Top Technological Trends that shape up the Fintech Industry

Introduction 

Technology is never stagnant and is always blooming with new advancements globally. Some tech slither bit by bit, others bang the door with a noise. What be the case, it is undeniable that technological advancements have profoundly influenced our life. 

Unlike other industries, the financial sector or Fintech is not an exception. Now you might ask, what is Fintech? 

Fintech is a combined word of finance and technology, which refers to making financial processes and services more seamless and accessible for customers.  

But do you know what technologies are responsively blooming in the Fintech industry? 

We will discuss that elaborately in this blog, but first, let’s acknowledge the Fintech Market Overview. 

Fintech Market Overview & Tech Scenario 

In the modern world, Fintech is a game-changing industry that makes the financial process more accessible. It performs with cutting-edge technological advancements like blockchain and AI and results in business growth. 

The evolution of fintech industries into a daily need has actuated both participants and digitally transformed banks with the motive to leave the traditional banking system and share market. 

Today, fintech startups are bringing new solutions to the businesses like e-banking, mobile wallet, and online payment systems. 

As per Statista, digital payments cover the vast fintech market segment. More than $4,406,431 million US dollars in transaction value is generated from this industry in 2020. 

Also, as per global fintech distribution, the United States counted 8,775 startups in February 2020, putting it ahead of 7,385 in Europe, the Middle East and Africa (EMEA), and the Asia-Pacific region with 4,765.

So from the above stats, it is clear that this industry will continue to shine in the coming year, maintaining the periphery of finance and innovation. 

What technologies are boosting the Fintech industry? 

In the next 10 years, the Fintech industry will reach sky-high by driving business model reinventions. 

The top financial technology that shapes the landscape of the fintech sector is:

• AI Integration- AI or Artificial Intelligence is responsible for automatic factory data discovery and machine-based identification of driving elements in financial services. This technology stack mainly hones financial modeling across the industry and adopts symmetric representation, knowledge graphs, and graph computing. 

Also, decentralized ML addresses the privacy risk associated with centralized datasets. Advanced encryption, secure multi-party computing, zero-knowledge proofs, and other analysis tools drive a new consumer protection frontier.

AI can build associations and identify patterns across complex financial networks. It offers a far-reaching implication in the future era. On that note, many financial sectors are implementing AI in a diverse way and are driving massive value creation, especially in the fintech industry. 

• Blockchain Integration- Blockchain and Distributed Ledger Technology (DLT) in some cases disrupt the established financial protocol by recording and sharing the data across multiple data stores and keeping all the data safe and secured.  

Hence, blockchain records the data in an immutable manner. Also, DLT benefits by allowing the storage of financial transactions in multiple places at once. It increases cross-chain technology, facilitates blockchain interoperability, and guarantees chain systems on various protocols. 

To say, it shares, transmits, and records the data and overall value of tasks like payment processing, supply chain management, and more. 

It brings out new fintech innovations in the market, like digital wallets, digital assets, decentralized finance (DeFi), and non-fungible tokens (NFT) that continue to play a prominent role in the tech market. 

Other worthy blockchain applications that help in the Fintech growth are:

– Real-time transaction settlement- Blockchain can perform real-time transaction settlement. Hence, banks use intelligent contract settlements to improve the efficiency and scalability of cross-border sales. Blockchain supports digital collateral to maintain the privacy and security of the transaction settlement. 

– Digital Asset Supportive service- DLT can promote tokenization for unlisted companies and private equity firms. It performs spot exchange between currencies and cryptocurrencies on digital platforms and takes custody of services like encryption and key escrow on behalf of customers. 

– Authentication Ecosystem- Customers use agreed-to-share information to receive a more personalized and authenticated ecosystem. Here, customers can choose their information to be shared, and other remains safe on the trusted server.  

– Decentralized Finance (DeFi)- DeFi is beneficial for replacing the intermediaries automatically and generates easy loans, investments, and trading in the fintech business. It adopts the deterministic smart contract and eliminates the risks and costs. It is highly responsible for improving efficiency in real-time transparency. 

• Cloud Computing- Cloud computing helps liberate financial service players. Financial institutions should understand the three major forms of cloud services public cloud, hybrid cloud, and private cloud. 

The public cloud refers to the infrastructure that is owned by cloud computing service providers. 

A hybrid cloud refers to the infrastructure that is composed of two or more types of cloud (private and public), maintained independently and connected with proprietary technology. 

On the other hand, Private cloud refers to the infrastructure that is built for individual customers’ exclusive use. 

Cloud computing in financial institutions brings out agile capabilities, high responsiveness, flexibility, and scalability. 

Some of the trends cloud computing follows in Fintech industrial growth include:

– Stimulates innovation- Cloud computing promotes multiple workloads to run on a single operating system, reducing the overheads of increased efficiency. It rather builds platforms that incorporate container as a service (CAAS).  

– Develops cutting-edge essentials- Cloud computing accelerates 5G communication and drives new interactions like the IoT(Internet of Things), AI, and other technologies in various industries. It is one of the best fintech software development essentials. 

– Promotes AI cloud integration- Cloud computing has also brought AI cloud integration that proliferates the application in fields like image, audio search, and more. It ensures deep learning to establish a broader range of improved services. 

• IoT implementation- Mainly composed of three major parts- smart sensor systems, wireless networks, and application and operating system support. IoT implementation can ensure eternal trust in the finance industry. 

IoT proliferates and creates a dense net for devices to communicate across wired and wireless networks. It helps embedded systems and cutting-edge technologies develop rapidly and become more intelligent. 

For banking, IoT links blockchain with it and improves risk management. It ensures that accounting records match the real-time transaction and builds robust trust among systems. 

• Hyper Automation- It benefits the Fintech industry while replacing manual work and generating more automated tasks. It includes deep learning, AI, robotics, and event-driven software for improved decision-making and automated work. 

Hyper automation also called process automation (RPA), mainly focus on the handling of workflow information and business interaction with robots and standardizing business execution. It maintains its tech feasibility with high repeatability, clear logic, and solid stability. 

Robotic automation removes human errors and allows businesses to respond effectively even in the fluctuating time. 

• No-code and Low code- Programmers of the Fintech industry develops application through graphical user interface and configuration with the help of Low code and No code development platforms (NCDPs). 

NCDP is the combination and application of component reuse and assembly in software engineering, DSL (domain-specific language), visual fast development tools, customizable workflow process orchestration, and design thinking. 

It is mainly an advanced form of cloud computing, DevOps, and other technologies that curate positive results like inflexible scaling, containerization, and maintaining high availability over computing environments. 

• SaaS Integration- SaaS helps Fintech companies to use the software as needed without the condition of maintenance. It promotes speed and expands the financial innovations of the business. Unlike SaaS, open-source software is a must-have for technology players and new fintech businesses. 

Additionally, it creates a serverless architecture to minimize the cost linked with each execution of software code. Both Open source and SaaS are a blessing for an organization that wants quick scaling. It also offers free-to-use source codes and allows developers to head start their application. 

• RegTech Solutions- Full form of RegTech is Regulatory Technology Solution that creates automated solutions and controls regulatory monitoring, compliance, and reporting. 

The growth of RegTech Solutions is increasing in the Fintech industry. It offers simple, cheap, and fast benefits in ample data management. With this solution, you can enjoy precise automated searches with specific regulations. 

It is suggested that in the future the need for RegTech solutions will grow for its speedy pre-and post-trade consent. Currently, more than 150 RegTech companies are available to associate with finance institutions, consumers, and regulators. 

Future Scope of the Fintech Industry in India

The Fintech Industry is vastly growing in India and will continue to grow at more pace in the coming years. The value of Fintech transactions in India is expected to rise in the upcoming years. Also, there are hopes and high expectations that this industry will generate $200 billion in revenue and $1 trillion in AUM within 2030. 

Conclusion 

The key technologies that are trending in the modern world allow the fintech and finance industry innovation to grow. The technologies are Web 3.0-generated technologies that boost the performance of finance among businesses. It also helps to generate a seamless integration among the fintech industry players. 

In a nutshell, the financial industry is transforming with advanced technologies like AI, Cloud computing, SaaS, Open source, deep learning, and more.