The FinTech industry is one of the fastest-growing technology sectors reaching a record high of a $7301.78 billion valuation in 2020. This figure is almost triple the evaluation for 2016 ($2767.01 billion).
Yes, there is no doubt that the industry faces challenges such as these:
- Outdated technology
- Regulations – regulators are not taking any chances
- Security of data
- Consumer trust
Regardless, technological disruptions are reshaping the financial sector, with more and more FinTech startups spearheading these innovations.
And your business can latch onto this.
Also, keep in mind that financial consumers are drifting online for their needs such as insurance, credit repair, and so much more as a result of the pandemic.
This action, combined with startups popping everywhere, stipulates the necessity for improved technology integration. Not just any incorporation but product or service features that:
- Slowly vanquishes the challenges facing the industry.
- Keeps your business relevant.
- And stay a step ahead of the competition.
This is what we are talking about.
7 FinTech Trends & Exactly How Financial Service Providers can take Advantage
Make Use of RegTech
The financial industry is bombarded with regulations. There is a need for this due to the peculiarity of the services your business offers. We are talking about dollar bills here. Lots and lots of it.
However, the rate at which new regulations pop up every day is drowning FinTech startups. This is where Regulatory Technology comes in. RegTech focuses on software designed to facilitate regulatory requirements delivery more efficiently.
The technology is powered by artificial intelligence and Big Data to help improve compliance with financial regulations in real-time.
Hence, by relying on RegTech businesses, financial service providers are not caught unaware of regulations that may crackdown on their operations.
Besides, RegTech can provide your business with real-time risk management strategies and analytics that will improve decision-making.
CeDeFi Integrations - Take a Pinch from DeFi
Now, if you haven’t heard about the DeFi, you may be living under the bridge or something - no offense. Decentralized finance has literally torn the financial industry apart.
Despite the huge risks involved, as a result of its association with the cryptocurrency market, financial service providers need to take a closer look at DeFi.
Reports show that as of October 2021, roughly $99 billion is locked in decentralized finance protocols. Keep in mind that this service started gathering momentum in 2021. Let the insanity of this growth sink in.
DeFi combines financial services such as:
- Saving and investing
- Exchanges
- Lending
- Payment applications
All of these come to operate not under a central authority, but as its name suggests, decentralized. However, DeFi goes beyond this decentralization to using smart contracts that cut the cost of middlemen and amplify trusts. This is because the parties involved have equal control.
Besides, DeFi fixes many problems associated with CeFi (centralized finance), such as:
- High fees
- Slow transfers – argh!
- Eligibility – even 13-year-olds are running their transactions independently on DeFi protocol
- Internal crisis
- Transparency
- Low capital
Can you see how disruptive this technology is? It fixes not one or two problems but more than 5 at a go! DeFi gets its peculiarity because it is being run on the blockchain platform. This will inarguably change the face of finance. What to do?
CeFi and DeFi integrations. That’s it!
As you can see, DeFi is just getting started. However, it needs centralized financial services to move towards a higher trajectory and maintain its dominance. Its technicalities, for one, are too geeky for the mainstream. And consumers need someone to guide them most of the time.
Embrace DeFi to fix these problems. It’s like killing two birds with one stone.
Companies like Unizen, CoinZoom, and Nexo are already taking drastic steps by establishing exchanges that use both CeFi and DeFi functions.
FinTech as a service – FaaS
I mean, there are BaaS and SaaS. So why don’t we add another one? Yes, there is vast adoption of FinTech services. However, these service providers are operating in isolation.
You have your means of payment, wallet, and everything that is all about your value offering. Of course, this action improves branding, but it could be suffocating for consumers.
A consumer has to have a saving app, mortgage app, investment app, and every other financial need out there. What about if all of this could be one application? Can you see the difference? The efficiency? The cost reduction? The list goes on and on.
Through Application Programming Interface, API, integrating these FinTech applications is possible. Akurateco, a Netherlands-based cashier platform, is a good example. It brings together multiple payment solutions on a platform available for businesses. Rapyd is another good example.
FaaS arguably takes the FinTech industry a step higher. Consider taking advantage of this trend. Offer your API to other financial service providers in a one-size fit all system.
WealthTech – Money Management Made Easy
DeFi brought in a new wave of consumers looking to manage their finances decentralized and online. More FinTech companies can take something for this. You see, during the 2020 lockdown when businesses went remote, people needed platforms, not for a mortgage payment or to keep up with their bills but to manage their wealth.
Of course, the need had been there way before the pandemic, but the lockdown intensified this. FinTech Global reported $1.7 billion in funding for WealthTech businesses in Q1 of 2020. In the year 2021, the WealthTech sector is accelerating faster than before.
We have Robo-advisors, which are the most popular WealthTech, gaining more and more traction. These platforms use machine learning and algorithms to help investors make better financial decisions. Unfortunately, fewer people are finding the need to put a call through to a financial advisory institution. They prefer these Robo-advisors.
But here’s something more; experts predict that the use of Big Data and AI in the future will skyrocket WealthTech growth towards improved financial solutions.
WealthTech is making money management simple and, most importantly, convenient. Your business can embrace this technology by developing a WealthTech platform complete with AI to improve customer experience.
Investing in Cybersecurity
One of the major problems facing FinTech companies is the security of data. Cyber threats have damaging effects on a company’s reputation. This is the last thing your business needs. You don’t just lose a ton of money plugging the data leak. You also lose customers.
Forbes reports that businesses lose $2,900,000 every minute to cybercrime. The figure isn’t going down but increasing every year. This makes it a priority for every FinTech company.
One way to make your business and customers’ data more secure is to obviously upgrade your security measures. However, there is more.
Invest in threat response tactics.
Campaign to raise awareness among your employees.
Do the same for your customers.
So, it goes beyond investing in the latest security technology. Work with these three recommendations.
Insurance and FinTech Collaboration - InsurTech
Technology implementations are no doubt transforming the financial sector both in business operations and service delivery. However, not every business within this sector is taking advantage of this trend due to its challenges.
PwC pinpoints insurance companies as one of those businesses. As a result, they could dwindle out amidst the technological disruptions. However, there is a way out.
With only 43% of insurers claiming to use FinTech as part of their corporate strategies, a gaping hole needs filling.
Insurance companies can collaborate with FinTech providers to transcend into the InsurTech space that will allow widespread adaptation and catch up with financial consumers’ new eccentricity with technology use efficiency.
Latch onto Open Banking
Besides FaaS that allows for finance-related service integration, open banking offers another route. Open banking is the practice where banks collaborate with third-party financial services to improve customer experience.
Physical banks and FinTech service providers share customers’ financial data securely and among licensed partners through open banking.
Open banking works similarly to BaaS (Banking as a Service). However, with open banking, only consumer data is shared. Whereas, BaaS allows for banking functionality.
Through open banking, FinTech business provides a more secure platform to meet consumer needs. For instance, lenders can get more accurate data of a customer’s financial situation to gauge risk level and offer credit terms that benefit both parties.
And let’s face it, some customers still prefer the time it takes to go to a physical bank to get their needs sorted. However, with their details available to your FinTech business, you can offer propositions that will satiate them.
For 2022, invest in open banking by collaborating with banks that will perfectly complement your offering.
Here’s the deal, whatever trend is out there, you may still find your business behind. So you need to collaborate with a software developer who understands how the FinTech industry operates and the right tools your business needs to stay ahead of the curve.
Our team of experts has put together a list analyzing factors such as:
Familiarity with the FinTech industry, including how it operates and regulations to build software solutions in line with industrial demands.
Transparent process – You want to know what exactly they are doing to help your business improve.
A large array of updated solutions and customized technology innovations.
Prioritize business and consumer data security.
With this, we came up with a list of 3 FinTech software development companies that you should consider discussing these trends to get the perfect fit for your business.
Top 3 FinTech Software Development Companies Helping Financial Service Providers Take Advantage of Trends
1. Altoros Labs
Altoros Labs is one of the largest FinTech software development companies out there. Their wide range of FinTech solutions designed to improve your business functions and minimize costs shows their expertise.
This company currently operates from more than 5 countries to meet FinTech business needs in every part of the world.
Their goal is to help financial institutions and startups mitigate risks and stay ahead of the competition by developing software solutions, fostering collaborations between businesses (for BaaS), and integrating with third-party systems.
Altoros Labs can do this with their team of mid to senior-level dedicated software development experts who prioritize quality software and seamless integration with your business existing systems.
Their services include developing applications to foster:
- Digital banking
- Cards and payment
- Insurance
- Lending and Alternative Finance
- Investment Management and Brokerage
Reach out to this software development provider to get started with discovering the FinTech solution that is right for your business to be not one but two steps ahead in 2022 and beyond.
2. IdeaSoft
IdeaSoft is another leading FinTech software provider. This company aims to empower innovations by helping businesses like yours to build modernized technology solutions towards better outcomes.
Since its establishment in 2016, IdeaSofts has operated with representatives in 12 different countries even though they are based in Ukraine. With them, your business can work with a FinTech tool to scale your operations.
Their services include:
- Digital banking
- Financial planning
- Investment and savings
- Robo-Advising and Stock-Trading Apps
- Mobile Payments and Digital Wallets
- Lending and Crowdfunding Apps
- Cryptocurrency & Blockchain
- Accounting
Reach out to them here to get started with developing technology towards your business growth.
3. Techment
Here’s another software development company with a deep understanding of the financial sector. Their main objective is to improve business efficiencies and boost service delivery through customized digital solutions.
Techment can keep up with its objectives and the demands of the financial industry through a talent pool of full-stack developers, domain specialists, data scientists, and platform specialists. Experts focused on delivering quality services.
Techment provides software solutions for:
- Commercial Banks
- Mutual Fund Players
- Brokerage Firms
- Wealth Management Companies (Advisory)
- Investment Banks (Advisory)
- Payment Gateways
- Micro Lending Firms
Reach out to them here to get started taking advantage of FinTech trends in 2022.
The Bottom Line
Here’s the thing, the FinTech industry growth is just getting started. Why? Consumers’ preferences are changing. Most are prioritizing convenience over every other benefit. We saw that with the growth of WealthTech.
Suppose people start to get comfortable building wealth online, depending on the very complicated internet to manage their hard-earned money. In that case, businesses need to take note of this consumer behavior.
Get started by figuring out measures to ensure your business stays relevant in the FinTech space.