Fintech refers to the intersection of finance and technology. By many accounts, fintech is becoming increasingly popular and is changing the landscape of investment management. According to the CFA Institute, advancements include Big Data and artificial intelligence (AI). Fintech also involves machine learning to evaluate investment opportunities, optimize portfolios, and mitigate risks. Let’s explore some of the trends in fintech for 2020.
Significant Investments Into Digital Transformation
Banks have invested $1 trillion in technology to get into the digital sphere. Why? This investment is mainly to better align themselves with consumers’ increasing focus on digital and mobile, thus improving shareholders’ economic performance.
Digital-Only Banks
Traditional banks will continue to feel the pressure from digital-only banks that offer essential services in the most simplified manner because of electronic documentation, real-time data, and automated processes.
RegTech Will Help Banks and Lenders Comply With Regulation
Financial institutions will benefit from AI-powered RegTech monitoring, reporting, and maintaining compliance with large regulatory data volumes.
Broadminded Lenders Use Algorithms to Benefit Lenders and Borrowers
Credit scoring algorithms will help financial institutions optimize default and prepayment rates, and streamline the application process, allowing for leaner staffing and enhanced customer experience.
Fintech Regulation to Expand
Financial authorities will continue prioritizing digitization challenges and taking actions implementing a global approach to this new era.
NFC Payments Grow to Replace the typical ‘Wallet’
Globally, NFC technology will grow as specific governments try to replace conventional technology to make payments.
Cryptocurrencies Start Long-Term Diversification
Cryptocurrencies, such as bitcoin, allow investors to diversify by serving as a form of alternative investment. So, opportunities will grow to expand with non-cryptocurrencies and diversify among cryptocurrencies.
Fintech Is Banking on the Future of Computing
The financial services sector believes that quantum computing can help supercharge its products and profits and create problems for data security.
Expansion to Decentralized Apps (d’ app) for Payment
Progressive innovators will seek to apply current principles (fully open-source, rewards contributors, runs without a central authority, and blockchain technology) to various online services they believe could be built in the d’app format.
Voice Technology
AI voice technology will allow for increased transactions, including smarter chat-bots for customer service and personalizing individual services. Banks may even consider using an on-site AI robot for self-service, rendering their back-office more efficient while reducing fraud and security risks.
The research suggests that these 2020 trends in fintech are here to stay. Nowadays, bank firms are looking for people with a combination of data science and finance knowledge to analyze massive amounts of information while interpreting their trends. If you’re in the investment management industry, continue to educate yourself on these trends in fintech so you can learn how to leverage them.
Sources: COX Blue, Forbes, and Investopedia
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