The value of the global fintech apps’ market is estimated to hit $305 billion by 2025. That is a huge number compared to its mere 11 million dollar valuation in 2010. The vast difference only marks the start of the craze set off amongst young fintech enterprises and fintech developers involved in Software Development For Startups. Today, many fintech applications are already making it to the mainstream market. The industry is undergoing various trends at the moment. Many of these trends are already circulating and are expected to rule in 2024. But before we venture into these trends, let’s understand Fintech and what it entails.
What is Fintech?
A portmanteau word for finance and technology, Fintech is precisely what it is made of- technology-driven finance. The fintech industry comprises all software, technology, or applications that make the best use of technology to facilitate finance in more ways than one. Fintech applications are used for various functions, including biometric authentication, multi-user collaboration, cross-platform integrations, analytics & data visualization, multiple payment gateways, and more.
Fintech applications are also great creativity and innovation tools for developers and entrepreneurs alike. A variety of fintech projects have already been launched in the market. The types of fintech applications include mobile banking apps, insurance apps, e-wallets, trading platforms, and more. Here are a few other fintech industry trends that are gaining momentum and are expected to rule in 2024.
Exploring the Top 9 FinTech Trends
- Embedded Finance
- Regtech Solution
- Robotic Process Automation (RPAs)
- Digital Identity Verification
- Artificial Intelligence
As the name suggests, embedded finance refers to integrating financial services such as lending, payment processing, or insurance into existing non-financial applications and operating systems. The search volume associated with the word ’embedded finance’ has skyrocketed. This is because businesses are slowly but surely realizing the benefits of the digital transformation of fintech systems. Companies should be aware of specific categories of embedded finance. According to a report by Exploding Topics Exploding Topics, the embedded fintech market is valued at $63.2 billion and is predicted to grow to more than $248 billion by 2032.
Let’s have a look at these categories and their examples.
Embedded payment portals could be considered the most common type of embedded finance application. Examples of embedded payment outlets include portals in Amazon, Uber, Walmart, and Zomato applications. Other embedded payment systems include Google Pay, Apple Pay, and BHIM, which store information and facilitate transactions.
Another category of embedded finance is embedded lending. Embedded lending removes the need to rely on banks and other financial institutions as intermediaries. The applications themselves automate the lending of vast amounts of capital at less cost and time. The companies can access money from reliable SaaS companies straight away. This has led to a drastic increase in demand for a reliable Mobile App Development Company which develops such SaaS solutions. This seems to be a very lucrative industry and is expected to be worth $7trillion within the next ten years.
Neobank is a direct bank operating completely online banking without traditional banking networks. A neobank is a type of new-age bank without any physical location and is presently entirely online. Such banks provide mobile-first financial solutions for payments, money transfers, lending, and more. These banks also allow users to make deposits, withdraw money, and even loan and lending services. This means the services are just the same as traditional banks offer. However, one drawback to neo banks is that they lack banking licenses and cannot operate stand-alone.
Regtech solutions are also types of fintech products that are used to manage regulatory processes through technology. The functions of such solutions are mainly regulations monitoring, reporting, and compliance.
RegTech is the management of regulatory processes through technology, usually within the financial industry. Its main features include regulatory monitoring, reporting, and compliance. RegTech consists of companies that use cloud computing technologies through SaaS to help businesses comply with regulations. It is known as regulatory technology.
Robotic Process Automation (RPAs)
Another trend that is catching on in the fintech industry are RPAs. Robotic process automation (RPA) is a software technology that enables easy deployment and management of software robots that emulate human actions while engaging with digital systems and software. RPA software is instrumental in building robots that can decipher images, navigate systems, identify and extract data, define actions, and more while delivering better efficiency and cost-effectiveness than human counterparts. In a survey by Gartner, RPA was identified as the fastest-growing segment in the global software market. With an estimated 63% growth rate (Gartner) in 2018 and even more in the last 1.5 years, the trend is all but set to grow exponentially.
Central Bank Digital Currency, aka CBDCs, is another Fintech trend to watch out for. CBDCs are digital currency issued by a country’s central bank. Central bank digital currencies are a form of digital currency that is equivalent to the value of government-issued fiat currency. CBDCs are gaining popularity as they reduce the risk associated with using digital currencies or cryptocurrencies. While cryptocurrencies are highly volatile in value, that’s not the case with CBDCs, which have a fixed value and very low volatility. This is because the central bank of that country controls them.
Buy Now, Pay Later or BNPL is a category of short-term term financing that enables users to purchase while paying for it in installments after the purchase. This is quite similar to EMI options on any purchase. The valuation of the BNPL market surged to 120 billion dollars between 2019 and 2021. That is almost a CAGR of 85%, marking massive potential for this trend. BNPL plans also charge very little or no interest. Compared to traditional credit lines and loans, BNPL loans are also easily sanctioned and do not affect credit scores if the payments are duly made on time.
Digital Identity Verification
Digital Identity verification is a technique to provide robust security measures to fintech applications. This technique uses technologies such as multi-factor authentication, double encryption techniques, biometric authentication, and more. These technologies protect against fraudulent activities, cyberattacks, and unauthorized access to financial transactions in the fintech landscape. Digital identities are also more secure than traditional on-paper identification as the documents are digitally stored online through stringent authentication protocols. In short, digital identity verification is all about leveraging technology to validate a person’s identity digitally and is proving to be a boon for the fintech industry.
All industries are realizing the benefits of AI in day-to-day operations, and the fintech industry is no exception. Customer service chatbots and innovative AI tools to automate fintech workflows are some of the ways AI is being implemented in the industry. Everyday use of AI in financial institutions has led to as many as 80% of global fintech companies realizing the importance and benefits. Most banks worldwide are already in the beginning stages of this transition and are making the best of AI in almost all aspects and saving costs. Automation with AI is expected to save companies as much as 70$ billion in North America alone. Multiplying it by the number of countries actively employing AI techniques, cost saving comes out to be a significant number.
Open Banking refers to sharing financial information to other institutions usually for the benefit of the customer. Open Banking allows financial services and new financial products to its users at the shortest notice.This not only drives competition amongst banks while improving the quality of services rendered but also help banks create a better customer persona based on the aggregation of data from different financial sources. This helps banks cut losses and provide better services. For understanding Fintech better, here is a bonus read on the same!
The future of the Fintech industry is one of the most significant stakeholders in the software development industry. Due to its high-value transactions and increased security requirements, the industry also drives innovation in software development. While more enterprises are investing in fintech development, more and more developers are also innovating to provide more security and transparency to fintech platforms. Many companies offer Financial Software Development but no one does it like OpenXcell. OpenXcell is an excellent partner for any enterprise looking for fintech software solutions. Its client roster of 700+ happy clients and 1000+ successful projects is only evidence of its commitment to quality.
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