From advancements in bookkeeping to the development of cryptocurrency and digital cash, financial technology (fintech) is all around us. We’ve already defined Financial Technology (FinTech) and its benefits. It has now become a broad term. It now applies to a diverse range of activities. Fintech refers to the incorporation of technology into the offerings by financial services companies to improve their use and delivery to consumers. It is an integration of finance and technology. It aims to revolutionize traditional ways and making Fintech as Future of Financial Services through financial service providers in the business.

FinTech Examples:

One example of fintech would be the introduction of mobile wallets like JazzCash in Pakistan. Making it possible to make payments online without having to go physically to a bank. Moreover, going through a time-consuming and human interaction-based process. Another great example of fintech is Robo Advising. It makes it possible for people to invest in portfolios without bearing a financial analyst’s expenses. Robo Advisers is a class of financial advisers. It provides digital financial advice based on algorithms while minimizing human interaction. They suggest the portfolios that a user should invest in based on specific mathematical formulations. Their ease of entry, low cost, and ease of use make them particularly attractive amongst entry-level investors.

FinTech Startups:

The most popular fintech startups companies are the one which challenges the conventional ways of providing financial services. They do it by making offerings that are less cumbersome and more efficient in their delivery to the consumers. This is achieved by using technology in the provision of these services. This increases the speed of delivering them. Moreover, it cuts down the costs associated with providing those services such as is the case with Robo Advising.

Talking about the fintech landscape, most of the fintech startups originate in North America. while Asia is the second-largest producer of these fintech startup companies. The users of fintech can broadly have four main categories:

1) B2B for banks and

2) their business clients

3) B2C for small businesses

4) consumers

The recent Coronavirus pandemic, also known as COVID-19. Which has taken the whole world aback, appears to amplify the need for fintech. With people stuck in their homes, avoiding human contact, and going outside. The use of technologies such as fintech, which allows people to work remotely with minimum to no social interaction. It seems to have spiked. It would not be wrong to say that coronavirus may act as a catalyst for fintech.

Future Of Financial Services

Like any other technology, fintech also faces regulations. Financial services are one of the most regulated segments throughout the world. The incorporation of technology into these services has raised various concerns about the future of financial services. These concerns have, inevitably, called for tighter regulations. One such concern is hacking. Whereby one individual or a group of individuals, using their technical expertise, breach another indiv1idual’s or group’s system or computer to gain unauthorized access to data. An instance of this is the hitting of the world’s third-largest fintech, Finastra, by ransomware as per the company’s statement on 20th March 2020.

Fintech companies have now established themselves as industry leaders with the potential of making money management easier than before while also creating an even more effective paradigm for the trade and financial services to take place in.

Financial Service Providers

Fintech companies have now established themselves as industry leaders with the potential of making money management easier than before while also creating an even more effective paradigm for the trade and financial services to take place in.
 
Fintech has also enabled financial service providers and member firms to explore newer markets. To increase their customer base by gathering consumers from places that they had not really reached before. Moreover, with the access to such under-banked and unbanked consumers, these fintech companies have been able to not just reach markets. But also capitalize on the untapped potential offered by these sets of consumers.
 
It’s not all rainbows and daisies for the fintech industry though. Since many businesses have also resisted the change and raised their concerns regarding the drawbacks that might come with the incorporation of fintech into everyday life.
 
These traditional financial service providers have maintained an aura of dominance over their demographics for the longest of times so for them to suddenly shift to an entirely new mechanism. Or incorporate different strategies is something definitely not in line with how they use to do work.
 
This is why many organizations in the west have been a little slow at accepting fintech as part of everyday life but have slowly over time come around to incorporating it into their work. So needless to say, despite all the reservations or the slow pace. Everyone is slowly coming on board the “fintech express”.

Financial Services Business

Fintech(Future of Financial Services) has established a path of disruption that has slowly but surely taken over the traditional financial models that have existed previously. With this path becoming more commonly traveled upon. There have been a few business models that have showcased the potential that the world of fintech holds for the financial services industry. Through the inclusion of emerging technologies, the fintech industry has become home to a variety of rather successful business models.

Alternative Insurance Underwriting

In the current situation, two individuals that share the same physical attributes (weight, height, history of usage of cigarettes/alcohol) will be giving the same life insurance premium because based on patterns, they are quite inseparable.
 
However, what if one of them turned out to be a health freak. While the other was nothing more than a couch potato who possessed a higher risk of contracting diseases such as diabetes for instance?
 
Since risk premiums do not account for qualitative factors. There exists a need to incorporate computing mechanisms that can look at alternative data points such as social signals, lifestyle, and medical history. This, coupled with sentient self-learning algorithms hold the potential to helping such companies better determine their insurance delivery patterns and provide specific conditions for each consumer/customer.

Payment Gateways

A payment gateway refers to platforms that help customers pay for a product or service through a seller’s website only. One can use their cards or digital wallets to pay for the products. But each payment will be accompanied by a company charge that can sometimes even exceed the cost for the product that the consumer is buying.
 

However, fintech is slowly also transitioning into retail banking by integrating all of these payment methods into applications that are affordable and convenient for both merchants and consumers. With such applications, there would be no need for individual payment methods.  Instead, everything can be under one single level.

What Are The Top Digital Payment System Technology Trends?

Asset Management

Big data is a giant that has slowly become a mainstay in the world of business. Its integration with fintech has enabled it to expand even further.
 
Buying stocks or mutual funds is something that almost everyone wants to get in on, but the recurring commission fees are somewhat of a hurdle that makes many hesitant to make their investment.
 
Fintech has hoped to counter this concern by providing investors to trade for free in exchange for their data. All of this data is streamlined into big data whereby it is available by high-frequency traders and businesses to influence the price of the asset.
 
Despite maybe paying a slightly higher price. The investors can save up a considerable amount of money by not having to pay the exuberant commission fees.

Data Transaction And Management

We had oil in the past, and now we have data. The one thing that is crucial to almost anyone and everyone that wishes to survive in this world.
 
Due to the massive potential that data holds. There is obviously a need for better management of it. Since it can give insights into the particular needs and wants of the customer.
 
Seeing the massive potential that this holds, Fintech startups in the transaction delivery space are creating products that can help garner consumer data that can be transferred and studied further to understand consumer ability to pay premiums, invest in real estate, buy funds, etc.

Conclusion

So, what exactly we expect from fintech in the future or the Future of Financial Services? Well, it is reasonable to believe that the traditional monopoly of banks appears to be short-lived as people start getting used to tapping their way to making every payment, transferring funds, seeking financial advice, etcetera. Digital payments are gaining popularity amongst users because of the ease they offer. It is also reasonable to expect that institutions that do not incorporate technology into their operations will be falling behind, as a higher number of consumers start prioritizing their ease and comfort at the expense of the conventional ways of doing things.