Financial economic system in world has been growing rapidly since the past two decades. It has had a catalytic effect since the Government’s introduction and encouragement towards digitization of monetary assets and services. Financial Institutions such as investment firms, venture capital organizations, banks have drastically evolved in terms of how they undertake financial proceedings, conduct financial services, and carry out related procedures.
One aspect of this evolutionary transformation is the involvement of technology in financial ecosystem. Technology has paved way to innovative processes and ways that can transform traditional transactions into effective solutions. Banking software, mobile banking, blockchain technology, biometrics and so on are front-runners in Financial Technology.
Blockchain Technology
Blockchain technology has promised to take the financial industry by storm where it has assured to create digital-ledger systems that cannot be altered easily. It allows for a combinatorics of shared databases and cryptography enabling multiple parties that may not know each other from different geographical locations to simultaneously access this constantly updated digital ledger. This technology further makes happen Bitcoins, Litecoin, Dogecoins, and other virtual currencies to be anonymous and secure.
While banks are evaluating the possibilities, it has been estimated that Blockchain has the potential to save millions of dollars in cash since it dramatically reduces processing costs. This technology will therefore make banks profitable and valuable. Blockchain consulting services would then be required to bridge the gap that allows for literacy and awareness in the field by its official users.
Blockchain has many-fold advantages. Firstly, it reduces fraudulent transactions, in financial intermediaries like stock exchanges and money transfer services. Secondly, it would allow organizations to access the verification details of a client by another organization avoiding repetition of the KYC process, thereby reducing administrative costs. Thirdly, the tech is powered to facilitate smart contracts as they bring about storage of any kind that can be executed only by involved parties entering relevant keys. Lastly, NASDAQ and Australian Securities Exchange are some entities actively looking at Blockchain consulting services and solutions that can improve efficiencies and cut costs.
Digitized Banks
A decade ago, people had to visit banks to make payments, money transfers, open accounts and for other banking processes. With the involvement of technology, these frequent bank visits have drastically reduced. A common man today, relies on mobile apps and other payment gateways to do the same thing in matter of seconds. Internet banking has revolutionized the way people interact with financial services.
The availability of data into digital format through technology enable banks to provide enhanced customer services. This leverages a customer by helping him save a lot of time. Moreover, digitalization has reduced human errors and is steadily building customer loyalty.
Customers today, are seeking interactive banking experiences to meet the ‘now-standards-of-living.’ Emergence of fin-tech has forced the traditional banks to opt for options such as cloud, data analytics, APIs, mobile phones, play software, Internet of Things all of which make up Open Banking a possibility. These inclusions, needless to say, will create may challenges that may require many experts in financial consulting services to address these issues.
Mobile Banking
Mobile banking allows a person to undertake and carry on a financial transaction anywhere in a matter of seconds. Fin-tech companies are working on it to make the experience as affordable and as simple as possible. Apps are taking more command when it comes to global payments and commerce. On an average, in a moderately developed economy, an earning person, makes 4 financial transaction in a week.
Many banks are adopting the ‘Mobile-app first’ model as they believe this will reduce transactional and processing costs in banks. With this, Mobile app development companies are entrusted to work on creating secure platforms that can host payment gateways. Some of these apps are inclusive of biometric verifications when high transactional accounts are under process.
Next-generation chatbots and voice-operated assistants are being developed at interfaces as it can cater to a person’s financial assistance needs. These are brought around by Artificial Intelligence that can also track fraudulent behavior easily.
Impact in the existing Eco-System
Loan Approvals – Banking stream has witnessed a new parallel growth that caters to financial needs of an individual or a business through loans. Financial Technologies is changing the framework of how loans are perceived and approved.
Insurance Processes –Insurance is no longer rigid but has evolved to be customized to suit a customer’s needs. Payment of premiums have reached to a stage where it can be automated, and related payments with expansions, changing terms are made simpler.
Asset Management –One of the foremost problem’s individual, high-salaried individuals, businesses are faced with is the wealth management aspects. Financial technology enables this tedious process by allowing its parties to compare customized plans to create and implement in-order to manage financial assets and investments.
Affordable Transfers –Time and again, banks charge a lot of money for inbound and outbound transactions. Fin-Tech makes this economical and affordable. Merchant accounts are needed on a mandatory basis in order to minimalize the transaction costs between a customer and a business while transferring money to-and-fro.
What will drive Financial Technologies’ future?
Fintech’s Innovation and readiness to adapt and use technology change will drive this force towards its precipice. Citizens are no longer spared to be dormant, in-fact seeks responsibility to create a digital economy. Digital era is paving way to capitalize through many feasible solutions.
With the increase in mobile and online banking transactions, there is a need of security now than ever. Digitalization would make the system vulnerable to unwanted exposure, hacks and bugs. Blockchain technology with its complex cryptography methodologies promises to curb this although many critics are skeptical about the scenario. Acceptance and increase in the trust factor will always pose as a challenge in the banking realm. The only way to conduct this is by creating awareness which will likely turn into a crucial factor in the whole process.
Government has taken steps to exempt traders from taxes levied through adaptation of electronic payments, cashless transactions, and other payment gateway systems. Digitization of financial ecosystem powered by Blockchain services, Artificial intelligence schema, mobile and internet banking, without a doubt, is Fin-Tech’s future.