Future of the Fintech Industry
Technology has always been intertwined with the finance and banking industry. In the current digital landscape, state-of-the-art technological developments have begun to blur the lines between traditional forms of banking and the digitalized future. The finance industry is embracing the new changes and investing in new technologies to revolutionize fintech and enhance customer experience.
According to a forecast, the global financial technology market is expected to reach a market value of approximately $324 billion by 2026 at a CAGR of 25.18% over the forecast period (2022-2026). In the last 10 years, the fintech industry has evolved as more organizations continue to develop and deliver products that aim to smoothen and personalize the banking experience for users.
Financial software development companies are assisting fintech startups to diversify and upturn entire sectors, especially mobile investment applications. Below are the six disruptive technologies shaping the future of the fintech industry:
1. Massive value generation with AI
Financial firms are using artificial intelligence to evaluate and manage data from diverse sources to deliver crucial insights. According to McKinsey, it is estimated that AI can generate up to $1 trillion in additional value for the global banking industry each year. Machine-based identification or automatic factor discovery will be widespread and hone financial modeling across the verticals. Knowledge graphs and graph computing will be used as methods in financial services for AI semantic representation. AI applications will infiltrate the entire spectrum of financial operations across the front, middle, and back offices.
2. Cloud computing will liberate financial industry players
Cloud technology will liberate the financial industry players by increasing the efficiency of migrated application development and maintenance, raising infrastructure cost efficiency, and reducing application downtime. Cloud computing provides platform integrity via automated and embedded security controls and processes. DevSecOps is a successful example of a cloud-based feature that reduces technical risks via a consistent, cross-environmental tech stack 2. Edge computing, cloud containers, and AI-cloud integration are the few relevant cloud computing trends to play a dominant role in the fintech revolution.
3. No-code and low code will redefine application development
In the last few years, No-code and low-code development has seen an enormous adoption. Finance industry leaders are leveraging the technology to reduce costs and accelerate cloud-based applications. In the finance industry, responding to market shifts is critical and NCDPs allow that while keeping business strategy synchronized. For instance, audit trails and document generation can be automated on NCDPs or LCDPs while maintaining compliance. The no-code and low-code application development will likely boost and play a dominant role for fintech organizations.
4. Open source, SaaS, and serverless systems will lower the barrier to entry
Speed and scalability in the organization are necessary for financial innovation which open-source software architecture and SaaS offer. SaaS allows organizations to use software without owning or maintaining it themselves. Serverless architecture removes the need for firms to run their own servers. Fintech organizations can easily scale and deploy products at a low cost as per their requirements. Open-source software allows companies to rapidly scale using free-to-use source code that gives fintech developers a head start for creating their own applications. This technology trend is widely adopted and will continue to do so on a wider scale in the future.
5. IoT will usher in a new era of trust in Finance
Disruptive technology trends such as IoT are coming to an age that delivers huge benefits in this fintech evolution. For instance, IoT-based inventory and property financing will refine risk management by ensuring accounting records match real-world transactions. IoT is highly used to determine risk, improve customer engagement, accelerate, and smoothen diverse undermining processes like claims, insurance, etc. Technologies like RPA in finance allows traditional banks and financial institutions to develop new products based on goods flow tracking like on-demand liquidity and other innovations delivered via smart contracts. It enhances customer relationship management by ensuring intensive and targeted customer support.
6. Blockchain will disrupt established financial protocols
Blockchain uses distributed ledger technology that allows the recording and sharing of data across a distributed network to all participants at the same time. The technology will disrupt established financial protocols to share and transmit data across industries including payments processing and supply chain management. Technologies like smart contracts, distributed data storage, and zero-knowledge proof which are key to fintech innovation such as Defi applications, digital wallets, and assets will continue to play a prominent role in the revolution.
As fintech continues to grow, the competition for consumer retention rises in response. As a result, traditional banking institutions are intertwining and incorporating disruptive technologies and growing trends to withstand the growing competition in the fintech innovation landscape. In the future, fintech adoption will escalate and become the core of banking and financial institutions’ success as consumer demands for digitalization grows.