Financial technology, or fintech, has rapidly transformed the way we manage our finances. It encompasses a range of new technological innovations that automate financial processes and improve financial services offered to businesses as well as individuals. In this article, we’ll take a closer look at some of the latest fintech developments and explore how fintech is increasingly becoming more prevalent in the industry.
The financial domain is experiencing a wave of disruption driven by the rise of fintech. According to a report by PwC, financial institutions are progressively at risk of losing revenue to innovative newcomers. In fact, 88% of correspondents from a survey conducted by PwC said they already feel the tide is turning against them. Also, more and more consumers are shifting toward non-traditional financial service providers. Overall, these insights from PwC highlight the growing influence of FinTech on the financial industry and the need for incumbents to adapt to the changing landscape.
How the industry is adapting.
To adapt to the flow of this evolution trend, traditional finance is integrating data analytics and mobile technologies into their legacy systems, providing their customers with a new digital experience. The goal is to offer a more competitive capability and service, comparable to the more agile systems of fintech companies. These integrations will spur cutting-edge technological advances as they take advantage of artificial intelligence, blockchain, biometrics, and identity management. These developments will not only enhance the customer experience by creating a more efficient and secure environment, but also reduce costs and create more agile processes.
The role of blockchain in fintech
Blockchain technology has become more widely known since the inception of Bitcoin after the Great Financial Crisis. Proponents of blockchain expect more financial Institutions will incorporate the technology into their production systems or processes. This impactful adoption will significantly transform payment and trade infrastructures, digital identity management, and post-trade settlement. The blockchain ecosystem is increasingly playing an important role in the future of the financial service sector. However, regulators will need to make sure that financial institutions can effectively leverage this technology without scarifying any safety protocol.
Examples of fintech innovations
Since financial technology is becoming more entrenched in the industry, fintech has so far created a plethora of useful, innovative inventions. Some of the examples are:
- Open banking: This a financial service that offers a connected network of financial institutions and third-party providers. This promotes an all-in-one platform for financial management.
- Insurtech: Technologies that focus on streamlining and improving efficiency in the insurance industry are called insurtech.
- Cybersecurity: Fintech is offering more enhanced security for enterprises as cyberattacks become the norm in a decentralized information storage environment.
- Roboadvisors: Instead of having a human asset manager make investment decisions, using algorithms and AI to automate the investing process has helped reduce cost and increased accessibility.
All in all, fintech is causing a tectonic shift in the finance industry due to its ability to disrupt conventional practices and offer more efficient and secure digital solutions. Fintech innovations such as open banking, insurtech, cybersecurity, and roboadvisors have transformed the way financial services are delivered and consumed. As fintech continues to evolve and gain more acceptance, traditional financial institutions need to adapt to the changing landscape to remain competitive and meet the needs of their customers.