Black5)Top 10 Emerging Trends in FinTech

 Welcome to My YouTube channel.

In this Video, We Will Talk About the Top 10 Emerging Trends in FinTech

1: Agile and adaptive banking

For the financial sector to be agile, means being competitive while also capable of launching new products at great speed and efficiency. Financial firms, financial institutions, commercial banks, and insurance businesses that stay flexible and nimble are the ones that will stay afloat. Gartner research indicates that by 2030 about 80% of the traditional financial institutions will cease to exist.

Moreover, the Agile banking academic study by the Journal of Business Economics indicates that about 77% of banks and 44% of FinTech firms intend to improve their financial services by adopting Agile methods. Yet, why do all these financial institutions consider the Agile methodology a savior?

2: Open banking and embedded finance

Next on the list is open banking and embedded finance. In short, the open banking phenomenon has existed for some time. However, only recently have financial institutions recognized its potential. Overall, the concept boosts digital experiences, grants faster onboarding, and broadens access to alternative asset marketplaces. Open banking delivers a myriad of opportunities to the finance industry because it grants unprecedented access to banking customers. Perhaps, that is why this sector is currently on the rise.

In more specific terms, open banking grants the following benefits:

Allows the creation of an API management infrastructure that eases data sharing

Promotes API governance architecture for better compliance and security

Implements data policies improving the efficiency of financial services provisions

3: Robotic Process Automation Takes Over Mundane Tasks

Many financial institutions are turning to robotic process automation (RPA) in an effort to drive down costs and make their teams more efficient.

RPA technology is also referred to as “software robotics.” It’s useful for automating repetitive, rule-based, time-consuming tasks that don’t require human brainpower.

Grand View Research predicts the RPA market will grow at a CAGR of 38.2% from 2022 to 2030.

Much of that growth is expected to come from the banking, financial services, and insurance sectors, which accounted for nearly 30% of the total market in 2021.

Gartner reports that 80% of finance leaders have already implemented RPA solutions in their businesses or have plans to do so.

4: Fintech Companies Offer Finance Solutions Along With Green Initiatives

As consumers and corporations start to put more emphasis on environmentally sustainable practices, the fintech industry is capitalizing on the opportunity.

Currently, only 8% of fintech founders say they are in the “sustainable fintech” category.

However, investors are flocking to this sector.

From 2020 to 2021, VC investment in green fintech grew by 100% for a total annual investment of more than $40 billion in more than 600 venture deals.

Green fintech startups and initiatives span the globe, but the highest concentration of these companies is in Switzerland, Spain, Singapore, and Sweden.

5: Buy Now, Pay Later Remains Popular But Many Have Concerns

The BNPL market surged to a value of $120 billion in 2021. That represents a CAGR of 85% between 2019 to 2021.

Industry research points to continued growth. A Research and Markets report predicts a CAGR of 32.5% through 2028.

More than half of Americans have used a BNPL service and nearly 40% of those who haven’t used BNPL say they’re at least somewhat likely to use it in the next six months. That’s according to a survey from The Ascent, a personal finance tool from The Motley Fool.

In that same survey, however, 17% of consumers say they are very likely to be late on a BNPL payment in the next year and 18% say they’re likely to do that.

Another survey had similarly alarming statistics.

6: Banking Industry Begins To See AI-Driven Cost Savings

From customer service chatbots to fighting off fraud, the market for AI in the banking industry is growing.

Allied Market Research predicts it will be worth $64 billion by 2030, posting a CAGR of 32% from 2021 to 2030.

OpenText, a company that offers digital transformation platforms, reports that 80% of financial institutions are aware of the benefits that AI can bring to their organization.

More than 60% believe that AI will be mainstream in the industry within two years.

About 45% of respondents have already adopted AI technology.

Research firm Autonomous NEXT predicts that AI will decrease operating costs in the financial services industry by 22% by 2030. That’s the equivalent of $1 trillion.

7:  Workers Show Increasing Interest In On-Demand Pay

Many consumers use fintech solutions to pay for goods, but what about the businesses that are paying them? Fintech is changing the payroll status quo too.

One trend is on-demand pay, also known as earned wage access.

Fintech solutions enable companies to set up cloud-based solutions where employees can log in on an app, check their payroll balance, and withdraw money at any time.

US workers withdrew $9.5 billion in pay using these types of platforms in 2020. That was nearly triple the amount in 2018.

On-demand access to wages is important to employees experiencing financial stress.

In one survey of working individuals in the US and the UK, 35% of people had been in a financially stressful situation in the previous year in which they were not able to pay an expense between pay periods.

The same survey reported that roughly 20% of people would be likely to use an on-demand pay option if it were available to them. About 5-10% of people are extremely likely to do so.

8: Cybercriminals Utilize New Tactics To Gain Access To Money And Information

According to data from Trend Micro, a global cybersecurity firm, cybersecurity threats are on the rise in the financial sector.

Between 2020 and 2021, the banking industry experienced a 1,318% increase in ransomware attacks.

UpGuard reports that finance was the most targeted industry for phishing attacks in the first quarter of 2021.

In the first six months of 2021, they say, phishing attacks in the industry were up 22% over 2020 and attacks targeting financial apps were up 38%.

Cybersecurity threats and attacks are costing the industry millions of dollars.

9:  Biometrics Adoption Accelerates

In 2021, Federal Reserve Chairman Jerome Powell said that cyberattacks are the number-one risk to the global financial system.

With such a bold threat looming over the industry, fintech companies are deploying a host of new security options.

Passwordless authentication is one security measure that IT leaders are pushing.

In fact, nearly 90% of security leaders say this solution provides the highest level of security. That’s according to a survey commissioned by HYPR, a company that offers a multi-factor authentication platform.

A relatively simple login method that doesn’t use passwords is sending users a push notification that provides an authentication code.

10: Neobank Appeal To Young Consumers

FICO reports that many young US consumers consider digital banks, like PayPal and Chime, as their primary checking account provider instead of traditional banks.

The report goes on to say that the number of young consumers who are choosing fintech options over traditional banks has doubled since 2020.

Only 25% of Gen Z use a big bank as their primary checking provider.

These digital-only banks are referred to as neobanks or challenger banks and they’re gaining popularity.

What Do You Think of Our Video?

Let Me Know in the Comment Section Below

Before You Go Please Hit the Like Button and Subscribe to My Channel.

Thanks for Watching.