The fintech industry is one that has been consistently on the rise since the 1990s, especially since the introduction of the internet. The Open Banking Directive came into play in 2018 and forced the UK’s 9 biggest banks to release their data in a secure and standardised format, making it easier for smaller banks to enter the finance world. Along with this, reliance has grown in both the business and personal worlds on being able to access the best financial technology, the industry has had to perform at high speeds in order to keep up with demand.
Some of the technology that we’re all used to today was unthinkable even a few years ago, for example the ability to tap your phone at the entrance to the tube to allow you to pay for your travel, and this trend is set to continue. In this article, we’ve put some thought into where the fintech industry may go in future and how we expect these changes to affect the landscape of the finance world.
- Continued growth of app based money exchange
In the modern world, especially post-COVID, we are all used to making payments using our phones, our contactless cards and even our watches. As we continue to move towards a cashless society, the use of app-based payments will carry on rising and will blend even more seamlessly into day-to-day life for many people.
- Growth of the SME sector
The necessity to visit physical stores has become less and less vital as time goes on, with many referring to it as the ‘death of the highstreet’. Whilst this has had a negative effect on many businesses, there is also scope for this to become a positive as it leaves more space for those within the SME sector to see success, not having to worry about the additional expenses that come with owning a shop. Traditionally underserved by large financial providers, fintechs are now broadening their offerings, and SMEs are taking advantage of this to help with their financial requirements, such as securing business loans and managing cash flow.
- Intuitive combined payments
Cloud migration can provide huge benefits to the financial services industry, including increasingly intuitive solutions which allow users to combine multiple purchases from different sellers into one checkout experience. This is already being used in places such as eBay, Amazon and Etsy, with the ease of this service making it a firm favourite for future expansion. Amazon even have a physical store in Seattle which allows customers to put items into their basket and leave without passing through a checkout, instead automatically billing their credit card.There’s also potential for technology to progress to a stage where checkouts are no longer used in the shopping experience, but rather payments will blend into the background and be dynamically integrated with our digital experiences.
- Increase in use of data to make lending decisions
One of the biggest changes in the finance industry over the past century was the shift from knowing your bank manager personally to banks using data about your lifestyle and spending habits to make decisions around how to lend you money. Whilst many were against this change, we predict that the use of AI and personal data in finance is set to continue, and become a lot smarter with reliance on an even greater set of data points, looking even deeper into how we live our lives. This could include having multiple ways to manage your money (such as mortgages, loans, savings and investments) and being able to move money in and out of your accounts in a smooth and unified way, making sure you always get the best deal on your finances. This could also work with utilities providers, with our banks automatically set up to find the best provider, continually switching to whatever will work out best for you.
- Continued growth of mobile wallets and online banking
Similarly to the growth of payment apps, mobile wallets and online banking is also looking to be on the rise. With such importance put on the ability to manage your banking on the go, financial institutions are rising to the occasion by continuing to innovate and provide solutions that make accessing your money and payments as easy as possible, whilst also being safe and secure. We expect that this is an area which will continue to have a huge amount of focus in the future.
- More trust in online banking from audience
Online banking was absolutely something which was initially met with suspicion from many people, with many unsure of how safe their money was without the safety net of a bank teller to ensure payments were being sent to the correct place. Highly publicised cyber attacks and hacking scandals over the past decade have also put many people on high alert, often making progress in the fintech world slower as security technology catches up with the needs of the audience. As people have become more reliant on online technology in recent years, the security of online payments has become paramount to providers, meaning that the level of trust from consumers is on the rise. As technology continues to develop and progress, so too will the confidence that people have in it.
- The rise of the ‘internet of things’
The term ‘internet of things’ is absolutely not a new one, but it is something which is continually evolving and becoming more common in our day-to-day lives. We predict that the finance industry is set to become more entwined in this world, with payments and transactions being seamlessly incorporated into making people’s lives more coordinated and easy. Things that may become more commonplace include your car paying for petrol through a virtual wallet associated with your numberplate, or your fridge ordering more milk when it identifies supplies getting low. Whilst this kind of technology may have seemed like something out of the Jetsons a decade or so ago, this is now commonplace in many people’s lives and is considered the future of many of our more common transactions.
- An increase in personalisation
The ability to personalise an experience with any business is one that appeals to many, and this is also true of the fintech world. Many institutions are working towards providing plans that are individually optimised to a person’s needs, ensuring that they gain the best deals and are more likely to stay loyal to that provider.
- Expansions of product offerings
It wasn’t too long ago that we started to see businesses slim down their offerings to provide a more succinct and simple service to their customers, however we are now starting to see a shift. Many financial providers are starting to bundle up their offerings, either with services provided directly by themselves, or by partnering with other businesses (such as BT Broadband and EE mobile providers). The end goal for all of this is not only to increase their customer base, but also to provide a more streamlined process for customers who want one point of contact for multiple contracts.
- Enhanced use of biometrics in payments
This is another piece of technology which seemed wildly futuristic in the past, but has fast become one of the most commonly used pieces of equipment in the modern world. As we begin to become more comfortable with online and app-based payments, the way in which we action them is also due to advance, with biometric recognition in the form of fingerprint, retinal or voice set to become more and more commonplace in day-to-day society.
We’d love to hear your views on our predictions. Why not send us your feedback and we’ll be sure to publish another article sharing your input. We will even reward the best contribution, so get your thinking caps on!