(The Next Hint) - The word “Fintech” is an amalgamation of two words, finance, and technology. It’s a broad term that refers to technology in financial services. The fintech sector encompasses banking, payments processing, lending, investments, insurance, and other areas. Fintech solutions are changing how businesses operate and how consumers manage their money.
FinTech’s are pushing the envelope on how businesses operate and consumers manage their money. The future of fintech is changing how companies use and how consumers manage their money.
Artificial intelligence & machine learning
AI & ML can help make better financial decisions, predict spending habits, improve security, handle tasks more efficiently and even offer relevant banking advice based on transactions history. The big players in future finance have introduced solutions, including chatbots designed to answer frequently asked questions about product offerings or client inquiries.
They also offer tools for accountants to crunch data intelligently to give accurate tax returns. In addition, some smaller fintech’s are using AI and ML to help clients make better financial decisions, predict their spending habits, improve security, and offer relevant advice.
P2P lending
Peer-to-peer (P2P) lending is a hot trend in fintech right now. Through peer-to-peer lending, people can lend money directly to borrowers without going through a traditional bank. It’s a disruptive force challenging the status quo because it gives people greater control over who they lend money to and increases transparency.
In addition, smart contracts are being used by some P2P lenders and other services such as grading borrowers based on their credit risk or even helping them set up automatic repayments, alerting them when payments are due.
Blockchain-based solutions
Blockchain technology could significantly change how financial institutions conduct business by making transactions more efficient, transparent, and secure. For example, allowing records of transactions and transfers to be kept in one place speeds things up and reduces costs for businesses like banks and stock exchanges.
Cross-border remittances too can benefit significantly from blockchain because it offers instant transfers at a low price between different countries, cutting out the middleman such as Western Union.
Cryptocurrencies & digital wallets
Forget carrying cash. Transacting with cryptocurrencies and digital wallets is becoming more accessible than ever. Smartphones can make payments or transfer money instantly without having to go through a bank or any other financial institution. Transactions made in cryptocurrency are secure and instantaneous because they happen peer-to-peer.
There’s no need for a central authority like a bank which makes it more efficient and cost-effective. The growth of eCommerce has contributed to this growth, with developers offering digital wallets designed explicitly for intelligent devices so consumers can pay for goods using their smartphones. The future of fintech when it comes to this aspect of commerce is bright.
Mobile banking apps
One of the biggest fintech trends for the future of asset management is the rise of mobile banking. The traditional model where someone visits a branch and speaks to someone face-to-face, let alone wait in line, is fast becoming obsolete thanks to mobile apps.
As a result, banks and other financial institutions see tremendous benefits by offering their customers mobile options because it’s convenient. Users can access their accounts anywhere and anytime using their smartphones or tablets.
Insurance tech
There’s still room for improvement in claims processing regarding insurance tech because it tends to be very manual. Everything from submitting claims, processing them, approving them, and even rejection letters can all be handled more quickly with the help of technology such as Robo advisors, which use analytics & AI rather than people.
There are several startups in the insurance tech space currently, with some already having a significant impact on this industry and disrupting the status quo.
Fintech in education
When it comes to education finance, parents play an essential role in saving for their children’s college education. Thanks to technology, fintech is making savings more convenient. They’re also introducing Robo-advisors, which look at a portfolio and offer specific advice based on past account history.
Services like these make it easier for users to invest or save for retirement without any prior knowledge of investing. In addition, it simplifies complex tasks like diversifying investments across different asset classes and provides actionable investment advice in real.
Fintech in healthcare
The traditional process of applying for health insurance can be especially challenging for people with pre-existing conditions where they end up paying more due to the high risk associated with their medical history.
Fintech solutions are making this process easier by allowing users to compare plans & prices online rather than visiting several offices. It also speeds up the claims process since it’s much simpler when all that is required is a smartphone rather than scanning paper documents or uploading them onto a website.
Moving money overseas
Depending on the bank and the type of service someone is using, it can cost a lot of money to transfer money overseas. However, with fintech, there are services like TransferWise, which allows people to exchange currencies at mid-market rates with minimal fees by avoiding exchanges & local banks. In addition, it’s faster than using a regular bank, where transfers can take days if they even go through at all.
Keeping an eye on financial data
Another way fintech is also making life easier for consumers is by giving them more freedom over their personal information, thanks to decentralization. Now, rather than having one company own all financial records, a person can have complete control over where the data goes because every transaction is recorded in a distributed ledger.
Blockchain technology is at the heart of this trend, and it has the potential to change everything from real estate to banking and even voting in elections.
Conclusion
Fintech is doing more than disrupting the status quo by actually making financial services accessible to everyone. The traditional process for applying for loans, getting fired from a job, or even transferring money overseas can be challenging compared to what fintech offers.
From new ways of investing & saving money to automated claims processing and simple mobile apps, this industry does it all. It is constantly growing as well as gaining traction worldwide.
By Mike K. Watson
February 21, 2022
