Top Fintech Trends Enabling Smart and Secure Finance

Arguably the most important aspect of digital-only banking, however, is its potential to reach a wider demographic than has ever been possible before. According to a recent World Bank report, there are still up to 1.7 billion people without access to the global banking system. So the significance of opening up access to essential financial services cannot be underplayed.

2. Public cloud

A report by the International Data Corporation (IDC) indicates that investment in public cloud infrastructure and services will have doubled between 2019 and 2023—with the banking sector accounting for roughly a third of spending.

Driving the move toward a cloud-based model is the growing prominence of open banking, which is gaining ground thanks to its ability to provide greater transparency. Agile fintech disruptors favour the cloud because it allows them to foster collaborative partnerships with developers. And large banks are now getting on board with the public cloud model because it supports a range of Platform-as-a-Service (PaaS) options.

Furthermore, operational challenges brought about by the pandemic mean that financial institutions and banks have little choice but to rely more heavily on cloud-based solutions from here on out.

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3. Robotic process automation (RPA)

RPA has been adopted by a variety of sectors and, as a fintech solution, has the ability to streamline operations, reduce the human burden of repetitive tasks and greatly improve banking efficiencies. This will speed up and reduce the cost of many of the time-consuming back-end processes involved in running a financial institution, such as account maintenance, new customer onboarding and credit processing.

Moreover, automation can be harnessed to build a strategy for service excellence that sets financial institutions apart from the competition, including hyper-personalisation, true data integration and the ability to act on real-time insights to intuitively know what customers want.

If you would like to get more insights into the capabilities of RPA as well as its security vulnerabilities, check out this whitepaper: Top 10 Security Risks in Robotic Process Automation

4. Autonomous finance with AI and machine learning

Financial consumers are feeling increasingly time-pinched as they try to juggle home and work commitments with managing their personal finances. With AI and machine learning solutions, innovative fintech startups and businesses can automate financial decision-making and save their customers valuable time.

Artificial intelligence solutions and ML are also enabling fintech firms to harness Big Data, to find meaningful patterns in customer behaviour that can lead to smarter financial decision-making. With this new intelligence, they can effectively tailor their products and services to match consumer desire.

Just as personalisation is becoming the expected standard across many other industries, like retail and healthcare, so to will it become the norm within banking. Other fintech applications of AI and machine learning include chatbots powered by conversational AI solutions, trading algorithms, policy-making, fraud prevention, risk management and compliance.

The proliferation of IoT technologies across all industries, not least the financial sector, has created a wealth of new opportunities for cybercriminals to exploit.

Given the nature of the information held by financial institutions, it’s unsurprising that cybersecurity represents one of the biggest focuses for the sector moving forward. In fact, the financial industry is one of the top three targets for cybercrime, accounting for around 10% of all annual attacks.

According to a recent Deloitte report, up to 64% of banking businesses are expected to plough investment into combating cybercrime in 2021 and beyond.

7. Biometric security systems

With the aforementioned rise in cybercrime, the financial technology innovators are having to think of new and infallible ways to protect their customers’ sensitive financial data. Passwords are coming under increased pressure from evermore advanced criminal technologies, and this is why biometric security measures are the next logical step in safeguarding financial security.

Many are already familiar with things like fingerprint ID, but an increasing number of banks, including HSBC and First Direct, are looking to the trends in fintech like face and voice recognition to keep their customers safe.

This not only has the benefit of being far more secure than a password but it’s also much easier for the customer. Instead of having to remember endless combinations of letters and digits, and answer multiple questions to access things like telephone banking, they can gain access to their accounts simply by using their biometrics. It also benefits the banks by making authentication quicker and more efficient, and enabling them to remove certain human touchpoints.

The technology can be applied at cashpoints too, removing the need for a traditional PIN.

Conclusion

The finance and banking sectors are experiencing a transformative wave driven by innovative fintech trends. Financial institutions need to flex their models to support remote operations while adopting the latest fintech trends to innovate their offerings and enable tailored, on-demand banking services for the masses.

The integration of AI and machine learning technologies has paved the way for autonomous finance, allowing for automated decision-making and personalised services. The importance of customer intelligence tools in gathering and analysing dispersed customer data cannot be overstated, providing valuable insights to adapt services to meet customer expectations.

However, amidst these advancements, the financial sector faces growing challenges in cybersecurity, with an expected surge in the global cost of cybercrime. Thus, biometric security systems, including face and voice recognition, represent a crucial frontier in safeguarding financial data.