11 Top FinTech Trends to Follow

FinTech is undergoing a remarkable transformation. The latest projections reveal a positive trend within the FinTech industry as revenue is expected to hit $1.5 trillion by 2030. A combination of factors, including advancements in critical technologies like artificial intelligence (AI), payment options, and cybersecurity, is causing this forward momentum. 

 

The continuous development of AI empowers FinTech companies to offer advanced analytics, personalized financial recommendations, and enhanced risk assessment. As AI algorithms become more refined, they enable tailored solutions that increase customer satisfaction and loyalty.

 

What’s more, cybersecurity has emerged as a critical consideration in the increasingly digital world of financial transactions. FinTech firms now invest heavily in cybersecurity measures to safeguard sensitive customer data from the ever-growing range of cyber threats.

 

The FinTech industry is also revolutionizing payment methods, fundamentally reshaping how we conduct transactions. Today, developing countries are experiencing a surge in mega-deals driven by the vast untapped market of individuals who need access to banking services. This dynamic creates fertile ground for rapid growth and illustrates the industry’s varied trends.

 

Ant Financial, valued at approximately $150 billion as of June 2019, is a prime example of these trends. Ant Financial embodies the convergence of evolving technologies, changing payment methods, and the growth potential in developing regions.

 

FinTech Market in Numbers

 

 Here are some current FinTech statistics:

 

• The FinTech sector is worth approximately $179 billion. 
• FinTech industry investment has increased by 3.5x since 2015. 
• Venture capital investment has consistently topped $40 billion per year. 
• Global FinTech investment was $164.1 billion across 6,006 deals in 2022. 
• Payments remained the strongest area of FinTech investment globally in 2022, with US$53.1 billion in investment compared to US$57.1 billion in 2021. 

 

 

11 Trends That Shape the Industry

 

The financial industry is constantly evolving, driven by new trends that change the way you handle money. Let’s explore eleven influential trends that are currently shaping the financial landscape.

 

1. Central Bank Digital Currencies (CBDCs)

 

CBDCs refer to digital forms of national currencies issued and regulated by central banks. These digital currencies aim to leverage the benefits of blockchain and distributed ledger technology to enhance efficiency, transparency, and financial inclusion.

 

What Precedes This Trend?

 

Several factors have contributed to the advancement of CBDCs. For starters, the growing adoption of digital payments has highlighted the need for secure and efficient digital currency solutions. Blockchain and distributed ledger technology have also provided the groundwork for developing CBDCs, offering secure and decentralized transactional platforms.

 

How Does It Simplify Our Lives?

 

Introducing CBDCs has multiple benefits that simplify financial transactions. These benefits include:

 

1. Enhanced Transaction Speed: CBDCs enable instantaneous transactions, reducing the time required for cross-border transfers.
2. Increased Financial Inclusion: CBDCs have the potential to provide banking services to unbanked populations, granting them access to financial services.
3. Improved Transparency: By leveraging blockchain technology, CBDCs ensure transparent and auditable transactions, minimizing fraud and corruption risks.
4. Financial Stability: CBDCs offer central banks better oversight and control over the monetary system, preventing financial crises and ensuring stability.

 

2. Neobanks

 

Neobanks have emerged as a significant trend in the financial industry. These digital-only banks operate exclusively through mobile apps or web platforms, offering customers a modern and convenient banking experience.

 

What Precedes This Trend?

 

Technological advances have facilitated the growth of neobanks through the increase in the accessibility of financial services via digital platforms. In addition, changing consumer preferences have driven the demand for seamless and user-friendly banking solutions. 

 

How Does It Simplify Our Lives?

 

1. Convenience: Neobanks offer 24/7 access to banking services through user-friendly mobile apps. This eliminates the need for physical branch visits and lengthy paperwork.
2. Seamless Account Setup: Opening an account with a neobank is typically quick and straightforward, often requiring only a few minutes and minimal documentation.
3. Enhanced User Experience: Neobanks prioritize intuitive and user-friendly interfaces, providing a streamlined and personalized banking experience tailored to individual preferences.
4. Cost Savings: Neobanks often have lower operating costs than traditional banks, allowing them to offer competitive or fee-free services, such as zero-fee transactions or low foreign exchange fees.

 

3. Biometric Authentication

 

 

Biometric authentication is revolutionizing digital identity verification. It involves using unique physical or behavioral characteristics, such as fingerprints, facial or voice recognition, to authenticate individuals.

 

What Precedes This Trend?

 

Biometric authentication has made significant strides in recent years — for multiple reasons. The primary reason is the increase in illegal online activities, such as cyberattacks and identity fraud. It has therefore become necessary to take more robust security measures in order to protect data. Sensor accuracy and affordability have further enabled the deployment of robust user verification across all demographics.

 

How Does It Simplify Our Lives?

 

Biometric authentication offers several benefits that simplify our lives. These include:

 

1. Enhanced Security: Biometric authentication provides higher security than traditional methods like passwords or PINs. Since biometric traits are unique to individuals, it significantly reduces the risk of unauthorized access.
2. Fraud Prevention: Biometric traits are difficult to replicate, reducing the likelihood of identity fraud or impersonation. This ensures that only authorized individuals can access sensitive information or perform transactions.
3. Versatility: Biometric authentication can be implemented across various devices and platforms, including smartphones, laptops, and banking applications. This versatility allows for a consistent and secure authentication experience across multiple services.

 

4. Robotic Process Automation (RPA)

 

Robotic Process Automation (RPA) is a trend involving software robots or “bots” to automate repetitive and rule-based tasks typically performed by humans. These bots mimic human interactions with digital systems, enabling efficient and accurate execution of processes.

 

What Precedes This Trend?

 

The growing need to optimize processes and reduce costs in different industries has driven organizations to explore automation solutions, which has led to RPA’s advancement. The advancements in artificial intelligence and machine learning have improved the capabilities of RPA. This has made RPA more versatile and capable of handling complex tasks.

 

How Does It Simplify Our Lives?

 

Robotic process automation has simplified our lives in many ways, including:

 

1. Error Reduction: RPA eliminates human errors and inconsistencies since it follows predefined rules and executes tasks precisely. This improves the accuracy and reliability of processes, reducing the likelihood of costly mistakes.
2. Scalability: RPA allows organizations to scale their operations without significant additional resources. Deploying and scaling up or down bots based on demand is easy, providing organizations with flexibility and agility in handling workload fluctuations.
3. Improved Customer Experience: RPA streamlines processes, enabling faster response times and smoother customer interactions. This enhances customer satisfaction and loyalty, as customers experience quicker and more efficient service.
4. Compliance and Auditability: RPA ensures adherence to regulations and compliance requirements by consistently following predefined rules and procedures. It provides a transparent and auditable trail of activities, facilitating compliance audits and mitigating risks.

 

6. Green FinTech

 

Green FinTech is a trend that focuses on integrating sustainable practices and environmental considerations into financial technology solutions. It leverages technology to drive positive environmental outcomes and promote sustainable investments.

 

What Precedes This Trend?

 

Several factors drive the advancement of Green FinTech. The increasing awareness and urgency surrounding climate change and environmental issues have highlighted the need for sustainable practices across all industries, including finance. Additionally, regulatory frameworks and policies promoting sustainability, such as the Paris Agreement and various green finance initiatives, have created a supportive environment for the growth of Green FinTech. 

 

How Does It Simplify Our Lives?

 

Green FinTech offers several benefits that contribute to a more sustainable future. They include:

 

1. Sustainable Investments: With the rise of green finance technology, individuals and businesses can make informed sustainability-centric investment decisions. These investments go beyond mere profitability and align with one’s personal values regarding environmental protection, making a positive contribution to the green planet.
2. Carbon Footprint Tracking: With Green FinTech platforms, individuals and organizations can access efficient tools to closely monitor and analyze their carbon footprints. This offers a chance to make well-informed decisions toward minimizing carbon emissions.
3. Digital Sustainability: Green FinTech embraces digitalization and paperless processes, reducing the need for physical documents, hence minimizing paper waste. This simplifies administrative tasks, saves resources, and contributes to a more sustainable and environmentally friendly workflow.

 

7. Voiceprint Technology

 

Voiceprint technology is a trend that encompasses voice recognition and natural language processing capabilities to enable voice-based interactions and transactions. It leverages the power of voice assistants and smart devices to provide a seamless and intuitive user experience.

 

What Precedes This Trend?

 

The growing ubiquity of virtual assistant services — Siri, Google Assistant, Amazon Alexa — has increased our comfort level with speaking directly to our personal devices. This has ultimately fueled the demand for sophisticated conversational interfaces across diverse industries. 

 

Tremendous strides have been made in advancing speech recognition and natural language processing tools that underpin these systems. This has resulted in higher levels of accuracy in understanding user intents, translating into improved reliability & efficacy. 

 

How Does It Simplify Our Lives?

 

Voiceprint technology offers several benefits that enhance convenience. These are:

 

1. Hands-Free Operation: Voice commands eliminate manual input, allowing users to perform tasks and access information without physically interacting with a device. This is particularly beneficial when a hands-free operation is desired or users have limited mobility.
2. Personalization: Voice recognition technology can identify and differentiate individual users, allowing personalized experiences and tailored responses based on user preferences. This personalization enhances user engagement and satisfaction.
3. Safety: Voice commands can be used when manual interaction is unsafe or distracting, such as when you’re driving a car. Voiceprint technology promotes safer user interactions and reduces potential risks by providing hands-free control.

 

8. DeFi Apps

 

DeFi apps, short for decentralized finance applications, refer to financial applications built on blockchain networks that provide traditional financial services in a decentralized manner. These apps aim to eliminate intermediaries, increase transparency, and empower users with greater control over their financial activities.

 

What Precedes This Trend?

 

Blockchain technology and smart contracts form the bedrock on which decentralized financial applications are built. Moreover, the growing interest in cryptocurrencies, the potential for earning higher yields, and the participation in decentralized lending and borrowing have contributed to the popularity of DeFi apps.

 

How Does It Simplify Our Lives?

 

1. Elimination of Intermediaries: DeFi apps eliminate the need for intermediaries, such as banks or brokers, reducing costs, improving efficiency, and increasing transparency in financial transactions.
2. Global Accessibility: DeFi apps are accessible to anyone with an internet connection, regardless of location. This enables individuals from all around the world to participate in decentralized financial activities without restrictions.
3. Programmability: DeFi apps leverage self-executing smart contracts with predefined rules to automate financial processes. It enables the development of innovative financial products and services with customizable features.
4. Yield Generation: DeFi apps provide opportunities for higher yields through liquidity provision, staking, and yield farming. Users can maximize their returns on digital assets by participating in decentralized lending and borrowing protocols.

 

9. Quantum Computing

 

Quantum computing is a trend that revolves around the development and utilization of quantum computers. It leverages the principles of quantum mechanics to perform complex calculations and solve problems more efficiently than classical computers.

 

What Precedes This Trend?

 

There is an increasing demand for powerful processing capabilities as scientific, mathematical, and optimization challenges become more complex. With classical computers proving inadequate, experts have explored quantum computing, which enables more sophisticated data analysis by manipulating quantum states. 

 

As innovation accelerates, there is keen interest in the potential benefits of applying it to practical use cases.

How Does It Simplify Our Lives?

 

Quantum computing can revolutionize various fields including:

 

1. Advanced Cryptography: Quantum computing can break current cryptographic algorithms that rely on the difficulty of factoring large numbers. However, it also opens up the possibility of developing new cryptographic systems resistant to quantum attacks, enhancing the security of digital transactions and communications.
2. Drug Discovery and Materials Science: Quantum computing can accelerate the discovery and design of new medications and materials by simulating molecular interactions and properties. This could lead to faster development of life-saving drugs and advanced materials with unique properties.
3. Optimization and Logistics: Quantum algorithms can optimize complex systems, such as supply chains, logistics networks, and transportation routes, resulting in more efficient resource allocation, reduced costs, and improved overall performance.
4. Machine Learning and Artificial Intelligence: Quantum computing can enhance machine learning algorithms by providing faster training and improved pattern recognition capabilities. This can lead to image and speech recognition advancements, natural language processing, and data analysis.
5. Financial Modeling and Risk Analysis: Quantum computing can facilitate advanced financial modeling, portfolio optimization, and risk analysis by quickly processing large datasets and running complex simulations. This can help make more informed investment decisions and manage financial risks more effectively.

 

10. NFTs

 

Non-fungible tokens, also known as NFTs, are unique and indivisible digital assets based on blockchain technology. Unlike cryptocurrencies, NFTs cannot be exchanged like-for-like, as each token has distinct characteristics and value.

 

What Precedes This Trend?

 

The growing popularity of blockchain technology proved helpful in constructing secure ways of tracking individual digital belongings. Naturally, this development led to a higher demand for verified means to associate ownership credentials with digital assets in arts, collections, or virtual reality worlds. This phenomenon is furthered by creators’ eagerness to monetize their work and directly engage with their patrons through NFT adoption.

 

How Does It Simplify Our Lives?

 

1. Authenticity and Provenance: NFTs provide a secure and transparent way to verify the authenticity and provenance of digital assets. Using blockchain technology, NFTs can verify the ownership and origin of digital art, collectibles, and other unique digital items. This helps combat issues like counterfeiting and fraud in the digital space.
2. Ownership and Control: NFTs empower individuals with ownership and control over their digital assets. Using NFTs, collectors and creators can establish direct relationships, bypassing intermediaries and traditional gatekeepers.
3. New Economic Models: NFTs have opened new economic models and revenue-sharing opportunities. Smart contracts embedded within NFTs can automatically distribute royalties to creators each time their digital assets are sold or traded, ensuring ongoing financial benefits. This enables artists to generate income beyond the initial sale of their work.

 

11. Gig Economy Financial Solutions

 

Gig economy financial solutions refer to financial services specifically designed for gig workers and independent contractors. 

 

What Precedes This Trend?

 

The rapid expansion of the gig economy, driven by technological advancements and changing workforce dynamics, has created a significant demand for financial services that cater to the specific needs of gig workers. 

 

How Does It Simplify Our Lives?

 

1. Financial Stability: These solutions provide gig workers with tools and resources to better manage their income and expenses, helping them achieve financial stability. Budgeting tools, expense tracking, and cash flow management features can assist gig workers in planning for irregular income and effectively managing their finances.
2. Access to Credit: Gig workers often need help obtaining credit from traditional financial institutions due to their non-traditional employment status. Alternative credit assessment methods, such as evaluating gig workers’ income streams and transaction histories, are used by gig economy financial solutions to offer credit and financing options specific to their needs.
3. Streamlined Financial Management: Dedicated platforms and apps tailored for gig workers simplify financial management by integrating income tracking, invoicing, and tax management functionalities in one place. These solutions automate financial tasks, saving time and effort for gig workers and allowing them to focus on their core work.
4. Insurance and Benefits: Gig economy financial solutions may offer access to coverage and benefits traditionally associated with full-time employment. This includes options for health insurance, retirement savings plans, and disability coverage, providing gig workers with a safety net and financial protection.

 

 

What Does the Future Hold for FinTech?

The gradual emergence and acceptance of inventive financial technology in recent years have been an exciting addition to traditional finance disciplines worldwide. Even better, American consumers have significantly adopted mobile banking apps alongside a range of other secure financial devices — a clear indication that it will continue thriving exceptionally well into the foreseeable future.

Over 82% of US adults will use a mobile banking app by 2025. This trend points to improved technological development and robust user security measures. The FinTech industry is expected to save up to $200 billion yearly by implementing these tools effectively as adoption levels grow.

The exciting future ahead is where FinTech continues to push the envelope regarding new technologies and services that ultimately make our lives more secure, convenient, and enriched. As such, it remains a sector worth watching closely over the years.