The modern digital world is constantly developing. It is difficult to overestimate the role of the financial technology industry in global business growth. It is remodeling the traditional market and presenting countless opportunities to companies of any size around the world.
In this report, we will present a brief analysis of fintech industry development in 2020.
An overview of the fintech industry in 2020: main trends
2020 has been a challenging year for the world economy, as it was full of failed expectations and unpredictable events. It took much effort for a business to withstand the covid-19 crisis. The increasing tempo of changes is evidently the greatest power in the financial technology sector. However, it can cause creations as well as destruction in some cases. This article contains a set of main tendencies of the fintech sector, which companies have to use to survive.
Fintech and Banking
For a long time, banks have been the primary lenders and providers of other financial services for businesses. The fintech market presents new faster payment opportunities and, for this reason, displaces traditional banking institutions. Fintech platforms are providing all the necessary tools to become the providers of better customer experience. Many companies deal with software development for finance and banking spheres. Such platforms as PayPal have gained immense popularity and even replaced banks at a leading position in some spheres.
Presenting a New Business Model
Fintech opens more opportunities for small businesses and startups. Cooperating with fintech allows such companies to increase their profits. Fintech employs the latest technologies, such as mobile payments and advanced security. Small businesses can operate a direct to customer approach (D2C) with the help of fintech while presenting new products or services straight to potential customers. This has substantially reduced the average time of market entry, causing a severe setback for market leaders who historically provided subsidization for such companies.
Sharing Economy Development
This phenomenon has emerged in other spheres of life, like taxis, restaurants, etc. However, it has already started altering the financial sphere. For banking, what we call a sharing economy means remote access to the assets for owners. It also employs innovative information technology to directly link those who offer services to those who provide funds. In this system of sharing economy, resorting to banks as intermediates is unnecessary.
Blockchain will get things moving
Blockchain will continue being an essential part of technology in various financial institutions. Moreover, Blockchain and Fintech will stick together to involve more formal use apart from their vast popularity in the retail sphere. However, there might be some doubts about the longevity of such cooperation. Several predictions are saying it won’t last more than 3-5 years. However, this attempt to make technology more profit-oriented and use it for real-life financial strategy is already a big step forward.
Cyber-safety will be the main concern
According to recent market surveys, more companies are worried about the security of processing data. There are many potential cyber-threats in the fintech industry. The main of them involve:
- hiring unreliable third parties;
- the use of rapidly changing and complex technologies;
- increased threats of international information exchange;
- the use of insecure mobile technologies by customers;
- the expansion of the Internet of Things;
Unfortunately, the situation is not going to change in the near future. The market offers many beneficial technologies that can’t be applied because of data security matters. Cyber-safety threats are going to remain the primary security matter for most companies.
Achievements in Robotic technology and AI will launch the localisation wave
Artificial Intelligence and robotics are already widely used by the largest companies. They help solve the key issues, such as cutting expenses and lowering the potential risks. AI and robotics focus on a specific combination of technologies, such as social and emotional intelligence, language processing, rational thinking, physical sensors, etc. It is going to reach much more than the simple replacement of bank staff. They will be able to perform more complicated operations simultaneously. Developers should consider this to make their products competitive.
Digital technologies will predominate
E-commerce has become a new normal in our daily life. It has led to a significant rise in the effectiveness of sales. Its technologies are capable of analyzing data and customers’ purchasing patterns. The new wave of digitalization is about to strike the fintech sector through many of the same indicators: divided teams and costs, resources to improve the digital standards. It will result in advancements in the spheres of insurance, mobile payments, asset management, payment confidentiality, and security.
To sum up
Fintech is a great brand-new technology helping companies of any size to analyze and manage the gathered data. Therefore, businesses require lower operating costs and cover more customers’ needs. These tendencies will prevail in the fintech sector and help many companies survive the post-crisis period. However, it may lead to destruction in certain spheres, such as data security in financial services. It presents lots of challenges to the traditional financial ecosystem, where being oriented on customer needs is essential to survive.