Fintech i.e. financial technology industry has changed the way of banking, investment or buy insurance policies for consumers in last couple of years. It has made financial products easily available and financial transactions more convenient for its users. Along with this, it has also brought several cost benefits such as investment management, mobile banking, fund raising, among others to the customers.
In the past couple of years, some of the following trends experienced by the fintech industry:
Trend-1: Rising adoption of digital wallets and mobile payments accelerating the growth of fintech industry across the globe:
Now a days, the popularity of using digital wallets such as Amazon Pay, Paytm, Apple Pay and similar services is on rise especially in middle age population due to the ease of use. In addition, advantages including convenient way of use, fast and secured payments, which led to increase the adoption of financial technologies and drive overall growth of fintech sector across the globe. Due to this, payments and transactions using mobile devices and internet is gaining traction in various countries.
“In 2019, one of the leading advisory firms, Ernst & Young Global Limited conducted a survey, of 27,000 consumers across 27 markets, and analyzed that more than 64% of the world’s digitally active population has used at least one fintech service. Moreover, China and India surpassed this benchmark by registering 87% fintech adoption rate. Along with that, Russia and South Africa ranked second, with 82% adoption respectively. On the other hand, France and Japan are tied at the low end of the spectrum with only 35% fintech adoption in 2019.”
Trend-2: Corporate agreements, and M&A is a new way of growth for fintechs:
In 2019, fintech industry witnessed a major spike in the number of strategic alliances such as mergers & acquisitions, and partnerships, between fintech startups and large financial corporations to strengthen their product portfolio, global presence, with the exchange/ acquisition of technologies, and customer base. Moreover, these increased collaborations between various fintech companies, earned the industry a spot on the 2019’s most talked-about industries.
“Global fintech investment in 2019 was recorded at ~ $137.5 billion across 2,693 deals. Two deals drove a very significant proportion of this investment: the $42.5 billion acquisition of Worldpay by Fidelity National Information Services (FIS) and the $22 billion acquisition of First Data by Fiserv.”
Top 4 Upcoming Trends in Fintech Industry
1) Sharp growth in contact less payments as an effect of COVID-19 pandemic:
Many industries across the globe are paying a toll and faced major impacts due to COVID-19 such as increased social distancing need, disrupted supply chain, challenges with work from home facility, among others. Similarly, fintech did not get complete exempt, however, the digital transaction segment of the fintech industry is expected to experience the mixed impact of the pandemic. Individual services such as online money transfers and payment collections are likely to grow. However, an overall downturn in other businesses of fintech industry is anticipated due to expected decline in annual revenue, workforce management issues including employee layoffs and increasing attrition rate, etc. Some of the recent examples includes;
- The companies such as Mastercard and Visa have cut their predictions for revenue as the spread of coronavirus (COVID-19) is expected to pull down the global economy
- Many leading companies including Infosys, TCS also faced restrictions in terms of talent mobility or overseas travel of its employees for assignments, this could materially impact the profit over the next financial year
- Equity markets around the world also experienced a decline due to the widespread fears surrounding the contagious coronavirus.
- The world is now facing a global health emergency which threatens major disruptions to supply chains and global trade.
While on the other hand:
- To support the fact of social distancing, most of the countries are also encouraging the use of contactless payment to prevent the spread of the virus any further from the exchanging of money
- According to a research published by deVer group, coronavirus surged the usage of fintech app by 72% in Europe
- Mobile banking has seen exponential growth in the number of interactions and transactions taking place through mobile devices
- Companies focus on expanding its mobile banking capabilities to target growth opportunities due to the increased adoption and ease of use
2) Personalized services using big data, AI:
With AI being omnipresent across multiple channels, fintech companies are looking to combine the power of both AI and big data to deliver personalized services to consumers in terms of one-to-one, and focused banking.
3) Focus on blockchain for improved safety and security:
Financial institutions have always been eyeing optimum security and safety and with the onset of Blockchain. Besides, it is also revealed that the investments in blockchain are anticipated to hit $6,700 million by the year 2023.
5) Focus on robotic process automation (RPA):
In the year 2020, more companies will be investing to deploy RPAs into their systems to optimize operations and make service delivery more effective. With their implementation, companies can further make their data aggregation and processing more streamlined, offer better customer service, find and fix loopholes in workflow and take care of other tasks like assessment of risk, managing compliance process, among others.
Thus, despite of rising need of advanced technology, increasing transactions, and growing fintech adoption, there are several challenges such as entry of new players, intense competition, demographic challenges, shifting economies, and risk of cybersecurity are continued to be the major threats for the industry which can fluctuate the growth.<p class="has-text-align-justify" value="<amp-fit-text layout="fixed-height" min-font-size="6" max-font-size="72" height="80">Hence, the industry is expected to witness increasing acceptance and advancements, though some of the barriers will make the ride bumpy for the industry and can limit its growth in the coming years.