Top Ten FinTech Trends to Watch in 2022, BFSI News, ET BFSI
The global FinTech market will reach $31.5 billion by 2026. That’s almost four times more than six years earlier. Investments in FinTech in 2021 increased by 144% compared to 2020.
The development of the FinTech industry depends on the technologies underlying financial products and services. Here are the top ten technologies and trends that will shape the FinTech world this year.
The Open API, or open banking, works on the principle of providing banking customer data to third parties with the consent of the owner. This information exchange format is beneficial for the bank user.
Through the open API, the bank provides information about the customer’s finances to insurance companies, stores and other organizations. They must check the creditworthiness of the customer before taking out insurance, granting a loan or authorizing a payment by installment. Open banking is transforming the market, allowing users to pay for goods online in a few steps, pay for services with a single tap, and receive a loan in seconds.
The Internet of Things
FinTech companies are increasingly using connected devices to gather valuable customer insights and make more informed decisions. Increased interest in IoT will see the wearables market grow from $48.89 billion in 2021 to $118.16 billion in 2028. Connected wearables perform many useful tasks in FinTech, such as banking applications mobile, financial institutions monitor customer behavior to decide what relevant services to offer, Mobile point-of-sale (POS) systems are replacing traditional POS systems. Smartphones, bracelets, smartwatches are used for payment instead of bank cards, while connected speakers and smart refrigerators order goods and pay for them themselves.
RegTech is a platform that helps organizations comply with complex industry regulations. Regulatory technology detects issues that do not comply with the rules and makes them compatible with the system. Special software automates repetitive tasks, monitors data security, warns bank employees and users of fraud. Given the relevance of RegTech, the value of the compliance software solution is expected to be $55.28 billion by 2025.
Biometric authentication is considered more secure than regular passwords and PINs. Users dislike multiple passwords and consider biometric authentication the best form of identity verification. They do not need to remember combinations of letters and numbers, change the password once a year. Confidential information will remain safe even if your smartphone or laptop is stolen.
With 93% of users considering the protection of financial accounts as the most important issue, FinTech is becoming a priority industry for biometric authentication technology. According to researchers, the global biometrics market will grow from $36.6 billion in 2020 to $68.6 billion in 2025.
Intelligent algorithms improve many processes of banks, credit and insurance companies. Artificial intelligence “studies” typical user behavior in a banking application. If a fraudster accesses the platform, the AI notices aberrant behavior and alerts the customer and the bank of the threat. Based on AI, intelligent virtual assistants are created. These are chatbots that help customers solve problems around the clock. The technology analyzes user habits, offers personalized financial advice on more favorable terms for the customer.
In the financial sector, banks are more actively implementing blockchain than insurance and credit organizations. Blockchain establishes procedures within the bank and helps keep an automatic record of data: how the money came, where it came from, how it was used and what it was spent on. It protects the bank from fraudsters because each transaction is recorded and cannot be modified. This means that it is easy to identify a hacker trying to commit a financial crime. It protects users against errors in financial transactions as they are verified by all nodes in the network. Blockchain enables faster international payments and transfers with minimal commission.
With the cloud, financial companies benefit from scalable storage and high computing power at competitive prices. The cloud supports open banking and the digitization of the FinTech industry. According to McKinsey, edge cloud, a cloud ecosystem that includes storage and compute resources; cloud containers as a service (CaaS); cloud microservices architecture; and the integration of artificial intelligence in the cloud are the trends to watch. Financial cloud services are expected to grow more than 24% annually.
Virtual cards become a guarantee of secure payment for goods and services on the Internet. The user pays for goods without indicating the information of a physical bank card, but only a 16-digit number of a temporary digital analogue. These cards are stored in a digital wallet on the phone. They are used for contactless payments in physical stores and online. The card can be freely blocked without losing access to the main physical bank card. Virtual cards offer financial institutions great benefits, including cost savings by reducing the issuance of physical cards; increased productivity by reducing payment processing time and streamlining other operations; protection of confidential information against fraudsters.
Automation of robotic processes
A “robot” performs repetitive tasks when entering data; generates reports; manages financial information; verifies the creditworthiness of the bank customer; handles insurance claims; handles customer inquiries and complaints; saves consumers. RPA is key to FinTech success, predicting 400% revenue growth for the industry by 2023.
FinTech companies want to expand the use of digital assistants by introducing them into financial management. Voice biometrics is likely to become a reliable protection of user data. The owner will be able to pay for goods, check the balance by voice command, while doing other things simultaneously. Manual data entry is not required. Capital One Corporation is actively developing voice payments and has long since launched Amazon Alexa which helps customers pay bills by credit card. Other FinTech companies are implementing voice assistants that serve as an alternative to chats, managers and call center operators and advise customers on complex issues. The trend is that the global speech and voice recognition technology market will almost triple by 2026