How Tech is Growing the Future of Finance
Technology and finance have always remained intertwined, from the abacus’ invention to make financial calculations more comfortable to the mammoth supercomputers used to drive complex financial models now. The fintech industry was carried out of that merger. Presently, most financial activity is carried out on mobile phones, enabling more people to access financial services.
Aside from increasing access, technology has also driven various drastic changes to financial systems worldwide and, in some cases, entire upturning sectors, as mobile investment apps and stockbrokers. However, the fintech revolution is continuous, and the following are some of the most key trends that will shape the future of finance, driven by savvy entrepreneurs.
How Tech is Growing the Future of Finance
As financial services have shifted from the realm of face-to-face to remote interactions, safety has been one of the main concerns that all stakeholders have had to fight with. Cybercrime has continued to rise to an alarming rate, including ransomware payments becoming a standard operating expense for multiple companies.
To oppose this, there is an increasing focus on biometric solutions to achieve the greatest possible levels of security since biometric markers cannot simply be replicated or hacked. Although public health concerns are shifting care to contactless biometrics identification solutions as properly, fingerprints have been the standard.
Traditionally, financial institutions have secured their customer data jealously to guard their market advantage. That has typically included denying potential competitors access just has often seen banks denying the customers themselves full control over their data. The open banking concept has seen a resurgence due to the increase in data protection laws that allow customers to access and move their data as they wish and the increasing cooperation between fintech companies and traditional banks.
Open banking has generated $7.29 billion in 2018 and is expected to reach $43.15 billion by 2026. Open banking gives new innovative fintech companies the ability to leverage big data to give more useful — and more customized — services, helping people lower their debt, increase their income, and make many profitable investment decisions.
As fintech companies have built solutions on new technology, governments and their governing agencies worldwide have been playing catch-up with new rules and regulations to cover each further advancement. That has started fintech companies dealing with a patchwork of regulations in every country where they operate.
Regtech solutions can usually be divided into identity management, monitoring of transactions and the risks connected with them, and regulatory reporting. The goal for every regtech solution is to streamline the process of identifying and complying with relevant regulations. The regtech market size is expected to increase from 6.3 billion in 2020 to 16.0 billion by 2025, in a Compound Annual Growth Rate (CAGR) of 20.3%.
Money is not dead. But. It is clearly on the way out, though, as the world steers away from physical contact and mobile payment alternatives become broadly available. From little startups to technology giants like Apple and Google, mobile payments have become a success in the financial services industry.
Solutions that facilitate money transfers are standard, but international transfers remain a big pain point. Transferwise increased $319 million at a valuation of $5.5 billion, and other fintech companies have raised huge sums as well. Although, there is yet a ways to go before international transactions become as seamless as local ones. The Payments market size continues to grow and, with it, the opportunity in mobile payments.
Far from the first days when cryptocurrencies were on the fringes, 2020 saw increasing adoption with mainstream financial services companies. For example, in November, PayPal announced it would start providing all U.S.-based users to buy, hold and sell cryptocurrencies at its platform.
As more extra people start to use cryptocurrencies, larger businesses will start to accept them. Since cryptocurrencies are not without their drawbacks (such as safety and volatility), companies that can give solutions to these drawbacks will be rewarded with the market.