends:
Open banking is a system that uses application programming interfaces (APIs) that simplify and safeguard information exchange between consumers/small businesses and third-party financial service providers.
Allied Market Research reports that the value of the global open banking market will be $43,152 million compared to $7,295 million in 2018.
Another research states that the global count of open banking users was 24 million in 2020. And it may reach 132 million by 2024.
Users get security for financial data exchange, banking activities, transaction, access to credit scores, and personal finance.
Open banking will keep growing by providing such benefits to regular consumers, FinTech companies, banking institutions, and the API industry.
Digital/Neo banks provide multiple services like money transfers, money lending, P2P transfers, NFC-enabled prepaid cards, and international remittance. Neo banks are widely preferred as they are user-friendly, cost-effective, and eliminate the need to visit a bank.
Technology like cyber security, biometric authentication, and artificial intelligence also improve the convenience of digital banks.
A task that can take hours in a traditional bank takes seconds/minutes in digital banks.
And that is why traditional banks will keep losing consumer traffic as more and more consumers conduct banking activities online. Most consumers prefer using mobile apps for digital banking and quick payments.
Any financial service provider can create such apps with the assistance of an established app development company.
Statista’s report suggests that the digital banking user count may reach 217 million by 2025 compared to 197 million in 2021.
Revolut, Statrys, Monzo, and Chime are some well-known examples of digital/neo banks.
Robotic Process Automation
Robotic process automation is a process that includes an expert utilization of software and digital systems with algorithms that can automate multiple human tasks.
Many sectors like Banking, Customer Care, Insurance, Healthcare, and Finance have already integrated RPA with their operations.
Grand View Research’s market analysis reported that the value of the global robotic process automation market was $1.89 billion in 2021.
The banking and finance sector uses robotic process automation for KYC verification, payrolls, general ledger management, accounts payable and receivable, intercompany reconciliations (ICR), and financial reporting.
RPA also simplifies the processing of credit cards, insurance claims, customer onboarding, and security checks.
It provides benefits like improved customer service experience, business data security, productivity, scalability, and analytics in the fintech industry.
Such benefits will keep increasing the usage of RPA in the fintech industry.
Blockchain is a decentralized digital ledger that has already improved many complex operations of the fintech industry. It provides a decentralized network, security token offering (STOs), smart contracts, reduced transaction costs, and fraud protection.
Many small and large use blockchain technology to improve the efficiency of financial operations. Cross-border payments also become easy and secure with blockchain.
Blockchain provides an accurate and error-free digital ledger for every transaction. Such a digital ledger can protect businesses from many legal problems and fraud.
Advantages of blockchain technology in fintech are lower costs, quick settlements, and tokenization. It also improves privacy and security, trade finance, consumer banking/lending, and global trade.
Amazon, Microsoft, Walmart, Alibaba, and PayPal are some established companies known for using blockchain technology.
Biometric authentication is a process that verifies your identity and personal information with your biological characteristics like fingerprints, facial structure, voice, and eyes.
The banking and finance sector always requires flawless security systems to protect the financial data of regular consumers and businesses. And biometric technology can provide such a foolproof security system.
Biometric authentication can protect consumer financial data from theft, duplication, and fraud.
A report suggests that 60 to 80% of mobile users in North America, Western Europe, and the Asia Pacific used biometric authentication between 2016 and 2020. And the number will only increase in the future.
The widely used biometric authentication with mobile users is facial and fingerprint scanning. But a good portion of the popular also prefer voice recognition and retinal scanning.
The well-known benefit of biometric technology is improved security in all business transactions, peer-to-peer payments, and digital banking.
Regulatory Technology (RegTech)
Regulatory technology is a software application to manage regulatory compliance in the financial industry. The primary features of RegTech are compliance, regulatory monitoring, and reporting.
Financial institutions need to conform to multiple laws and regulations to operate within acceptable standards. RegTech makes it easy for such institutions to comply with all necessary legal requirements.
It utilizes innovative software to improve the efficiency of compliance processes.
Digital products and services are prone to dangers like hacking, money laundering, data theft, and invasion of privacy.
RegTech can protect a company from such risks with Machine Learning and Big Data. That is why many professionals in the financial services industry are already using reg tech.
And companies like Ascent Regtech, ComplyAdvantage, Chainalysis, Hummingbird, and Forter are some examples of that.
Artificial Intelligence & Machine Learning
Artificial intelligence can analyze the behavior of users to help with cybercrime prevention, customer support, fraud detection, insurance, credit card eligibility, and loan eligibility.
The systems of AI and ML can record and store all consumer interactions with 100% accuracy. Analyzing such interactions helps financial institutions create personalized solutions for many consumers and businesses.
AI algorithms can quickly detect/report fraudulent activity and suspicious users on any financial platform. They can also block users if their activity on the platform endangers its operations.
AI and ML provide improved credit scores, better security, virtual assistants/chatbots, fraud protection, and stock predictions.
Many small/large businesses use AI and ML technology to improve the security and effectiveness of their operations.
The Internet of Things
The internet of things is a network of numerous devices connected to the internet to exchange data.
Smartphones are great examples of IoT in the fintech industry as most consumers prefer using smartphones for digital payments and banking.
Biometric authentication has become a necessity in the fintech industry due to the rise of financial frauds, data theft, and hacking. IoT devices like smartphones and wristbands make it easy to provide biometric authentication systems.
The connected devices also provide real-time customer insights and behavior analysis reports. It helps fintech companies personalize their solutions for all consumers.
Cashless instant payments, quick customer support, and data security are the benefits of IoT in the fintech industry.
And these benefits will keep improving as more businesses recognize the importance of IoT in fintech.
Some other fintech industry trends are Cloud Computing and Cybersecurity.
Cloud technology provides better security, storage scalability, data management, compliance, and lower costs.
Market analysis of Allied Market Research reports that the value of the global finance cloud market was $23 billion in 2020. And it may reach $90 billion by 2030.
Cloud technology supports open banking and has lower storage costs. It will surely increase the usage of cloud technology in fintech operations.
Cybersecurity in the fintech industry keeps improving due to technology like Robotic Process Automation, Artificial Intelligence & Machine Learning, Blockchain, IoT devices, and Biometric Authentication.
You can expect improvements in the mentioned fintech trends or the launch of some new ones between 2022 and 2023. These trends have the potential to modernize and simplify financial services for both regular consumers and businesses.
That is why the value and revenue of financial services will also keep increasing as they integrate such fintech trends with their operations.
Fintech trends provide reliable security, customer support, instant payment solutions, and fraud protection for all financial services.