4 Trends in Fintech in 2020

Trends in Fintech

CREDIT: Edi Kurniawan via Unsplash

Financial technology (FinTech) pertains to technological innovations that help improve and automate the delivery of financial services. FinTech, as detailed by our writer Anubhav Jha in a previous post, is changing the way companies are doing business.

For instance, it’s now being used for mobile payments, loans, and money transfers — all of which underscore why FinTech will be a vital fixture in the financial sector moving forward. On that note, here are 4 trends in FinTech to watch out for this year:

1. Implementing intelligent automation

In an article on FinTech trends, Finance Digest talks about the limits of human concentration and emotion when it comes to trading and managing funds. This will force the hands of organizations to automate, with the investment and banking industry leading the way.

Case in point, the Hindu Business Line notes how the banking, insurance and financial services sectors are driving intelligent automation, which is helping to lower the costs of business transactions and offer differentiated customer experience.

This adoption is part of the automation revolution in the subcontinent — one that is projected to pump in $365 billion (28 trillion rupees) to the Indian economy in the next five years.

2. Moving to mobile

Financial organizations are fast moving to mobile. The Financial Express attributes such a shift to Indian consumers being predominantly online, with the messaging app WhatsApp alone, for instance, reaching 400 million users. Crucially, more than 95% of users now apply for a loan using a mobile device, as opposed to less than 30% just 3 years ago.

These figures show a massive shift in consumer preference not only in India, but in most parts of the world, too. For example: A survey found that over 70% of British respondents use mobile banking. This, in turn, is compelling banks to improve and optimize their mobile channels. Given this shift, expect financial institutions to continue moving to mobile.

3. Changing credit

Financial institutions have long been assessing creditworthiness through credit scores, which are comprised of extensive factors such as payment history and credit use. FinTech, though, is breaking that mould all over the world. US-based FinTech startup Petal Card is veering away from tradition by giving users, particularly those with no financial history, more access to safe, responsible and low-cost credit compared to more traditional options, which are often expensive and limiting introductory credit products.

Petal Card accomplishes this by using machine learning to access and assess other available data points from their clients that are not covered by the usual credit testing methods. This means that those who would unfairly not do well during most credit testing methods, such as students, stand a chance of getting a good score.

This system is a lot like the one being used by India’s online lending ecosystem (Rubique, for instance). It relies on artificial intelligence algorithms to evaluate in real time personal and professional details, along with unconventional data such as telecom payments and online shopping history. With so many still underserved by traditional financial institutions, this system will likely take off even more this 2020.

4. Building up blockchain

Financial institutions are always on the lookout for ways to ensure optimum security and safety, and blockchain can help in that regard. But as Hackernoon points out, financial institutions, particularly banks, have been lukewarm to blockchain — until now. Blockchain offers a decentralized, distributed, and near fool-proof means to do business, and it is “everything the FinTech industry could ask for”, as it helps facilitate smarter and safer transactions.

Having said that, there have been some early adopters. In China, most notably, state-owned banks such as the Bank of China and the China Construction Bank, as well as privately owned ones like China Merchants Bank, have started using blockchain to varying degrees. Some banks in India, including Yes Bank, have followed suit, too. Expect more banks worldwide to do the same starting this year.