Frederick Jace
The financial technology or fintech market is always evolving. This means that when it comes to software development for fintech, more companies get inspired to create increasingly innovative solutions. So, how do you keep ahead of the competition by being more creative? One of the most effective ways is to follow and embrace the latest trends in fintech.
So, what are the current trends in the field of financial technology and how can they enhance your products? Find out the answer in this guide.
AI & Machine Learning
According to research studies, artificial intelligence (AI) can help the financial services sector to bring down costs by a significant margin. AI and machine learning (ML) based systems allow you to quickly and cost-efficiently analyze big data and make informed decisions.
Chatbots have emerged to be among the most prevalent trends and they have been here for some time, evolving and getting better. They are only one example of how AI and ML are revolutionizing the sector. Additionally, AI algorithms are proving to be powerful elements for preventing fraud and unauthorized account access.
ML models can help in analyzing different factors to ensure effective user identification. Developers can use AI and ML systems that create real-time fraud detection models with various unique patterns to analyze current transactions and eliminate or reduce losses from fraudulent activities.
Virtual Bank Cards
These are digital cards that lie within e-wallets. Both traditional banks and neobanks offer virtual bank cards. Some of the key benefits of these virtual cards include:
- Users can make in-store payments using NFC or other online platforms
- There is no risk of fraud that is usually likely with traditional credit cards and debit cards
- Each purchase gets authorized via the user’s banking app
- If a virtual card gets compromised, it can be instantly nullified and replaced with a new one
There are also disposable virtual cards that change information after each transaction.
Blockchain
Blockchain refers to a decentralized P2P ledger technology for storing non-modifiable data or time-stamped blocks. It is all about data privacy and transparency. More and more fintech developers are integrating blockchain technology to help develop more trustful relationships between service providers and users.
Distributed ledger technology, also referred to as decentralized finances (DeFi) is the key that goes between blockchain and fintech and connects them together. This fintech trend is supported by the following technologies:
- Digital wallets
- Distributed data storage & exchange
- Digital assets
- Smart contracts
- Zero-knowledge identity proof
The benefits of the DLT include instantaneous transactions, no need for supervision, no risk of tampering, and a high level of security.
Alternative Lending
Alternative lending is also a major fintech trend re-shaping many aspects of the industry. It is also referred to as P2P lending and refers to loan services processed via digital platforms. They are geared towards borrowers who are not effectively serviced by traditional lenders and are seeking other options.
It exists in different forms, including:
- Direct lending
- Structured equity products
- Venture debt
- Debt financing
Alternative lending is set to keep growing in popularity into the near future.
Embedded Finance
Both investors and consumers are showing a growing interest in embedded finance. So, what is embedded finance? It is the integration of financial services and non-financial applications and websites.
The growing demand for embedded finance is being driven by the need for convenience and consumer needs. An ecommerce website offering buy-now-pay-later options is an example of such a service. With such a service, users will no longer have to visit a lender to go through time-consuming paperwork. They can have ready access to credit without the need to leave the digital platform.
Embedded payments is another example. With this service, users will not have to re-enter their credit card details every time they want to make a purchase. Studies show more and more people are using embedded finance for loans, payments, investments, and credit cards.
Fintech service providers that can embrace this trend early can expect to win over more customers. It is allowing non-traditional-financial market players to offer traditional banking services using the Open Banking API. Interestingly, the concept is not new, still, its widespread application is expected to bring a revolution in the area of payments.
There are many other technologies and trends that continue to make a big impact on the fintech industry. To name a few, they include microservices, big data, capital market digitalization, biometrics, cloud deployment, gamification, regtech, DevOps, and green initiatives among others. If you seek customized software development for fintech to empower your business, ROONYX is the perfect solutions provider for you.
