The financial services industry encompasses investments, lending, insurance, asset management, accounting, and foreign exchange. Currently, the industry and its reliance on traditional transactions is being disrupted by the emergence of financial technology, better known as fintech. We defined it here on Techie Scoops as the use of computer programs to support and enable financial services. The increasing and escalating use of the internet for all types of finance has seen the fintech industry become one of the fastest growing in the world. Here are several areas of the finance industry that make extensive use of fintech:
It’s an understatement to say that fintech has significantly changed how consumers pay for goods and services. Tech Bullion reports that the wide usage of smartphones has encouraged an array of innovations including the emergence of mobile wallets. Fintech has made it possible to make payments by using mobile devices as a digitized version of a bank card. Banks only need to link accounts to the devices, and people can easily pay for goods and services using their phones. The most obvious example of this is fingerprint payments on smartphones, which doesn’t require any information to be manually imputed by the purchaser.
Cybersecurity and Fraud
Cybersecurity is critical in finance, and although fintech doesn’t make financial organizations immune to threats, it is the strongest defence against hackers. Medium reveals that cybersecurity is the biggest investment that global bank executives are focusing on. This is not surprising as banks and financial institutions have become big targets for hackers with an Ecuadorian bank losing $12 million (₹833 million) to cyber criminals. The advantage of fintech is that it can quickly adapt to changes in the market, and immediately develop cybersecurity measures that can counter new threats.
The Forex exchange is now a mainstream financial industry, and that is largely down to how fintech has revolutionized the market. Fintech allows traders to be instantly up to date with any fluctuations in the Forex market. Using real-time accounts, traders can make “more secure and rapid payments” with much more accuracy. Computer algorithms are also now being used to make precise trades with less risk. FXCM explains how the Forex market has a daily trading volume of over $5 trillion (₹347 trillion), making it one of the most important global markets in the world. It is no wonder that Forex is where many of fintech’s most advanced innovations can be found.
Fintech companies are able to use blockchain to keep up with the complexities associated with regulation. The financial industry is constantly creating new rules and regulations in order to reduce financial crime and misconduct. Blockchain allows companies to stay up-to-date through records that automatically renew the latest compliancy changes. The technology has also removed the need for manual verification, because all transactions are digitally verified and recorded. Once information is saved on the blockchain, no one can delete or modify it. A blockchain-based compliance platform can verify the authenticity and ownership of any document, making it an irrefutable proof of transaction.
When it comes to customer service, fintech is making a difference by automating customer/company interactions. This is to keep up with the growing demand for a much more streamlined and rapid service. A Salesforce State of Service report found that in India, 93% of decision makers want their customer service to go digital. This will allow them to stay competitive while also reacting to modern customer needs. In the next 18 months AI and chatbots are “projected to increase by 90% and 118% respectively”.