Technologies that will change the fintech sector in 2020

Technologies that will change the fintech sector in 2020

Within a short time, FinTechs have become well-respected and established new players among traditional financial institutions. The newcomers in the industry often focus on individual sections of the value chain and usually place the user experience or efficiency gains at the center of their work. While they were initially seen as competition, FinTechs are now increasingly seen as cooperation partners, from whose know-how you can benefit.

"FinTechs are a new category of market players in the industry of finances. They use innovative technologies to maket the product range of traditional financial institutions more customer-friendly and improve them. "

We took a closer look at seven of the financial industry's most essential areas and explain how fintech startups are turning them around. You will also find that not only new startups turn the financial landscape upside down, because well-known financial companies are also paving the way into the future.

Banking services

Traditional banks have entered the digital age in recent years with internet banking and payment apps for smartphones. These developments have saved time and money for bank customers. But this has also changed a lot for the banks themselves. Not to be unfounded, the digitization of banks means that less staff is needed. On the other hand, financial institutions need more service personnel to deal with customer concerns online and on the phone. These are the changes that, as an outsider, can still be perceived quite easily. But of course, there have been many other changes.

Of particular note here is how banks process investments for bank customers and in their interest. A bank employee no longer makes most of these investments, but they are made by computer programs that use algorithms and large amounts of data to make purchasing decisions. This not only makes investing easier for the Bank, but also for you as a private individual. Because even if you may not have the programs and resources of a large bank, you can now resort to tools that make investing a child's play.

The selection of smartphone apps for investing in the stock market and other sectors of the financial market has grown steadily in recent years. You can find apps to help you buy stocks and do any other activity in the financial sector. For example, if you want to learn how to trade, you will find a rich and helpful selection on the Internet or in the App Store you trust. This gives rise to opportunities that seemed impossible a few years ago.

The collaborative economic opportunities

In 2020, citizens will continue to need the services provided by the traditional financial institutions, but perhaps they will no longer turn to a traditional banking system. The so-called collaborative economy promises to transform the financial sector as well.

For example, in this case, we would be talking about the application of IT to efficiently connect those who have capital with those who seek financing, instead of going to the intermediation of a bank. In the United Kingdom, the United States and China there are already private lending platforms in which people who need money and investors come together, who want to lend it to obtain a return; likewise, the fixed interest rate is given by the level of risk determined by the platform itself.

Money bonds in the digital age

While three parties were required for money bonds in the past, the intermediary has now become superfluous. Because both peer-to-peer bonds and crowdfunding platforms make it possible that money bonds can only be processed between the lender and the recipient. Blockchain technology will ensure that this development continues in the coming years. Banks and insurance companies are decoupled from the money bond process, and the whole process is cheaper and faster for both parties. While the loss of the intermediary means that the two parties have more control over the process, the security factor is becoming increasingly important.

How do you, as a lender, know that you are not transferring your money to a fraudster? This is where the solutions of various fintech companies come into play. The solutions usually include the processing of tons of data and applications that are built on the Blockchain. This allows the lender to see how safe their investment is and how trustworthy the other party is within minutes. While this type of risk management would have included many documents in the past, today, all vital information is only a mouse click away. However, the biggest winners in this development are the people or institutions that borrow money. This is because there are opportunities for transactions that a conventional bank may not have carried out in the past or today.

Robotization and artificial intelligence

Everything shows that the application of robotization and artificial intelligence in the financial sector will evolve in a similar way to what was the appearance of ATMs. In the next five years, there will be a leap in using this type of technology: from being used in specific applications to being fully integrated into a day-to-day and used in almost all the financial institutions' activities.

Insurance services

Just like all other financial sectors, the insurance sector has spawned tons of new applications and programs. For example, this includes apps that make it easier to take out insurance and find the right insurer for individual life situations. And all of this can be done and regulated online. As a result, customers save time, benefit from transparency, and spend less money.

While the end-user benefits the most from developments in the insurance sector, insurers and certain parts of this industry are hard to keep up with. Sales jobs, in particular, suffer from the digitalization of the insurance industry.

As you can see, the digitalization of the financial industry is progressing inexorably. The big winner was, is, and will continue to be the end-user. The opportunities that many fintech companies will open up will result in unprecedented transparency in a previously reserved market for only a few participants. This does not mean that companies, banks and financial institutions do not benefit from the development. But the changes in the financial sector should above all be welcomed by customers with open arms.

Blockchain

According to studies, 56% of the financial sector directors recognize the importance that Blockchain will have in their businesses, but 57% do not know how to respond to the challenges it poses. The two main advantages that this technology is attracting attention is the considerable reduction in the cost of banks' infrastructures and internal platforms and that the applications of this technology are practically limitless, ranging from financial transactions to automation of contractual processes.

Internet of Things and Cybersecurity

Cybersecurity is already amongst the main concerns for institutions of finances. This situation is likely to increase in the years to come. Its importance rose as a consequence of the fastly growing popularity of the IoT, especially in the payments, commercial Bank, and insurance areas. The study estimates that in 2020 there could be 25,000 million devices connected to IoT.

Everyone should prepare and be ready for everything that is happening and what will happen in the coming years. No doubts that the technology will take over all sectors, and no one can escape these significant changes.