Fintech Trends to Expect in the 2020s

February 12th 2020
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@DashDevsDashdevs

A software development and fintech consulting company that empowers technology innovation.

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Although it may seem that the paradigm shift has just begun, the reality is that the financial services sector has already undergone significant changes. Merely think of mobile banking apps, contactless payments, online money transfers, crypto platforms, robo-advisors, and crowdfunding marketplaces. And fintech innovation has definitely had a hand in this evolution. 
Within the last few years, more advanced features have become commonplace, and things speed up. Today three out of four customers transfer money or make payments through fintech services. They talk to fintech chatbots more often, looking for helpful advice or personalized offers. Keep their money in banks that don't have physical branches. Meanwhile, being focused on banking and fintech product development, we believe that there is even more to come in the next decade. 

#1 Fintech Data Protection is Critical as Ever 

Financial service companies are 300 times more likely to be attacked, so it's no surprise that for 70 percent of industry executives, cybersecurity remains the top concern. Currently, fintech organizations spend around $2,300 per full-time worker on cybersecurity every year. However, the expansion of digital-only banks and the prevailing use of mobile devices may only bolster cyber threats and compel teams to reassess their approaches. Moreover, even the introduction of new regulations, such as Open Banking and PSD2, brings new risks since API abuse may soon turn into the primary attack vector. 
With this background, fintechs and banks should re-examine established safety features that are still in place. In the 2020s, it's critical to promote defense, review how security budgets are deployed and put cybersafety at the core of digitization efforts. If we're talking about fintech software development from scratch, companies can follow the "security by design" concept, where 'threat-resistance' is efficiently implemented into the entire workflow and standard code production. Adoption of progressive technologies like biometrics or behavioral analytics is another way to stop fraud, but it implies rigorous planning and testing. 

#2 Smart Fintech Automation with Human Touch

Inherently, automation of processes is nothing new, but RPA in fintech is something that swiftly gains the momentum and will definitely impact the industry over the next decade. It's not only about streamlining back-office processes or improving customer service but also about better security and compliance with local or global regulations. 
RPA tools can take on high-volume and rule-driven duties, thus freeing up employees of the routine and allowing them to focus on more complex and revenue-generating tasks. Fintech robotics can be applicable for account opening, user onboarding, screening, risk evaluation, verification, data mining and reporting, compliance procedures, and other recurring and time-consuming activities. 
On average, automation in fintech can result in up to 25 percent cost savings, but if companies engage employees to educate robots, their ROI can rise to 50 percent

#3 Welcome the Fintech Internet of Things and Payments

The IoT market in the banking and financial service industry is projected to exceed $2 billion by 2023. The proliferation of payment methods, such as machine-to-machine, is trenching on the traditional payment area, forcing providers to reconsider their business models. 
In the coming decade, payments will be smooth, invisible, and real-time. They are likely to be more than straightforward transactions, and we expect to see a whole new surge of prudent services, where enhanced data privacy and valuable purchasing insights will become the norm. A human won't necessarily be a primary initiator but still will be immediately notified about any purchases done by the IoP/IoT things.
Redesign of customer experience, comprehensive IoT and IoP regulations, convenient access to various financial products, better security measures will remain the primary objectives for payment providers.  

#4 Fintech and Big Data Are Meant to Be Together

Predictive analytics is a comparatively new area in data science, but it has already gained traction among fintechs. In fact, it utilizes data mining, artificial intelligence (AI), computer science, and multiple machine learning (ML) techniques to assist firms with business process optimization and cost reduction. Meanwhile, data science and fintech are expected to drastically change the traditional approach to doing business before this decade ends.
Early fraud detection and preventive security may be the main applications of data science in fintech. Being able to quickly collect and analyze millions of information units from user actions, it may detect abnormal activity and notify the team of potentially fraudulent practices. Moreover, comprehensive customer profiles, client segmentation, personalized financial offerings, and process automation are just a few examples of how big data can help fintech in the 2020s. 

#5 The Rise of 'Platformization' 

Compliance and data security are the biggest challenges for financial service companies globally. Especially considering the fact that too many regulatory requirements have been released lately, and most of them come unfinalized. The ever-growing customer requirements, the evolving complexity of statutory processes, and the soaring costs only aggravate the situation. This is where platforms come into play. 
These days we tend to talk a lot about various platforms, namely open banking-as-a-service, banking-as-platform, payment-as-a-service, white-label banking, and many others. As we can see, many reputed institutions, as well as new industry entrants, have already embraced the "open revolution" and are not going to lose momentum. 
Platform-based ecosystems are likely to become the overriding business model for both fintechs and banks in the future. In this way, startups and non-financial players have an opportunity to build customer-focused products, bring down operating costs, and shorten time-to-market. Meanwhile, platform providers can create collaborative ecosystems, spur technology innovation, and tap into new revenue streams. 

Final Thoughts

When we started working with fintech companies six years ago, it was challenging to perform competitor analysis since the best-known firms in this industry were Stripe and Mint. Shortly after fintech has grown and developed dramatically, while the next decade is projected to bring even a more powerful wave of disruptions. 
In fact, we can already contend that in the next ten years, financial services will become ubiquitous, seamless, and customer-focused since they are promised to be centralized and even managed for us. The fintech trends outlined in this article can soon give way to more recent developments, as new players appear, and incumbents quickly diversify.
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@DashDevsDashdevs

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A software development and fintech consulting company that empowers technology innovation.

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