According to recent research conducted by Statista, there has been an increase in the adoption of fintech, despite a general downturn in sales and usage for numerous businesses. Leading up to the pandemic, the use of finance apps saw a notable rise on a global scale, with Japan experiencing the biggest increase at a rate of 55 percent.
With the world going digital, fintech is gaining much popularity and numerous exciting advancements are underway in this sector. The latest financial technologies, including blockchain and Artificial Intelligence (AI), have the potential to enhance current innovations and create new ones. It is vital to consider the impact these innovative financial technologies have on the financial sector in general. To take a responsible approach, businesses and individuals must be aware of the following resources.
The Sole 100% Digital Bank
Ever since its inception, digital banking has been acknowledged widely as the financial system of the future. Industry pioneers such as Ally have made it feasible to manage financial matters electronically, making a variety of tasks, such as credit score checks, deposits and more, possible to complete from the comfort of one’s home.
Even though physical banks continue to be a favoured choice for numerous customers and businesses, they are being substituted increasingly by exclusively online banking solutions as the preferred way of handling finances.
Banks could potentially reduce expenses by eliminating the need for physical branches, freeing up funds to invest in customer service and developing user-friendly interfaces (UIs). This could ultimately provide customers with more convenient and affordable options for managing their finances.
Credit Evaluation and Loan Approval Techniques That Are Not FICO Score-Based
In the past, it was challenging for individuals with limited incomes or insufficient access to financial institutions to secure loans due to their inadequate credit scores or credit history. However, this issue has been tackled with the advent of financial technology, thereby expanding loan access.
Nova Credit is a credit-rating firm that employs unconventional techniques, like online activity analysis, in rating an individual’s creditworthiness. This helps in approving loans for those who may not have qualified through traditional credit checks.
Peer-to-Peer (P2P) Lending and Financial Transactions
Peer-to-Peer (P2P) systems, such as Venmo, which were originally designed for a younger demographic, have witnessed substantial expansion amongst the aged population, as well as individual users and companies alike.
P2P lending eliminates the requirement of traditional financial institutions involvement in loan processing, leading to more efficient, economical and convenient financial transactions between lenders and borrowers. Similarly, Peer-to-Business (P2B) lending works on similar principles, except it involves individuals lending funds to businesses (often in the real estate industry) in exchange for a return on their investment.
Business to Customer: We offer our clients a secure and reliable online buying experience through the use of an advanced payment gateway. This tool enables customers to send their financial information securely to merchants, with a middleman or gatekeeper quickly deciding whether to approve or decline the transaction based on the user’s credentials.
Our system employs encryption to safeguard against unauthorised transactions, such as those that occur when customers lack sufficient funds in their accounts (learn more). Financial data is secured while transmitting, and payments are processed promptly and efficiently, even when third-party entities are involved.
As online transactions become increasingly common in certain industries, such as retail, new technologies have emerged to enable remote payment processing. Square is a prime example of such technology, enabling merchants to easily and rapidly process credit card sales while receiving real-time confirmation of their success. This feature is particularly useful when participating in remote events and conferences.
Bitcoin is the most well-known cryptocurrency, though many others are also available, all of which utilise blockchain technology. This technology provides a secure, decentralised, and unchangeable ledger for transactions, eliminating the need for third-party entities. As a result, swift purchases can be made.
It is evident that cryptocurrency is not merely a temporary trend and will persist in the future. A case in point is PayPal, the parent firm of Venmo, which plans to integrate cryptocurrency features into its mobile payment app as early as 2023. This move will enable Venmo users to trade and store cryptocurrencies within the app.
Government Funding for Tackling Climate Change
Green finance, or climate finance, refers to advancements in financial technology and the broader financial sector that prioritise sustainability. The development of green finance solutions has been driven by fintech’s potential negative environmental impact.
Fintech enterprises are striving to transform this scenario. As an illustration, Alipay’s Ant Forest programme incentivises consumers who take measures to lessen their carbon footprint with financial rewards.
Consumers receive green energy points for actions that help lower carbon emissions, such as carpooling or using public transportation instead of driving. When Alipay users accumulate enough points to ‘plant a tree,’ the company will take concrete steps to protect the environment, such as planting an actual tree.
Enhancements in Financial Cybersecurity
In order to safeguard users of all types, it is crucial to ensure the security of the numerous innovative financial technology advancements that are either in progress or already available. Ensuring the security of your financial assets is of utmost significance.
Developers are making progress in protecting fintech consumers through customised initiatives and solutions aimed at enhancing online security for the financial sector. Cybera Global is leading this effort by providing technology that strengthens cyber-protection for enterprises, particularly government institutions, from financial cybercrime. This technology employs government blacklist data to instantly alert of any potentially malicious activity.
Many of the fundamental technologies behind the abovementioned advancements, such as blockchain, inherently involve multiple layers of cybersecurity measures.
The future of financial technology is bright, with more efficient payment systems, greater security, and other factors contributing to its expansion. These advancements have played a crucial role in driving the growth of this critical industry.