Last year, fintech – technologies and innovations in finance competing with traditional services – experienced a surge in both the user numbers and the size of its market. The industry saw the surge of three major trends: the expanding use of AI, Big Banks adapting to fintech and the revival of blockchain, among others. Here we are going to take a closer look at these trends and how they defined the fintech industry.
According to predictions, the sector is set to reach over 4.5 billion users by 2023, while its market value is forecasted to grow to USD 310 billion through 2022. Bearing these figures in mind, let’s take a closer look at the three fintech trends that shaped 2019, as identified by a Fintech executive from Fininbox, a banking SaaS (Software as a Service) provider.
Expanding the use of Artificial Intelligence (AI)
Even though AI has been a technology trend for a while, this tool became quite relevant for fintechs this year. Currently, there are many ways how this technology is applied. From tracking various financial operations to dealing with everyday customer enquiries – fintechs used AI to improve their services in 2019. Bright future projected for this sector in coming years as the value of AI in fintech market is expected to increase by nearly 4 times until the end of 2024.
“The use of AI is not limited to a single area in fintech,” claims Anton Zujev, the Head of Development at Fininbox, a Banking Software as a Service (SaaS) provider for electronic money and other financial institutions. “Essentially, this technology automates various processes in digital banking. For example, AI-driven chatbots allow dealing with customer requests, digital services or more intuitively anywhere and anytime. It is also great to see how AI is being developed to increase fraud prevention. The remaining skepticism towards disruptive financial technologies will inevitably be reduced as people start seeing clear benefits in usability improvements and overall industry effectiveness.”
Big banks are adapting fintech
Traditional financial services and innovators have been in rivalry since fintechs came into the mainstream. However, this year marked many cases of established names in the financial sector shifting towards more fintech-driven activities. Such banks as JP Morgan, Bank of America and Goldman Sachs are successfully developing their digital services while employing the latest technologies and collaborating with fintechs.
Zujev regards this trend positively and believes there is still room for growth. “Competing in this growing sector is not enough. Both traditional financial entities and fintechs have a lot to learn from each other. While the former are more reputable and reliable because of experience, one should not forget the knowledge of digital and tech of the latter. Collaboration, not rivalry, should be the way forward.”
Revival and relevance of blockchain
Even though the rise and fall of initial coin offerings (ICOs) tainted the image of blockchain, this technology is slowly gaining positive recognition. As for 2019, it is worth noticing that both traditional banks and fintechs have embraced blockchain as a tool for cost reduction across multiple areas. In other words, blockchain can make operations, paperwork and various back-end tasks less complicated and time-consuming.
“Blockchain has been stigmatized for a while,” says Zujev. “It is understandable – both large banks and tech-savvy audiences were disappointed with many failures that followed the ICO boom. Regardless, the development of the blockchain technology along with finding new ways to apply it seems to be picking up again. Blockchain is likely to grow further – although it is a popular trend already. The main reason is its wide application.”
Consumers are drawn to improvements provided by fintech advancements. It is inevitable that more and more disruptive technologies will be embraced and therefore it is only a matter of time until more organizations will adapt and integrate advancements in fintech. Seeing which parts of vast fintech sector are adapted next might determine the future trends that are bound to be quickly replaced as the industry matures.