Recently updated on April 15, 2024
Fintech – financial technology – has dramatically evolved in recent years. The most notable changes happening in the past decade. These changes have created new convenient ways for people to interact with their money and posed new challenges for those who struggle with finances.
These shifts lead to the questions: is FinTech reshaping the financial industry, or is this a hyped-up myth? Here is what you need to know.
The Shift Toward Online Banks
The Introduction of Robo Advisors
Accessible Payment Processing for Small Businesses
Changes to Security
The Shift Toward Online Banks
One of the most significant changes we have seen in recent years is the movement away from the traditional brick-and-mortar bank toward new, online banks like Tangerine. These new online banks promise to solve many of the frustrations people experience with the traditional banks. This includes disappointing interest rates and confusing layers of bureaucracy.
What does this shift toward online banks mean for the finance industry? As these banks become more commonplace with their offers of free accounts and better returns, consumers will continue to shift away from traditional banks. What is more, they will take their money with them, challenging the business models, and forcing change.
Digital banking businesses also have an opportunity to speed up their way to the market with flexible white label fintech platform. With a wide range of pre-built features, combined with thoughtful customization and development, white-lable gives a solution with the functionality to jumpstart an online finance business or get digital without heavy upfront investment.
Another way to go to market quickly and cost-effectively is to conside a white label banking solution. It serves as a foundation for digital finance products. The customizable white-label core allows you to build on top of it and create a unique customer experience. The platform offers a robust infrastructure, ease of integration, and the ability to focus on customer and product experiences.
The Introduction of Robo Advisors and AI assistants
AI is causing significant disruptions in the financial industry. One of the most notable disruptions is the introduction of robo advisors, which offer a custom investment plan based on algorithms with little to no human interaction. Robo advisors are meant to replace human financial advisors when diving into the world of investing.
Of course, there are pros and cons to using robo advisors. While the potential cost savings are hard to beat, sometimes you need a human perspective to help plan for the nuances of your lifestyle.
So, are robo advisors disrupting the finance world? Well, by the end of 2015, robo-advisors managed $60 billion in client accounts – they are expected to reach $2 trillion by year-end 2020. While it is likely that human advisors will be around for a long while, there is no ignoring this significant disruption caused by Fintech.
Striking a balance between superior customer service and cost optimization is a delicate yet necessary task for financial services providers, as it contributes to long-term success, customer satisfaction, and sustained growth in an ever-evolving industry. And an ai-powered assistant for fintech can help with that.
It helps providing instant assistance for app- and service-related questions, and guide your customers through processes in a human-like manner based on your existing knowledge base. A touch of personalization to customer interactions with AI personal assistant, helps users efficiently navigate a product with personalized responses, tailored recommendations, and helpful insights. And in case of complex queries, a smart AI chatbot grants a seamless handover to human support teams, ensuring a smooth customer experience and providing context for faster problem resolution.
Accessible Payment Processing for Small Businesses
Another significant change in recent years is how easy it is to move money around, particularly for small businesses and contractors. PayPal has become an acceptable form of payment worldwide. It is even starting to introduce tax integrations to simplify tax season. As more people create side hustles and maker businesses, this type of transaction is only expected to increase.
Programs like Square also make it possible for entrepreneurs and crafters to accept credit card payments on their phone at a competitive rate. These disruptions tie into a larger shift toward using digital currencies, like Bitcoin.
The movement toward digital money handling and currencies is a significant disruption to the financial industry, leaving many banks struggling to keep up.
Changes to Security
Finally, new technology means new security measures and new ways of getting around them. It is expected that traditional passwords will be obsolete within the next decade as we move toward biometrics and voice recognition. Many banks are currently investing in biometric technology to replace pins and login passwords.
Fintech is also playing a role in cybersecurity behind the scenes. AI and machine learning help identify fraudulent activity faster than ever. Additionally, the introduction of automation can notify someone of a transaction the moment it occurs, shortening the timeline for identifying and preventing attempted fraud.
Within the realm of protective measures, new money monitoring systems are in place. From credit repair software for consumers and professionals to intuitive money monitoring apps like Mint, people are more aware of what is happening with their finances than before.
These disruptions are largely positive, providing new ways to keep our money safe. However, for every new security measure, there is someone who has the skills to get around it. As we move to cloud-based data storage, there are still a lot of unknown risks.
Myth or Truth?
Fintech is absolutely reshaping the financial service industry, presenting new opportunities and challenges for finance businesses. Banks and financial advisors will have to go with the flow and embrace the changes to ensure their continuity.
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