The finance segment will see even more promising and innovative fintech examples in 2023.
Financial technology – or FinTech – has rapidly matured since the pandemic swept across the world and completely changed the transaction ecosystem. In the first quarter of 2020, global investments in fintech businesses reached $25.6 billion. Many businesses, households, and consumers have had to rely on the digital world more than ever before to simplify their financial affairs – 46% of people, nowadays, use only digital channels.
That is why 2023 will probably witness even more impressive fintech examples.
Digital and Contactless Payments
Digitization is transforming the world’s payment. Instead of cash, all consumers need are credit/debit cards or simply their phones to complete safe purchases within a few simple steps.
According to McKinsey’s 2020 Global Payments Report, the decline in cash and ATM usage was nearly 50% in mature markets such as the UK, the US, Japan, and Singapore. Businesses, therefore, benefit from reducing cash-handling expenses and incremental margins from electronic payments.
Contactless and digital transactions, as the growing fintech examples, will become an increasingly important factor in global payments in the foreseeable future. In 2020 alone, the number of transactions conducted in this approach grew by 41%. Furthermore, they could fuel a shift in technology adoption of financial institutions to diversify the payment methods.
Among fintech examples, E-wallet is one of the most popular digital contactless payment solutions. The global market for mobile wallets is predicted to expand with a CAGR of 18.9% in the 2021-2028 period. The solution’s growing popularity is attributed to its significant benefits, including enhanced security, convenience, and cost-efficiency.
It creates a virtual platform where users’ cash, cards, gift cards, and other forms of currency are stored securely. Users will be connected to vendors via this platform, meaning transactions and purchases will happen virtually with a higher level of security and faster speed. As a result, vendors can significantly enhance their services and ensure customer satisfaction via such innovative fintech examples.
“We need banking. We don’t need banks anymore”. Bill Gates’ words are proven now when more and more people consider switching to digital banks instead of paying a visit to a physical office.
Over 14 million and 12 million citizens in the US and the UK utilize digital banking. Due to their accessibility and ease of use, digital banking services are continuously expected to expand in 2022. First, these fintech examples allow users to engage in most banking processes from the comfort of their homes with 24/7 availability.
Second, with electronic transactions, sensitive information will be encrypted, allowing for a higher level of security and privacy. Third, customers can enjoy various advanced financial services via digital banking software or apps, such as virtual assistants and automatic payments. Finally, digital banking helps clients track their transactions and manage their finances effectively.
These fintech examples also have nudged financial firms and their patrons toward paperless banking. Reducing paperwork means banks can save a lot of time and money to run more efficiently, as storing, indexing, and retrieving data are done virtually with greater speed and accuracy. It also means transaction fees will drop, allowing wider access to banking services for more potential users.
Artificial Intelligence and Biometric Security
Banks and fintech companies are adopting artificial intelligence solutions at increasing rates. Their investment in AI could surge from $1.5 billion in 2019 to $4.3 billion in 2024 solely in the Asia Pacific. The market for AI in fintech is estimated at $8 billion in value. Experts predict the figure will rise to $27 billion in the upcoming five years.
First, the dynamic role of AI in various fintech examples is why it has attracted enormous investments. AI and ML are being utilized in advanced features such as automated chatbots, customer analytics, and fraud detection. AI plays an active role in facilitating intelligent systems that address multiple complex tasks, ranging from handling queries to identifying leads and preventing crimes. The second benefit of employing AI is customer-centric fintech examples. By collecting and analyzing data from customer interactions, banking institutions can deliver the right products and offers to their clients.
Besides, we will see a spurt in fintech examples experimenting with biometrics security features. As cyber criminals are more than active now, financial providers enhance these methods to protect themselves and their clients. The key advantage of biometrics is advanced security. Various traditional authentication methods such as passwords or PINs can be easily stolen and controlled by fraudsters through data breaches.
Therefore, using tangible, non-transferrable traits such as fingerprints or iris scans, biometric methods confirm the identity of a user with a higher level of precision. In addition, these fintech examples speed up the payment or onboarding process significantly. There is also almost no chance of users forgetting their biometrics like in the case of passwords.
According to Mastercard, over 90% of consumers prefer biometric methods to passwords. Fingerprints or facial recognition are popular ways to prove users’ identities in the verification process. A report titled “Authentication Frustration: How Companies Lose Customers in The Digital Age” conducted in late 2021 further clarified the growing preference for biometric authentication. Among the 2,000 respondents, 44% saw biometrics-based fintech examples as preferred authentication methods over other options.
If banking and financial institutions do not integrate these methods into their processes to increase speed and convenience, the risk of losing customers is apparent. Over 60% of consumers abandoned their transactions due to verification problems, and 85% of them claimed that difficulties in the authentication process would create a negative impression of the brand or business.
In banking and finance, the adoption of biometric authentication, such as iris scan or voice recognition, will grow. As these methods become more advanced and accurate, their popularity will surely expand in 2022.
Autonomous finance leverages AI algorithms to gather data and gain actionable insights from trends and patterns. Afterward, they recommend adaptive services and offers, such as suggesting a payment gateway, currencies, and other frictionless payment processes. Thanks to these fintech examples, users become more independent and active in their financial activities. They have greater access and control over their finances and enjoy highly individualized offers from providers.
For banking institutions, autonomous finance transforms how they engage and interact with customers. It creates a feedback loop in which the provider continuously adapts and improves their services based on customers’ activities. It also boosts their operational efficiency.
Partnerships With Traditional Banks
Fintech examples have traditionally been seen as a disruptor, upending financial systems to offer fresh technology-forward approaches and products. For a while, fintech and traditional banks have been believed to be in rivalry. However, to effectively address challenges in the diverse financial services field, a close and strong partnership between these two institutions is an emerging trend.
Formal banking infrastructure has high dependability, credibility, and a loyal customer base. It also complies strictly with regulations that prevent risks and protects end-users. Meanwhile, fintech examples are characterized by dynamic, flexible solutions that match customers’ demands for seamlessness and personalization. The two contrasting perspectives, when combined, will embody their positive qualities and deliver services that are both highly innovative and dependable. This combination is particularly essential in a world where about one-third of consumers express their ultimate concern is the experience, rather than whether a banking services provider is an established institution or a fintech company.
Today, many leaders and executives have already acknowledged the importance of bank and fintech partnerships. A survey by Cornerstone Advisors pointed out that nearly 90% of financial institutions see fintech partnerships as an essential next step.
One noteworthy example of such a partnership is CitiBank and Google in late 2020. This collaboration means owners of Citi accounts will have vast access throughout the Google ecosystem and can make purchases via Google Pay. The move allowed CitiBank to reach all GooglePay users, estimated at 150 million people.
Such collaborations present an excellent opportunity for banks to increase revenue and, most importantly, innovation. They put consumers at the center of services and offers while transforming banking processes. We can expect that relationships between Fintech and traditional banks will keep thriving in the future.
The fintech revolution is gaining momentum as people want to get more things done with less effort. With a track record of offering speedy and transparent transactions, payment security, and valuable financial information, fintech is a power for good. Undoubtedly, fintech trends will continue to transform and become the standard in financial markets.
This article was first uploaded on 19 May 2021, and updated on 12 April 2022 for more details and relevance.
GEM Corporation is a leading IT service provider that empowers its business clients in their digital transformation journey. Based in Hanoi, Vietnam, GEM is characterized by competent human resources, an extensive and highly adaptive tech stack, and an excellent ISO-certified and CMMi-based delivery process. GEM, therefore, has been trusted by both start-ups and large corporations from many global markets across different domains.
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Duc Anh is a seasoned marketer with over five-year experience. He has grown his passion for the Technology field while partnering with GEM to deliver insightful technology content. Now, he is pursuing his career path in technology as a Product Marketer for one of the leading ICT companies in Vietnam.