The FinTech industry is one of the fastest growing and paced industries around, and it’s changing the financial services industry as we know it daily. Banks and other financial institutions are increasingly developing strong customer-centric models that deliver an overall better banking experience for everyone, and they’re using FinTech to get it done.
From personal digital assistants, saving and investment tools, fraud mitigation, payment processing, and more, the FinTech industry is responsible for some of the most innovative and intuitive ways humans interact with technology that truly make their lives easier.
Leading FinTech Industry Trends
With its constant evolution, the FinTech industry is one of the most interesting industries—each year revealing new windows into the future of the banking industry around the world. This list covers the top FinTech industry trends banks and financial institutions can expect to lead the conversation well into 2021 and beyond.
1. Paycheck Disruption
Some FinTech firms are working to empower consumers with flexible payday options, so they can get paid earlier than their regularly scheduled payroll without payday loans or predatory loan businesses.
Apps like Earnin let consumers tap into funds in advance of their official payday; they don’t have to wait for payroll to have access to their paycheck. Giving consumers this kind of flexible access to income helps contribute to their financial wellness by giving them more control over their finances. It also helps businesses retain talent since employees don’t have to wait on payment processing to get to funds from their paychecks.
2. Artificial Intelligence & Machine Learning
Artificial intelligence (AI) and machine learning remain a top FinTech trend as one of the main influences behind the rapid growth and development of new technologies in the FinTech industry. It helped start the growth, and it’s not stopping anytime soon.
FinTechs can leverage AI to develop chatbots that act as personal digital assistants to help customers complete simple transactions like viewing their account balances, making payments, or getting personal savings or investment advice based on a customer’s transaction history.
Through machine learning, the AI chatbots only get smarter with time and each inquiry they complete for consumers. In the long-term, AI chatbots will be able to complete more and more complex commands for customers. Using conversational AI, FinTechs can also offer their customers a digital assistant that’s as authentic as a human operator that follows brand voice, and help improve customer engagements with a bank's financial product offerings.
Artificial intelligence in banking can also improve financial literacy with users. Many digital assistants are able to provide personal financial advice to users, who in turn get to learn more about their own finances, the saving and investment opportunities available to them, and banking industry concepts they may have not been aware of before.
3. Digital Banking
The growing popularity and adoption of digital banking has empowered banks to provide a growing number of real-time and same-day banking services through multiple online channels at once. This trend away from brick and mortar banks and in-person exchanges to do their banking online shows the type of experiences they’re looking for when they decide who they bank with.
If a bank or financial provider lacks a digital banking alternative for customers to login and complete transactions on-demand and on the go, they’re ignoring the biggest signal on how to develop a more customer-centric approach to banking services.
4. Big Data and Open Banking
Access to Big Data on the open banking network gives financial institutions the ability to provide customers with personal and actionable insights. While following stringent security and compliance protocols, banks can work with financial data aggregators like Envestnet | Yodlee, and use enriched data to help give customers personalized recommendations based on trends and spending patterns. Banks are also able to make more relevant product and service recommendations to potential customers using segmentation so they’re only targeting the highest qualified leads.
Some FinTech firms look beyond big data to provide the most relevant services to their customers. They’re looking at transaction histories across multiple industries. However, none of these niche insights have the same impact as big data that has been rigorously enriched.
In light of open banking, PSD2 regulations and increasing concern about data security, regulation and security in the FinTech industry are going to continue to be a leading trend. Security remains a high priority for customers, and they won’t bank with financial institutions who do not clearly communicate and show how they’re committed to protecting their financial data.
From risk management, fraud mitigation, account and identification verification tools, there are a number of products and services financial institutions can offer customers to offer a highly secure digital banking platform.
Envestnet | Yodlee handles data responsibly to protect our customers and their consumers from fraud and misuse. We are open banking ready and offer industry leading practices for data security, regulatory compliance, and privacy for accessing and handling personal consumer credentials and financial data.
The majority of data we gather is through contracted feeds with financial institutions we partner with to gather data responsibility and with respect for their operations.
6. Blockchain & Cryptocurrency
Around the world, having direct access to a bank account can be costly or just downright impossible. This helps explain the explosion in growth and popularity of blockchain and cryptocurrencies that allow people to send and receive digital money at little to no cost with minimal regulatory oversight. Many leading technologists have rigorously tested and embedded protocols to ensure blockchain and cryptocurrencies are increasingly secure ways to complete digital transactions.
In the coming years, Facebook is expected to roll out the Libra project, the social network’s own cryptocurrency and P2P platform that will allow users to send digital “libra” coins to one another without the need for a bank account or credit card. With over 2 billion active users on Facebook already, the rollout of Libra will have a lot of eyes on it as it could signal a significant shift in consumer behavior to embrace other forms of digital currency moving forward.
7. Robotic Process Automation
Robotic Process Automation (RPA) is an emerging trend about to make a splash in the FinTech industry. RPA involves automating existing processes to eliminate the need for human touch points so more time and money can be spent on higher value tasks. Apart from the upfront costs to implement the technology, banks and financial institutions can benefit from RPA technology with lower human error rates and better customer experiences.
RPA technology can be applied to all rule-based, structured, and straightforward actions, including processes like viewing account information, application status, and balance information. Bank operators are enabled to respond to customer requests in real-time with reduced turnaround so they’re able to help a greater number of customers get the information they’re looking for.
What Do These Emerging Trends in Financial Services Mean for the Industry?
With so much competition out there, banks, particularly smaller banks, shouldn’t risk delaying implementation of FinTech applications and ultimately, fail to meet increasingly high customer demands and expectations. This doesn’t stop at just providing helpful services to customers; it’s all about building relationships and loyalty as customers journey towards financial wellness.
People remember who was there to help them make their goals and aspirations possible, and a reliable and on-demand partner is always with them thanks to mobile banking apps that empower customers to complete banking transactions all over the world at their fingertips.
This shift from a product-centric model to a customer-centric banking model has happened quickly, ,and the tech evolution of digital banking solutions isn’t going anywhere. Banks and financial institutions still have time to really hone in on their operations and find the touchpoints with their customers with the most opportunity to innovate and deliver truly satisfying customer experiences in one of the most important areas of a person’s life - finances.
How Evestnet | Yodlee Keeps Your Company at the Forefront of FinTech Trends
Envestnet | Yodlee is the industry leader in data aggregation and data analytics. Our analytical and technological capabilities are always created for the future of banking and FinTech. The driving force behind our solutions is to help shape that future by providing innovative tools for banks and financial institutions to empower the financial lives of their customers. Contact us today to learn how we can help you stay ahead of the curve.