FinTech, as the ingenious abbreviated wording implies, refers to financial technology. It is the technology of banking and financial marketing that brings a boundless unity to finance and technology. Quite simple and straightforward, right? But there’s a lot more to FinTech than meets the eye.
Every moment you perform financial transactions or use various online banking tools, you make use of FinTech. This financial technology is assisted by the use of other digital technologies like blockchain and eCommerce.
Fintech became of utmost importance in 2020 because of the COVID-19 pandemic. It evolved and increasingly fostered digital transactions across the entire globe. Naturally, this resulted from other majorities of business declines and the essential fact that numerous customers and businesses started utilizing the most efficient payment and transaction methods at that time.
Today, cryptocurrencies typically make up most of the FinTech market. Bitcoin was the pioneer blockchain-based digital currency to prosper in the digital market. Blockchain is essential in financial IT solutions, and it is the core technology behind the FinTech revolution.
Fintech services enable digital banking to move faster and be more efficient. They make businesses more robust and functional, fostering more accessible interactions with customers and employees.
Today, the platform of financial technologies radically continues to change at a significant pace. These changes are easily discernible in their impact on financial activities regarding money, transactions, and banking.
A recent study shows that FinTech organizations’ surge surpassed 70% in Europe alone during the lockdown period. The FinTech industry continually creates strides to ensure simple, swift, flexible, and secure financial transactions for its customers. This process will only become even better and more efficient with time and bring about financial services technology developments worldwide.
No doubt, 2021 will be a year to see a record increase in the number of financial tech companies. With numerous individuals and businesses leaning toward financial services solutions to cater to their finance needs, this will be the year of a ‘FinTech rush’ on a global level. It will lead to heated competition among all financial services organizations.
Areas to Watch in FinTech Development for 2021
Looking ahead, toward the near future here in 2021; Fintech has limitless boundaries for continued improvement and evolution and the following are some of the key areas to watch:
Blockchain
With blockchain’s sophisticated technology, transactions are easily carried out in a completely safe and secure environment. Due to this essential trait, banks and other financial institutions lean toward blockchain technology to harvest its benefits.
With FinTech companies on the rise, blockchain technology is predominantly predicted to influence banking in 2021 and the far future significantly. Blockchain’s exceptional characteristic is its widely praised safety. In blockchain, data is immediately recorded in its system, it becomes critically challenging to tamper with such data as the blocks are typically impenetrable.
Several FinTech startups model their businesses around Bitcoin and provide peer-to-peer lending services or the ability to process payments via bitcoin.
Financial institutions are readily investing in blockchain technology to mitigate costs more efficiently and improve general services. This is likely to increase the development and provision of financial service solutions.
Improved Biometric Digital Security
As FinTech companies and online transactions became more mainstream, mobile banking and other financial services became primarily available. This evolution brought along its security concerns with the advent of cybercrimes.
Naturally, organizations in the FinTech industry must implement all readily available security measures. And what better way to do that than evolving the FinTech landscape to accommodate new biometric features that can propel online security to new heights. With this, new and old customers become imbued with the confidence of having their data protected.
Of course, this leap is bound to come with its challenges, but it is a likely development bound to create a significant shift in the financial technologies market.
Automatic Finance Management
In the ever-growing world of business investments and financial interactions, technology helps customers make swift and accurate decisions about their money. These decisions could be in terms of where and how to invest it, acquire loans at more favorable interest rates, or manage investment portfolios.
Primarily, the automated nature of financial activities can be achieved by FinTech services through the use of AI and machine learning to manage a client’s money. This happens by creating applications that can quickly and algorithmically evaluate different financing options and assist its users in making effective financial decisions with minimal effort.
Normalization of Digital Banks
The FinTech industry is at a crucial transition point, with digital banks at its core. While social-distancing regulations are still in effect across large parts of the globe, the lingering pandemic has put a major transactional shift from cash towards contactless digital payments. Virtual transactions’ constant need gave birth to financial services technology that is safer, more flexible, traceable, and, predominantly, more compelling to various businesses or customers.
Businesses can now reach into new access and transacting methods with customers who now prefer digital payments over cash use. Digital banking is more convenient than ever; with financial services IT solutions, consumers can now access various personal financial information and carry out essential transactions with just a few swipes on their phones.
Conclusion
The FinTech evolution is constantly making waves around the world. Among all the FinTech areas of development or its potentials discussed above, most represent significant by-products of customers’ demand.
FinTech makes financial services better by providing solutions that allow easy access to financial information. It also offers more transparency, ensures swift transaction processing, creates more secure accounts with better identity authentication, and lastly, the most vital; it provides better support for its customers.
To ensure the advancement of the financial services organization, clients are always a top priority. The provision of secure and transparent experiences and respect for privacy are all fundamental in FinTech progression in the world of transactions.