Remarkable Impacts of COVID-19 on the Fintech Industry
Financial technology (fintech) sector has been one of the fast-growing industries in the last few years. But, like most other sectors, it has been largely affected by the COVID-19 outbreak.
Let us have a look at the effects of the pandemic on the fintech industry:
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A Decrease in the Number of Alternative Lenders
There has been a noticeable decline in incomes across small and big businesses as well as retail customers. This has reduced consumption and raised defaults. Repayment holidays have cut down the revenue streams for lenders. As a consequence, tightened requirements and lower demand have caused a decline in issuance and compelled companies to cease operations.
Expansion of Digital Finance
The digitalization of finance has seen a remarkable upgrade caused by the coronavirus pandemic. Quarantine restrictions have increased the use of remote services. From online shopping to delivery, entertainment, streaming services, and mobile payments- everything has shifted to the digital realm. This massive shift to digitalization is likely to stay in the post-COVID-19 world. Cashless payments are a perfect example of this progress. Besides, the pandemic has driven the adoption of fintech and regulatory technology across the financial industry.
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Higher Personalization
The COVID-19 pandemic has increased people’s interest in telemedicine. Supposedly, it may boost commercial interest in biological data, such as blood pressure, body temperature, and others. It would enable companies and governments to improve assessment and forecast, as well as influence the way people live. Besides, the massive 5G adoption is expected to shift the consumer paradigm dramatically. All of these changes would affect areas of fintech services, including software, credit scoring procedures, targeting and customer acquisition, and more.
5 FinTech Trends to Watch this Year:
The finance sector has been disrupted by innovative technology, and fintech has made managing finances easy and accessible with just one click. Banks and other firms are also utilizing the latest technologies to enhance customer experience and simplify their processes and scale services. By leveraging artificial intelligence, blockchain technology, and data analytics, the financial industry can be ready for a transformation.
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Here are five fintech trends to keep an eye on in 2020:
More Bank Branches will Undergo Digital Transformation
Banks are coming up with new approaches to improve the branch experience as mobile banking is gaining popularity. Implementing digital signage brings more interactive experience to branch visitors, while mobile devices help with tasks to move customers through the process efficiently and quickly.
As customers lean toward online banking, branches take advantage of the technologies to build a better in-person experience.
Use of Artificial Intelligence in Finance will Expand
AI and predictive analytics have been around to assist the financial industry. With the digitization of financial sectors, AI aids chatbots give informed financial advice, helps in fraud detection, and guides in customers’ investment.
Financial Services Firms Increase their Use of Data Analytics
With the increasing growth of the Internet of Things and other digital devices, more information is available for financial firms to monitor and analyze. With all the information gathered from swiping credit or debit cards, businesses can identify fraud or breaches and examine the risks.
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Automation will take over Financial Services
Automation is cheap, accurate, and efficient and can quickly get work done. Financial firms are implementing bots to automate internal tasks such as responding to IT tickets or accounts receivable. Technologies like RPA have created more productivity and reduced cost as it takes up more mundane or complex tasks and allows staff to focus on more important issues.
Blockchain will be a Key Security Solution
Blockchain can be utilized as a security solution with various points of verification built into each transaction. This multipoint verification protects the information being transferred and develops a detailed record in each step. This is a safety measure, especially for customers who want to move large amounts of money.
Blockchain technology makes peer-to-peer transfers in a decentralized network with no middle man to charge a fee, which helps saves money.
How Blockchain Technology Is Transforming the Landscape of Financial Services Sector:
Blockchain, primarily a distributed ledger technology (DLT), is a disruptive application that has a tremendous potential to transform the workings of the financial sector in recent years. However, the banking sector has always been open about adopting new technology to turn conventional banking practices to convenient banking practices.
Let us look at how blockchain technology is transforming the financial services sector:
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• Banking space has been facing several issues regarding the recoverability of loans granted by the banks. Using Blockchain technology can make it possible for the transactions to be recorded in a block. Generating the blocks of every transaction will enable banks to trace the diversion of the loaned funds.
• It is essential for the banks as well as other financial institutions to create a database containing all the information of the customers, including their identity proof in order to avoid money laundering or other forms of fraud. Blockchain technology can help banks conquer the problem of establishing identity by providing cryptographic protection that ensures the involvement of all parties to the transactions.
- The domestic payments generally take minutes to hours to complete, but it takes several days to complete the transaction for cross-border payments. Besides, inadequate infrastructure creates security concerns while making an international transfer. Hence, these payments are prone to cyber-attacks that can interrupt transmission. Blockchain technology streamlines payment systems, reducing the operational costs, human blunder, and falsification. It also helps banks get rid of all intermediaries in the payment processing system to lower the costs of process payments between clients and banks.
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