There are a number of hot new fintech trends to look out for in 2018. From the rapid rise of electronic payments and data analytics, to AI automation, and personalisation, the pace of innovation is transforming the banking landscape.
As banks increasingly consider partnering with fintechs, the main motivation is enhancing the consumer experience. Banks are often held back by their outdated legacy systems. Now, through collaboration and innovation both banks and fintechs are making greater use of consumer insights to be able to provide more tailored services. So let’s take a look at four of the big fintech trends that will be reshaping the financial landscape.
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Fintechs driving the user experience
Dubbed a ‘banking revolution,’ Open Banking went live in January 2018 enabling the creation of new types of interactive smart banking services and a boom in technology trends. The digitally-focused and tech-savvy fintechs have been breaking barriers ever since by focusing solely on enhancing customer experience.
More choice, better service, longer opening hours, more convenience and innovative products are just a few of the advantages that fintechs have over many traditional banks. Take Revolut for example. Nearly three years old and the fintech startup is already a Unicorn firm.
One of its most innovative solutions that it developed is the disposable virtual cards, aimed at combatting fraud. Users will be able to set up disposable virtual cards in seconds, with card details that are destroyed after every transaction and new ones automatically regenerated, adding an extra layer of security to the platform.
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By GlobalDataThe disposable virtual cards will work alongside Revolut’s existing security features, which include location-based security, the ability to freeze and unfreeze cards.
The future of fintech will be focused around making life more convenient for consumers and businesses.
AI
Artificial Intelligence (AI) is certainly one of the most exciting fintech trends to keep an eye on. AI has the potential to completely transform the consumer journey and experiences.
It will eventually become part of everyday life for consumers. It is already being used within the financial sector and being deployed more to accommodate the need for convenience that consumers’ desire.
There will be more application of AI through conversational banking to provide better recommendations for customers. This will improve the digital interaction between financial institutions and customers, enabling them to communicate better across more digital channels. On the back end, AI is being used to drive operational efficiency, aid employees and pre-empt any problems that could arise.
Furthermore, in payments, AI has the ability to quickly and efficiently detect fraudulent activity by alerting the system to unusual transactions.
Harnessing AI effectively builds trust between consumers and financial institutions as it creates a secure environment for customers to conduct their banking needs.
Personalisation
In an open financial ecosystem that is filled with competition, one of main fintech trends that has built momentum is personalisation. Using data to help customers manage their finances will be critical for fintechs and banks to master. Customers that have been with banks for decades are still not offered personalised services that suit their unique situation.
This is also an area that fintechs are excelling at. For example, Monzo supports their customers by offering financial advice based on their spending habits. They have in app tools to help customers budget, save money and find the best deals.
Several incumbent banks are producing products and services that are more tailored but over the next few years there is going be more emphasis on developing personalised solutions to support customers. Still, we are in the early days but it is an exciting time to watch how using the power of data can better service consumers.
Data analytics
More sophisticated data tools are reshaping the financial sector. The way that fintechs and banks can store and send out data has changed dramatically with regulation such as PSD2 and GDPR.
GDPR will give consumers back control over their personal data and harmonise the regulatory ecosystem by uniting regulation across the EU. Furthermore, GDPR will let organisations have a greater understanding of individuals’ data. With that data, financial organisations can address the needs of consumers more accurately.
However, GDPR has only just started so how data is being used will be a massive trend to watch this year. The players who take data seriously and come up with thoughtful and secure propositions with very transparent customer consent will be the ones who emerge stronger throughout the next couple of years.
It will be the unique mix of these fintech trends that will equip financial institutions with the right tools to accelerate their business models and customer service. The convergence of AI, data and the ability to efficiently serve customers will shape the future of the banking and fintech sector.
