The financial technology (fintech) sector has witnessed many advancements in areas such as wealth management, retail banking and payments. The latter, especially, has been the focus of upgrades and improvements by a host of established players and new entrants, mainly because it’s the most frequent daily operation for providers. Additionally, payment firms that can build up the most engagement with customers in this area can find it easier to transition to other services such as credit and money management.
From a data perspective, the growth of fintech has been remarkable. In 2019, more than 60 percent of consumers worldwide used a fintech platform, while the global payments market grew by hundreds of billions compared to just a few years prior.
Indeed, fintech companies and entrepreneurs that have invested in the right areas have found success. Razi Salih, a businessman with years of experience in the fintech sector, knows that the next crop of success stories will come from those who wisely capitalise on the emerging trends of 2020 and beyond.
Machine Learning and Artificial Intelligence
The continued development of artificial intelligence (AI) and machine learning capabilities looks to make its way into the fintech sector. Already, recognised financial authorities such as the Financial Conduct Authority (FCA) and the Bank of England understand the potential for innovation these two fields offer. Together, these organisations have established a forum that will explore the use, impact and safe adoption of these technologies in the UK’s financial services sector.
The rise of digital banks that cater to tech-savvy customers is expected to continue, with analysts observing that digital banking might be the new norm in years to come. Digital banks have found success by offering convenience and intuitive tools to their customers, qualities that have become vital in the social distancing era. While legacy brick-and-mortar banks will continue to exist, more and more people will embrace digital banking for at least some of their banking needs.
Open banking, also known as PSD2, is a set of regulations that allow third-party technology and fintech companies access to banks’ customer data, provided the customers grant permission. One of the requirements for this set of regulations is Strong Customer Authentication (SCA), a security measure intended to reduce fraud in payments by introducing multi-factor authentication.
While the focus for many banks will be meeting the regulatory milestones, there are opportunities to build revenue-generating applications and features with this data that can give established banks an edge over challenger rivals.