How Fintech is changing the banking sector
The financial industry is experiencing rapid development due to implementation of innovative technologies. Their goal is to automate and improve the quality of financial services. FinTech helps companies transform and offer in-demand services to customers.
FinTech stands for financial technology, which includes the development of cutting-edge software aimed at implementing innovative solutions in the financial industry.
The business landscape is constantly changing, financial services are expanding and becoming more customer-oriented. The implementation of digital tools allows companies to attract more customers and, at the same time, reduce costs for operational services.
What are examples of Fintech?
For example, mobile banking apps. Today, large banks have their own apps that allow customers to transfer and receive money, and pay for goods and services online. In addition, companies like PayPal, Monzo, Monobank are virtual banks without physical branches.
Financial technologies are also used by giants like Apple, Facebook, Google, and Amazon, who, in addition to their primary services, have started offering financial services. Today, these companies have implemented online wallets in their accounts, and money transfers have become available even in messengers.
What is Financial Technology (FinTech)?
Let’s understand what Fintech means in simple words. It’s digital products, tools, apps, and innovative business models with lots of services that are used to provide financial services. Technologies like Big Data, Blockchain, biometric elements, and others are used to develop financial products.
Fintech Market Development
To understand how Fintech works, let’s look at its history. The development of the Fintech industry began in 1950 with the launch of the Diners Club credit card for payments in the entertainment and travel sectors. This was followed by the first bank credit card with the gradual appearance of ATMs and self-service points in stores, gas stations, and public transportation.
The 70s saw the emergence of electronic commerce, while the 80s marked the beginning of big data development. It was then that the term “fintech” appeared. As often happens, a new impetus for development was given during a crisis. This happened in 2008 when trust in traditional banks was disrupted, and new developments and business models began to emerge in response to customer demands.
Covid-19 made its corrections, and FinTech companies began to actively collaborate with major financial institutions.
- According to the World Bank, global investments in Fintech in 2010 amounted to $8 billion. In 2017, they grew to $90.5 billion, and in 2020 they were estimated at $111 billion
- Investments in the Fintech industry have grown 3.5 times since 2015 (Pulseof Fintech H2’21)
- As of 2023, the Fintech industry is valued at $179 billion, according to Deloitte
- According to forecasts, the financial technology market will reach $188 billion in 2024
- There are currently over 26,000 fintech startups. In 2019, there were around 12,000
- Visa has been recognized as the largest Fintech company with a valuation of almost one quadrillion US dollars (CFTE).
What is Fintech in IT? It’s the use of technologies such as:
- Data Analytics
- Big Data
- Automate processes
- Artificial intelligence (AI)
The main principle of Fintech is to use cutting-edge technologies to ensure the accuracy, efficiency, and flexibility of digital financial tools. In the future, Fintech can significantly change the financial industry by reducing costs, introducing new popular tools, and improving the quality of personalized financial services.
Fintech Services & Directions Insight
Every year, the categories of fintech services are expanding. In response to customer demand, new directions are emerging.
FinTech Solutions segment on such digital services:
- Personal finances
- Money Transfers. Fintech Example – TransferWise
- Online Payments (Klarna)
- Credit without banks
- Nonbanking – digital banks in mobile applications
- Crowdfunding – Collective Funding. Fintech Example – Kickstarter
- B2B Fintech – data exchange and business settlements
- Artificial intelligence
Fintech: Financial Technology Industry Stats for 2022-2023
It is now beyond doubt that fintech has become a part of the financial future, and this field will continue to develop and transform.
Banking Industry Highlights:
- 92% of Chinese citizens used fintech banking, payment solutions, and financial management in 2019 (Global FinTech Adoption Index 2019)
- In 2022, about 65.3% of the US population used digital banking.
FinTech companies not only influence the volatile financial landscape but also, according to experts, pose a threat to traditional banks. The latter risk losing customers if they do not adapt and fully utilize FinTech solutions. The use of digital tools will allow banks to remain competitive.
Thus, Fintech technologies in the banking sector will provide such advantages:
- improving operational efficiency
- cost savings due to the lack of manual processes
- secure protection of personal data through encryption and biometric authentication
- expedite secure payments
- improving customer interaction
- improving transaction security
- personalized service provision
- data analytics improvement
- increase transparency and provide clients with more control over financial data
By embracing and implementing the financial technology revolution, the banking sector will gain opportunities for growth and retain its position as a leader in the digital financial industry. We at New Line Technologies develop innovative technological solutions from scratch for the financial services industry, as well as improve existing services, strengthening our clients’ positions in the market. Our solutions are convenient: they allow for all types of transactions to be carried out from a mobile device, integrate with international payment systems, and transfer funds between international settlement accounts. Take a look at our projects in the field of FinTech.