The FinTech industry is thriving globally. In 2021, FinTech received investments of nearly $226 billion, a staggering sum that underscores the extraordinary strength of the market. An updated report by Harsh Goyal is due for publication in a matter of weeks, breaking down the dynamics that will shape the FinTech industry in years to come.
With Global FinTech Fest taking place across mid-September, recent weeks have seen conversation buzzing around the technologies and trends shaping the industry. BCC Research sent three analysts to the show floor, located in the heart of bustling Mumbai. Unsurprisingly, talk of the Metaverse and Web 3.0 was abound. Hailed as the future of the internet, investors and business owners were naturally keen to speculate on what exactly the virtual world might look like.
More immediate product developments were also circulating the Jio World Convention Center. Voice-based payment systems are to be the focus of industry giant Amazon. With voice commands already being a popular feature in smart phones, voice authentication is an obvious next step in making digital payments simpler and more convenient.
The Technologies Used in FinTech
While simplicity is one of the key aims of FinTech, the technology behind it can feel anything but. In fact, a lack of understanding of FinTech was cited as a key reason customers were unwilling to adopt the technology. But with enormous potential gains at stake, understanding the technologies and how they can be beneficial to your business is crucial.
Below are the top five technologies used in Fintech, as identified by BCC Research.
1. AI and Machine Learning
Artificial Intelligence (AI) and Machine Learning (ML) are key fixtures of fintech. AI is often deployed in the back end to automate decision-making in lending, trading, and financial analysis. It also provides oversight and tracking of employee actions for compliance and security purposes.
In the front end, AI powers customer-facing services such as help desks and transaction support. Kasisto, for example, provides AI-enabled “text-chat” software to financial companies. Smart wallets such as Wallet.AI monitor users’ habits and then deliver personalized advice for budgeting.
Similarly, ML is popular among fintech’s like ZestFinance, and Affirm, with “explainable” ML becoming an increasingly implemented tool.
2. Big Data Analytics
Big data analytics works in conjunction with AI and is key to enhancing cyber security. Predictive analytics in particular is one of the most important tools used in Fintech. Data, statistical algorithms, and ML techniques are used to identify the likelihood of future outcomes based on historical data. The goal is not just to ascertain what has happened, but to assess how these events will determine the future.
Fraud prevention is a primary objective of big data analytics. Fintech’s are alluring prospects to cybercriminals, who are keen to exploit the mass amount of funds in their systems. But new predictive analytic tools can help scout out fraudsters. Suspicious email addresses, IP addresses, unlikely regions, and odd account names are cautioned and identified by such technologies.
3. Application Programming Interface
Application programming interfaces, or APIs, have driven much of fintech’s success. APIs enable one software program to “talk” to another, by exposing some of a program’s internal functions. In simple terms, they give fintech’s access to the financial data they need in order to power applications. Being quick easy and quick to deploy, APIs help fintech companies maintain their competitive edge by bringing products to market quickly.
4. Cybersecurity
Traditional financial services and fintech need one another. Fintech technologies could help slash the costs and enhance the efficiency of old-school banks, but integration challenges are making consumers vulnerable to hacking and cyber threats. As a result, confidence in new fintech solutions has wavered, leading to historically shaky adoption rates.
With many fintechs operating with finite financial resources, developing software that prioritizes security often takes a backseat. Yet AI and Blockchain should be used with greater intensity to identify and respond to cyber threats. Although no software is bulletproof, interfaces between digital financial systems should be subject to rigorous scrutiny and testing during the product development process.
5. Blockchain
This technology has been growing in popularity since the launch of Bitcoin in 2009. Well over half of all fintech uses blockchain for its decentralized and encrypted method of data storage. Blockchain has been known as the “Uber of banking”, emphasizing the transformative nature of the technology. By simplifying, speeding up, and cutting the costs of payments, Blockchain will continue to enjoy widespread usage in the coming years.
Learn About the FinTech Market
With new intel expected in the coming weeks, the rapid evolution of FinTech has never been clearer. But you can stay up to date with the latest developments through our upcoming report on FinTech markets. This report delivers projections for the upcoming period and identifies market opportunities, drivers, and restraints for the industry.
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