The direction of finance and technology is going through some huge changes right now—and these changes are happening faster than anyone could have imagined 10 years ago! New companies, innovative technology, and consumers’ reactions to rapid developments are changing the way we think about finance.
The recent economic downturn and recession have made it more important than ever for companies and consumers to find ways to make their money work harder for them. And it has left many of us questioning where the FinTech industry is headed.
What is FinTech?
FinTech is a broad term that is a combination of “financial” and “technology” and refers to the advancing technology used to deliver financial services in a widespread and faster way. FinTech includes software and algorisms used for mobile banking, peer-to-peer lending, and crowdfunding platforms to artificial intelligence-based investment advice, online marketplaces, and cryptocurrencies.
The term was coined in the early 2000s by a British banker who wanted to convey the idea of using tech tools for financial innovation. It wasn’t until the 2008 financial crisis that it became a mainstream term—and now it’s everywhere we look.
How will FinTech impact companies?
FinTech is changing the way companies interact with customers and other businesses. Let’s take a look at how it impacts each of these areas:
- Businesses will have to adapt to stay competitive.
- FinTech can help companies reach new markets more quickly and efficiently, as well as provide better customer service for existing markets.
- Companies that leverage FinTech will be able to manage risk and compliance more effectively than those that don’t adopt this technology as quickly.
FinTech companies have made it possible for individuals and small businesses to access financial services and products previously available only to large corporations.
How is FinTech impacting consumers?
The popularity of FinTech has grown rapidly over the last few years. We believe this trend will continue as consumers become more comfortable using mobile applications instead of visiting brick-and-mortar locations. For example, millions of people now access their bank accounts through mobile apps—a number that will continue to rise as more people participate in digital banking activities.
Financial technology helps companies connect with customers in new ways: it’s a valuable tool for customer engagement and marketing for businesses across all industries. For example, as more people move towards digital payments (like Apple Pay or Google Pay), new tech like blockchain technology could start to replace credit cards.
These improvements will help open finances for millions of inexperienced users, enabling them to reap the benefits of global markets and access a range of services that were previously unavailable to them.
Open banking and online payment services
Open banking with Canadian banks is that it involves a lot of financial data. Every bank has a slew of financial data for all the people it serves. It ultimately allows customers to use their bank account to book an Uber and pay for groceries, even if those companies aren’t owned by your bank.
Whatever the case, open banking is unique because it puts financial information in the hands of the consumers. This gives the consumers the opportunity to control this financial data, which is usually something that they are not often able to do. From that point, the consumers in question will be able to do a variety of things with all this data.
The idea behind open banking is that it will make the financial industry more efficient and help customers get the best deals on their loans, mortgages, and investments. But it’s also a way for banks to make money by selling this information on how consumers allocate their money.
Big Data in FinTech
What’s more, the amount of data that FinTech’s can collect on customer activity is unprecedented. Data is the new oil and currency of our time, it’s not just big data: it’s massive data. With so much information available, these companies can make better decisions and improve customer experience by using predictive analytics, machine learning, and artificial intelligence (AI). The scope for technological innovation in finance is staggering; it could dramatically change our lives for the better.
It’s possible to use technology in banking to improve efficiency, safety, and customer experience. If a bank has access to your financial profile, they can anticipate when you’re likely to need funds next month or next year based on previous patterns — then offer you a loan when you’re most likely to accept it (and therefore be less likely to default). This could dramatically reduce the risk of defaults for lenders, who would no longer have their finances tied up.
The future of finance will see the right mix of people and technology
While finance and technology are often considered separate things, the future of finance will see the right mix of people and technology. This is because FinTech is not just about technology: it’s about people too.
Finance used to be a very one-dimensional industry; there were only so many ways to make money for companies with few layers of complexity in their processes. But now that we live in an increasingly digital world with access to better data collection techniques and advanced algorithms, financial services have been able to become more efficient than ever before. Financial services companies can now offer customers new products like insurance or loans at higher quality standards while also making less money on each transaction due to lower operational costs.
There are many exciting developments on the horizon that will continue to shape our economy and everyday lives. To learn more about how Inverite’s AI-powered bank verification service can help your company, get in touch with us today!