By Vatsal Jain
FinTech is the major impetus behind the innovations within the finance sector. Over the past decade alone, there have been remarkable developments across wealth management, payments, and retail banking. Customers are now shifting toward FinTech for even better financial services, and the trend is gaining greater momentum with each passing day.
The COVID-19 pandemic has further boosted the importance of FinTech in the financial realm. As such, let’s look at some domains that are coming out as the key trends for entrepreneurs and will persist to be so after 2020.
Lending Goes Digital
The lending or mortgage industry has emerged as a game-changer too with its innovation-enabled solutions. It is encouraging customers to deal with their pandemic-led financial liabilities at their fingertips.
Also, there are significant advancements on the integration front with digital transition and concepts such as open banking. In layman terms, digital lending is the future. Now, people have a grave desire to overcome the conventional pain points of the lending procedure that incorporates intricate procedures and red-tapism. Tech-enabled lending platforms have made the overall procedure paperless and considerably faster.
In addition, the ever-growing data has streamlined the onboarding procedure for lenders as it is becoming simpler to profile a potential borrower. Using such an improved service capacity is now the order of the day. The conventional lending procedure takes 3-5 weeks, and the average time to cash can extend to as far as 3 months.
Such a time-consuming process is now outdated and inadequate. With digital ecosystem and inclusions, the turnaround time (TAT) can be decreased to a few days and hours. There is a plethora of opportunities in digital lending for entrepreneurs such as SME lending, consumer finance, and open banking, to name a few.
Digital/Contactless Payments Going Mainstream
To minimize COVID-19 contagion, there has been a huge behavioral change among consumers vis-à-vis the payment modes. In the pre-COVID era, consumers prevalently preferred cash to process payments/transactions. However, the global health crisis has dramatically changed the situation. Now, we barely see direct payments across the retail sector.
Therefore, this shift in consumer behavior is spurring the transformation from face-to-face transactions to digital and remote. And it is only reasonable for consumers to do so, given the pandemic that is sweeping the globe. Eventually, in a world where there is a health risk due to physical interactions, contactless consumer experience is poised to take primacy.
FinTech AI Assistants Stepping Up Financial Services
Chatbots are among the most popular FinTech trends of recent times. 2019 already witnessed a slew of welcome developments. In other words, the banking and financial services industry is embracing conversations. The past decade has seen the emergence of gadgets and apps that can listen, examine, and resolve our concerns and queries. AI-based chatbots are entering the landscape and proactively propelling transformations, given development in speech capabilities and natural language processing (NLP).
It seems that the very technology can be used to improve and take financial services to a greater level, and conversational banking now holds great promise.
Case in point, financial institutions such as Morgan Stanley are already leveraging AI to recognize fraud and implement a trade. HSBC seems to use AI in a more decisive way as it utilizes robots to identify money laundering, fraud, and terrorist funding.
Financial Planning and Management
Helping people manage their finances digitally – investing, analyzing, and advising – is a domain ripe for innovation while conforming to the policies in the area.
The ever-growing data has influenced FinTech platforms to create state-of-the-art solutions propelled by technologies such as Big Data and Artificial Intelligence (AI). In general, people are also focusing on unconventional investment instruments beyond bank deposits and real estate, particularly on account of the COVID-19 pandemic. It is straightaway boosting the penetration of tech-enabled wealth management services worldwide.
RPA In FinTech Optimizing Financial Processes
Another lucrative FinTech trend for entrepreneurs now and beyond 2020 is robotic process automation (RPA). When applied to conventional procedures, it leads to the reorganization of traditional systems and cost-cutting by a huge margin.
RPA has a flexible application since it is not a point-solution – it can be applied to any task of a structured and rule-specific nature. Besides cost-cutting, RPA can also help firms decrease human errors, thus, helping dedicate more time and window to emphasize high-priority tasks that, in turn, lead to better customer experience.
To Wrap Up
With 2021 knocking at the door, questions regarding the future take center stage. The only thing that is certain is that the FinTech trends explained above will persist to shape the finance sector. At present, the trends under the limelight are the key to satiate the demands of tech-savvy consumers.
If we see the pace of tech advancements, we can look at that down the road, technology will take over the finance sector entirely as new customers will be more tech-savvy than were before.
Vatsal believes in the mantra “Write until the ink runs out”.
Despite being a B.Tech Grad in Computer Science, a staunch inclination toward writing as well as keen observing skills motivated him to churn out write-ups in the online arena. Coupled with the technical insights he has ingrained, he’s tapping white spaces in the writing bracket in a bid to facilitate people with recent technology and market trends.
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