This 2018 proves a promising year for Financial Technology, a.k.a. FinTech, as it continues to propel the financial sector to greater heights. According to the World FinTech Report 2018, FinTechs are driving revitalization of the financial services customer journey by innovating with emerging technologies. Financial firms must look to continue aligning with customer goals, maintaining trust, and delivering digital and efficient processes for future success.
Here are the Top 5 Fintech Trends currently disrupting the financial services landscape that can have a sustainable impact for years to come. Take a moment to consider how your business can better position itself to benefit from these changes:
- Artificial Intelligence (AI) & Machine Learning (ML)
AI and ML are expanding frontiers across all industries, including the financial route. Current AI developments focus on cognitive use in sales, marketing, investments, wealth management, and compliance sectors of the financial services market.
Some examples of AI and ML technologies being used today are Robo-Advisors which are automated investment platforms that use algorithms to manage investor funds and recommend the best wealth management portfolio, Automated Trading that use complex AI systems to make extremely fast trading decisions, and Chat bots that can communicate about your bank account and give advice on smart savings and finances.
- Blockchain & Distributed Ledger Technology (DLT)
Blockchain technology is gaining stronger traction in FinTech. The Global FinTech Report 2017 has showed that 77 percent of the financial services industry are expected to adopt blockchain as part of their production system by 2020. One third of the surveyed institutions, particularly banks, have expressed interest in integrating blockchain technology in their financial operations.
Using blockchain can help in storing client information and sharing with the banks connected to the digital ledger technology. This helps in reducing costs and maintaining security. It eliminates the need for mediators and allows simplified payment process. It creates an audit trail for all the trading and transactions carried out on the system that helps in detecting any illegal activity from source to end.
- Cloud Computing & Advanced Data Analytics
The adoption of cloud computing in banking is growing with focus on data analytics for security and regulatory compliance. Enterprise-wide applications are being migrated into the cloud. This year, financial institutions are pushing to create more cloud-enabled business models as the use of open APIs become more popular. Modern consumers are more selective on information that meet their interest and specific to their needs.
Cloud computing and advanced data analytics enable finance organizations to get big data on clients’ profiles and interests to customize banking products and services that match consumer requirements. Enabling cloud-based backend infrastructure allows banks to drive more refined data, cope with consumer demands, and optimize banking efficiency.
- Social Trading & Financial Wellness Platforms
Social Trading is one of the fastest growing trends on Forex, stock, and other markets. It makes use of social media platforms and offers interaction between active Forex traders in real time. It provides significant benefits by sharing knowledge on financial insights and allows investors to trade online with the help of others while sharing techniques and strategies.
Financial establishments provide social trading or financial wellness platforms for consumers to share their thoughts, concerns, and queries enabling them to make correct financial decisions.
- Crowdfunding & Peer-to-Peer (P2P) Lending
Another hottest trend in FinTech is the P2P lending. It is also called as marketplace lending, social lending, or crowdfunding wherein funds for different purposes are solicited from the public online. P2P is the segment of crowdfunding specifically concerning loans. Borrowers request loans
online, where their loan requests can be viewed as open loan profiles. Individuals and businesses can then buy or invest in pieces (fractional lending) or whole loans through an online marketplace that displays the requested amounts.
FinTech P2P companies manage the entire lending process, including the screening of loan applications, risk evaluation of borrowers, providing the online marketplace for buying loans, and overseeing repayments back to lenders. P2P lending is time-saving, offers quick approval time, and has low-interest rates.
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