The buzzword fintech recently became very popular and both individuals and multinational companies are starting to make good use of the benefits it brings to the table. In order to take advantage of these benefits, you need to understand what are the technologies that sit behind its apparition and how fintech actually managed to become a disruptive innovation in many industries. Financial instruments such as stocks, bonds, currencies, commodities and so on moved into the online environment and evolved into something much bigger that can only be handled with the help of innovative technology instruments. This article is meant to break down most of these technologies and make you understand how and why fintech disrupted the industries.
Metrics that refer to the human characteristics are now used with the sole purpose of protecting data better. While technology is evolving so rapidly, people are now worried about security issues. Biometrics in security can entirely change the way payments are made. Innovation in this field made the apparition of fintech possible. The benefits of biometrics can be noticed by banks, alternative banking, retailers, consumers and many more others. Say goodbye to PIN codes and welcome fingerprint authentication. Biometrics had great success in mobile. Using biometrics is extremely efficient, reducing the time required for authorizing a payment. It’s convenient and definitely more secure compared to other methods of protecting data.
Artificial Intelligence evolved with the purpose of helping human beings deal with tasks that can be automated. The evolutionary algorithms that are being studied at the moment will allow machines to think similarly to human beings. Machine Learning, Neural Networks, Big Data and AI influence the evolution of fintech too. In fintech, AI could help with analysis prediction, meaning that it can represent a step forward in choosing the right strategies for sales, it can generate revenue analysis and optimize the resources.
The financial operations will be automated and enhanced in terms of performance. The internal processes are going to be influenced by the leading-edge algorithms used for developing AI. In addition, Artificial Intelligence together with Machine Learning can lead to making decisions automatically based on data analytics, all without any kind of human interaction. Decision automation is a trend that could influence fintech and make monthly payments. Day to day operations would be reduced visibly, helping people focus on other sectors that can’t be automated.
Blockchain technology went beyond Bitcoin and expanded so much that it became a focal point in financial services and especially in fintech. The reason why blockchain adoption is so important for fintech and it makes its existence possible has to do with the advantages it has. The costs and the speed of completing a payment are dramatically reduced by using blockchain technology. Thus, the payments, transfers, and purchases that have to do with fintech and alternative banking can be handled easier and safer.
The identity of users who complete such transactions is protected. Cryptographically securing identities became a condition for fintech. It is expected that blockchain technology will reach maturity around the year 2025 when it will become mainstream and it will be integrated to more industries other than finances (the medical system, the voting system etc.). In 2019, it’s estimated that the capital markets spending on blockchain technology will reach $400 million. Blockchain technology encourages the use of smart contracts which are financial instruments used in fintech as payments of bond coupons or dividends.
Data is generated from everything that’s currently surrounding you and has to do with tech. Smartphones, sensors, browsing the Internet – data is constantly generated and it can lead to a digital exhaust if it’s not handled well. Big data can improve the social, political and economic intelligence if improved in the future. As with any other tech innovation, it has both advantages and disadvantages. The advantages include transparency (important for fintech), real-time data analysis, pattern recognition, user analytics and many more others. The negatives are related to security and social segmentation (not everyone has access to cutting-edge technology). The functioning of fintech is based on how to secure data is.
Actually, big data will become mainstream very soon and smart data is going to take over certain industries. In finance, rapidity and reliability are both concepts that have to be taken into account before anything else. Having data handy for quick analysis and usage is the goal, and big data is too complex to be able to offer that. It may have represented the starting point of fintech and other types of innovations, but data is steadily shifting towards something greater.
Going fully mobile
End-to-end alternative banking started to be very popular given the fact that more than half of the population is spending time on various devices with an active connection to the Internet. Transforming finances was possible because of this transition from the requirement of desktop software programs to mobile apps. Having everything you need related to finances in one single, comfortable place is much more convenient compared to physical visits to the bank. Banking is changing itself too, but alternative banking is at the center of attention.
One example of an alternative banking service would be Contis. On their website www.contis.com you can read about the services they can offer to credit unions, white label, companies and consumers altogether. This platform represents the result of the fintech disruptive innovations. People can now handle all payments securely and efficiently with the help of alternative banking methods such as this one, everything from simply accessing their smartphone.
New payment methods
The newest payment methods also encouraged the apparition of fintech innovations. Since people started using cryptocurrency to make payments, other methods started to emerge. Payoneer, AfterPay, ZipPay, Apple Pay and other numerous for making payments in the online environment made people trust virtual transactions more. Fintech is all about making transactions digitally, so new payment methods are always welcomed, as long as they are affordable, secure, easily accessible and user-friendly. More payment methods are expected in the future for sustaining the fintech revolution.