Fintech Trends to Watch Out for Right Now
Fintech Trends to Watch Out for Right Now
Fintech enterprises have used blockchain, AI, IoT and other technologies to keep pushing the limits of innovation and ushering in new trends.
On the other hand, traditional financial institutions are collaborating with fintech startups to accelerate the speed of digital transformation and innovation at their organisations.
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As consumers want a better user experience, more customisation, quicker service and more choices, fintech companies are working hard to stay ahead of the curve.
Current Trends in Fintech
Some developments that were on the fringes of fintech will take centre-stage, including:
So far, tokenization — the process of creating and managing cryptographic tokens on distributed ledgers — was mostly relevant to digital assets like NFTs. But tokenization will be used to represent physical or intangible assets such as real estate.
Tokenization will be used in fintech to improve transaction visibility and streamline sales and purchases by offering greater liquidity and easily verifiable ownership.
Increased Financial Transparency
Open Banking and, eventually, Open Finance will continue to drive data interoperability and transparency.
Third-party applications of Open Banking — that require banks to send data in a secure, standardised manner to facilitate online information exchange between approved entities — will continue to increase.
Regulatory bodies all across the globe are trying to create standardised regulations for Open Banking, especially related to data ownership. They are also intent on mitigating the slew of data breaches that financial institutions have faced of late.
The inclusion of blockchain technology in fintech will also bring in regulatory changes.
Many governments worldwide are in the process of crafting the regulatory scaffolds fintechs need to grow and innovate.
Distributed Ledger Technology
DLT is pegged to bring in the next wave of disruption in the fintech landscape — along with AI, ML and data analytics.
Blockchain can improve the accuracy and transparency of the financial services ecosystem by allowing new methods of checking systems and verifying transactions. It is also becoming a feasible substitute for conventional financial transactions — particularly in B2B.
The demand for contactless, seamless and secure payment options has increased the applications of QR codes in fintech.
QR codes that use the Open Banking infrastructure are becoming more popular as viable alternatives to traditional digital payment methods.
Both customer-present mode and merchant-present mode of QR codes are gaining popularity.
Near field communication that enables devices in close proximity (2-4 inches apart) to share data wirelessly is becoming more mainstream and finding uses in card terminals, mobile phones and contactless cards.
NFC also has uses in peer-to-peer sharing and in read/write cases where an active device, such as a phone, picks up data from a passive device, which does not have the capability of reading information itself.
Both banks and fintechs are experimenting with ways to leverage cryptocurrencies like Bitcoin and Ethereum to reduce the risk of fraud. Cryptocurrencies are highly trackable, don't have intermediate stages between participants, and the speed of transacting with them has increased, making them more suited for use in the fintech sector.
The disruption of the financial industry has reached such a stage that no businesses, regardless of size, have the option to bypass fintech. For small businesses that do not have the ability to carry out innovative fintech projects in-house or hire a technology team, outsourcing operations are emerging as a trend.
Using third-party fintech services, small financial services companies are digitalizing and growing their operations.
Fintech has proved how inextricably linked capital and technology are, as it continues to morph relentlessly. Both established organisations and fintechs need to be strategic about the changes to capture a greater share of their markets.
Sign up for the Oxford Fintech Programme to get a foundational understanding of the fintech landscape, along with upcoming regulations, and take advantage of the current trends in fintech to drive growth in your institution.
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