Financial technology is a market that is red hot. Figures from McKinsey & Company reveal investment in technology to enhance and automate financial services is expected to exceed $30 billion by 2020. These improvements are forecasted to bring banking and financial services to a new level, and clearly a focus on technological upgrades in financial services is already afoot around the globe. A study from EY finds 85% of banks believe an investment in digital transformation is a priority.
Which technologies are financial organizations investing in - and why? These are the fintech trends MOQdigital is keeping its eye on in 2020.
Voice-controlled devices are now a part of life for many consumers. PWC notes that over 100 million Alexa-equipped devices have been sold and 52% of all smart speaker owners now use their device daily. Owners use these devices to make purchases, pay bills and control their home thermostat or security system. Financial organizations see the potential to transform customer service and improve transactions for customers through voice-controlled technology.
Several major players in the finance industry are already seizing on the possibilities of voice control and are delivering services that utilize voice assistants like Siri and Alexa. Bank of America, for example, offers Erica, a virtual financial assistant with voice-command built into the functionality. PayPal allows customers to send money through Alexa and Siri. We expect to see more financial service deploying voice-controlled technology that gives customers the ability to check balances, make transfers and pay bills with a simple voice command.
As banks and financial services seek to enhance the personal touch of their offerings, they are looking to Artificial intelligence (AI) to improve the customer experience. For example, chatbots that use AI can bring services to customers in real-time and solve problems that customers would previously have waited for a live assistant to solve. But AI-drive chatbots can now offer efficient, quick help to many common issues, with a personal touch added in.
Finance organizations are also highly targeted by criminals for fraud and theft, and AI can help with risk and fraud mitigation. Solutions that use AI can recognize abnormal patterns, detect fraud and identify a customer using certain learned behavior patterns.
The potential of AI is not lost on financial organizations. According to Autonomous Research, AI technologies will allow banks to reduce operating costs by 22% by 2030.
Mobility and Connected Devices
Smartphones account for 70% of the mobile time and the US adult spends almost 3 hours (2 hours, 55 minutes) on a smartphone. About 90% of smartphone time is in apps.
This mobility culture has been a game-changer in fintech. Gone are the days when banking customers had to head to the local branch and wait in line to make a deposit or request a statement. Consumers have grown increasingly comfortable using their phones to interact with their bank, check their bank account and make payments using apps on the device. In 2020, financial institutions cannot afford to make plans for the future without a mobile strategy.
Juniper Research predicts the number of customers using mobile devices for banking and payments will exceed two billion users this year. Expect to see investment in mobile technology continue to expand in fintech as customers demand to seamlessly make trades, apply for loans and pay for things almost everywhere using their mobile device.
A recent study finds 98% of the world’s top 100 fintech startups are vulnerable to web and mobile application attacks. The research from ImmuniWeb also reveals 100% have security, privacy and compliance issues relating to abandoned or forgotten web applications, application program interfaces (APIs) and subdomains. Another study from the same firm finds 97 out of the 100 largest banks are vulnerable to web and mobile attacks.
While security has grown as a major priority in many industries today, in financial services and banking, the concerns are very high given the nature of the data these organizations are accessing and storing. Add to this the many financial regulations these organizations must comply with, and the financial industry needs ironclad data protection and will be looking to invest in cybersecurity innovation to enhance their products and services.
The API Economy
Fintech wants to take advantage of an increasing interest in open banking, where banks open up their application programming interfaces (APIs), allowing third parties to access financial information needed to develop new apps and services.
Fintech platforms built on open APIs are hot and include Stripe or Venmo. Expect to see much more growth in this space as open banking is a trend filled with the potential to increase revenue streams and build a larger customer reach for financial institutions.
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