Fintech industry may be at its early outset, but it already has become a buzzword in the world of information technology. Ever more young entrepreneurs are launching their fintech start-ups to get into stride. However, before you start any fintech business (as well as any other project), you need to understand the difficulties you may encounter on your way. No less important is to conduct a market research in advance and to look ahead the incoming trends affecting the industry. Let’s take a look at the latest tendencies that fintech start-ups should bear in mind.
- Fintech revolution goes global
In 2016, the total amount of venture capital investment to the fintech start-ups made about $17.4 billion dollars with the most intensive investment in the US and China.
The fact that contemporary investors contribute to the fintech companies in the global market exists for several reasons. One of them is that fintech innovations come from specialists who are well-versed in modern technologies. Increased technological competition adds to the development of business without borders. Technological advances allow companies to operate in the global market, despite the fact that geographically they can be located in one country only.
Another reason is the fact that technical innovations are being quickly implemented which allows fintech companies to make significant progress and reach a new level in a relatively short period of time.
- Personal authentication and security come out on top
Thanks to technological innovations, making transactions becomes ever easier, but at the same time, security issues are coming to the forefront. A huge number of applications allow users to make transactions with one or two clicks. However, it is this simplicity that makes transactions more unprotected, and the issues of authentication of the user’s identity and protection against fraud become much more complicated. In response to the rapid development of fintech industry, banks are joining their efforts to create a powerful network, and companies that deal with fraud protection and identity authentication also work together to provide the best possible user experience.
A special place in the fintech system is taken by KYC process, which stands for “know your customer”. The concept means fighting against money laundering and financing terrorism, however, in fact, KYC goes much further beyond this, and covers such activities as proof of identity by document collection, bank statement and company registration certificate, and more.
- Artificial intelligence affects customer experience
Artificial intelligence is currently transforming businesses across the world, and fintech industry is no exception. One of the most trending AI based software solution is machine learned chatbots managing financial transactions, analysing financial activity, tracking accounts, and even advising on how to handle financial operations. The next expected trend is big data analysis made by artificial intelligence which will help in forming investment strategies.
- Banks start cooperating with fintech
Initially, fintech companies were considered the competitors of traditional financial services providers. However, recently, banks have found a new strategy in the fight against the threat of fintech temporary domination – the giants of the banking industry join their efforts with fintech start-ups to work toward becoming a new source of innovation.
Many of them organise incubators for the development of start-ups in the industry. The power of banks allows fintech companies to make significant investments in the development of innovations. In addition, banks have a number of advantages, the most critical of which is the access to a huge client base – something that young fintech companies do not have.
The next challenge in this collaboration will be defining the ways to offer faster and user-friendly transactions and expand integration to deliver greater 24/7 customer experience.
- Multichannel technology innovation prevails
And finally, probably the biggest trend is technology innovation and the sophistication of the specific software for fintech stakeholders. With the emergence of multiple fintech start-ups, fintech trading in the open market is no longer considered as something restrictive and secretive.
Another feasible factor that fintech companies should take into account is the mobile revolution. Thanks to the increased popularity of smartphones, people’s approach to holding transactions online has changed tremendously and affected companies that provide customer services, with fintech industry being not the least of them.
As a result, multiple companies are launching their fintech apps free of charge, with the possibility to switch to the premium services.
However, such apps may not fit the needs of experienced narrow-focused businesses. Very few fintech businesses of this kind have invested in custom software development, although software solutions experts say that it’s critical to work with the tools developed to meet the narrow-focused needs of each separate company.
The bottom line
Overall, the world is going to change with the rise of fintech start-ups. Easier transactions will allow businesses to provide faster services and better digital customer experience and transform banking operation optimising their processes.
There’s still a danger of the emergence of multiple ransomware and hacker attacks during the process of the fintech adoption, that’s why the reasonable and careful approach of all the operations is required among the players in the fintech industry.