5 technologies that will change the fintech industry in 2021 

IT Outsourcing Informatique 5 Technologies Industry Fintech ENG Post 09

Here, we will review 5 technologies that will change fintech in 2021:

Blockchain, RPA, Artificial Intelligence, RegTech and Conversational Banking. 

Before considering the transformation of the five technologies into financial technology, please consider what financial technology is. 

Fintech integrates technology and finance, and harmoniously combines the two largest industries. Of course, the impact is huge. Five years ago, fintech solutions were still regarded as cutting-edge innovations, but now they have become everyday life. 

According to McKinsey’s data, 80% of financial institutions have sought innovation in 2018, and investment in this field is estimated to reach 30.8 billion US dollars. Now compare this figure with the $1.8 billion in 2011. 

2020 will change the technology of fintech 

We analyzed new fintech projects, start-ups and internal innovation, and summarized this research into a list of 5 technologies that will revolutionize the industry in 2020. 

Fintech Technology First: Increase of RegTech Solutions 

Regulatory technology is creating automated solutions to manage regulatory monitoring, compliance and reporting through the latest breakthrough fintech software innovations. Tracking new restrictions in a single database is a convenient way to adapt financial institutions to legal requirements. 

Advantages of RegTech 

  • Inexpensive, fast and simple control of large amounts of data  
  • Precise and automatic search for specific regulations  
  • Fast compliance before trading  
  • Connect financial institutions, regulatory agencies and consumers to protect the interests of the three parties. 

RegTech innovation 

  • Cooperation between financial institutions and regulatory agencies to promote the development of RegTech; 
  • Governments and financial institutions from various countries share expertise on common projects and bridge the skills gap. For example, the Monetary Authority of Singapore (MAS) and the Financial Conduct Authority (FAC) help create automated regulatory solutions for banks. It is expected that similar practices will take place globally in 2021. 

There are currently more than 150 RegTech companies. Compared with the 300 million pages of existing regulations, this feels very small. Failure to comply with mandatory government regulations will lead to fines and crises. The management of a financial institution (FI) will try to do everything on its own to avoid these problems. 

The demand for RegTech solutions in the market is obvious. Obviously, this niche market will be filled soon, and by the first half of 2020, you will see outstanding startups. This is why FI owners should consider becoming one of the leading RegTech providers in the financial sector. 

Fintech Technology 2: Embrace artificial intelligence, machine learning and the Internet of Things 

Artificial Intelligence (AI) has been engaged for 5 years in the financial technology industry. However, although it says a lot about its popularity, its efficiency still causes many problems. Let us take a closer look at the dynamics of AI solutions in the industry and analyze how to carry out this innovation. 

  1. Independent AI solutions have not made any breakthroughs, and so far have not met expectations. However, this cannot be said for small AI applications. 
  2. Banking solutions successfully used AI for modeling technology and analysis management. Artificial intelligence has a lot of untapped potential in attracting investors. There is still a lot of space we have never done before innovation 
  3. The combination of artificial intelligence in fintech with big data and management solutions works best. Artificial intelligence can analyze the performance of financial institutions, generate insights and automate basic organizational processes (team management, documentation, customer communication). 

 

A good example of the application of AI in the financial sector is Alpaca Forecast AI Prediction MatrixIs a price prediction solution developed by Bloomberg. The software can handle millions of transaction records, record changes in demand, define patterns and predict future price changes. 

 

Machine learning (ML) is one of the important AI components and is widely used in banking in the following areas: 

  1. Fraud prevention ML tools analyze existing fraud cases, detect common patterns and evaluate whether specific companies have not shown similar behaviors. This allows you to predict possible fraud and spot suspicious financial institutions.  
  1. Risk Management  The software will analyse your company’s performance and detect potential threat patterns. 
  1. Fund Development Forecast  By scanning your investment history, ML-based tools can define the most likely future development. 
  1. Customer Service  The platform analyses customer data and builds intelligent customer profiles. 

The Internet of Things (IoT) can accelerate financial processes internally (management and team organization) and externally (client management and communication). The Internet of Things network allows you to connect your smartphone to a financial database and transfer data directly from one device to another. 

So far, retail banking is the clearest sign of the development of Fintech IoT. A good example of this innovation is Citibank and beacon-based solutions can unlock ATM access via smartphones during non-working hours. 

Third place in financial technology: Blockchain will shake everything 

Since 2018, blockchain has been growing, it doesn’t often make headlines now, but innovation has nowhere to go. Many Asian banks have officially adopted blockchain to protect their financial transactions, and European and American institutions will follow this trend. 

Benefits of using blockchain in fintech 

  • Each transaction is encrypted and there is no possibility of penetration.  
  • Every network stakeholder must approve transactions so that hacker attacks rarely occur.  
  • Tokenization helps international companies use a common currency instead of the national currency. 

From the Commonwealth Bank of Australia to Alpha Bank of Russia, blockchain transactions are being implemented globally, and new institutions join this trend every month. 

Fintech Technology Number 4: Robotic process automation coordinates the workflow. 

In order to reduce the use of human resources, financial institutions can apply RPA to their business management solutions. RPA uses robots to complete tasks through a graphical user interface (GUI). The tasks range from simple tasks (selecting projects, sending emails) to complex processes (writing reports, configuring databases). 

The most common RPA procedures are as follows: 

  • Statistical information collection  
  • Numerical calculation of company performance and transaction management 
  • Summary extraction from large documents  
  • Regulatory document management  
  • E-mail and attachment control
     

Conversational banking will become the mainstream, the development of artificial intelligence and language processing technology will naturally lead to the active implementation of chatbots, and financial technology is no exception. The use of chatbots in financial management and transactions is called conversational banking. 

 

Fintech No. 5: How will conversational banking be used in finance by 2021? 

  • Answer the most common questions from customers. How to find the nearest ATM, how to access the lost card again, how to know my password-these requests can and should be processed automatically.  
  • Account management: chatbots can guide customers through the registration and transaction process.  
  • Financial management: Chatbot becomes your pocket financial advisor and can even track your budget, capital flow and taxation. 

Examples of efficient dialogue banks include Erica, a chat robot developed by Bank of America. The bot handles the most popular client’s questions by processing text and voice messages and providing answers with text responses or voice memos. 

In conclusion 

Due to the development of technology and the ever-changing demands of the financial market, changes are inevitable. Every year, financial technology changes in new ways. The way you integrate these trends into your business will determine your success. Combining RegTech, artificial intelligence, Internet of Things and machine learning with blockchain and conversational banking will play an important role in attracting customers and improving the efficiency of financial institutions in 2021. Banking companies do not have to research every technology at the same time. – Needs substantial investment and technical expertise. Implement some of these innovations into routine operations so that you can quickly see the results you need. 

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