Top promising Fintech innovations and technologies
FinTech (Financial Technology) applies technological innovations, such as mobile devices, software, accurate analytics and data networks within the industry of financial services. FinTech companies are supported by massive funding. Their number is increasing all the time. Such companies have made improvements that lower the likelihood of the mistakes made by humans.
They reduce economic fraud or crime, minimize audit risks, enhance the visibility of management and improve compliance of taxes. Here, is a breakdown of six promising FinTech technologies and innovations you should pay attention to.
1. Disruptive Innovations
Disruptive Innovations change the work of the markets. Old products cease to be competitive due to a decrease in the significance of the parameters by which they were evaluated. 50 years ago, we counted with the help of a calculating frame. At that time the competitive advantages depended on the reliability of the frame material, the size and so on. But when calculators appeared, it did not matter what the calculating frames were made of. The calculator is much more convenient, faster and more accurate. Therefore, the parameters became absolutely insignificant. The same goes for technology.
“Disruptive innovation” is a term not exclusively from FinTech. It is often used to describe events in financial services. Especially, when technological development forces financial institutions to rethink an approach to the industry.
Following the experience of the Personal Money Service company that cooperates with unsecured personal loan lenders and other financial institutions, disruptive innovations are used by small companies if they manage to attack the market leaders successfully. To integrate into the market, the startup should understand the essence of disruptive innovations and learn how to apply it.
2. RegTech or Regulatory Technology
Regulatory Technology (RegTech) is a technology that helps financial services comply with the financial requirements. One of the main priorities of RegTech is the automation and digitization of AML rules and Know Your Customer (KYC) processes. AML is aimed at reducing illegal income. KYC identifies and verifies clients of financial institutions to prevent fraud.
The Financial Conduct Authority (FCA) of Great Britain is the first state regulator to actively promote this concept. Regulators like FCA work with RegTech firms in various applications, including artificial intelligence and machine learning. It is made to improve the efficiency of financial services and reduce costs.
InsurTech is a subcategory of Fin Tech, which is used in the insurance sphere. According to the report by Capgemini and Efma, traditional insurance companies faced competitive pressure because of the increased number of insurance startups that use InsurTech.
4. Initial Coin Offering (ICO)
ICO is a large-scale fundraising for startup companies that use blockchain. In fact, it is the sale of a new cryptocurrency for cash.
ICO is similar to the initial public offering (IPO). IPO means that the company places shares on the stock exchange to attract investors. But the difference is that ICO means working with supporters of the currency, and not with investors. It makes ICO similar to crowdfunding.
Last autumn, ICO was banned in China due to poor regulation and use by fraudsters. Recently, the US filed a criminal case of fraud in the ICO for the first time.
5. Artificial Intelligence
The use of chatbots in customer service and the purchase of goods through voice helper are already in use. Such decisions reduce the personnel costs. Therefore, they may occupy a dominant position in the structures of the front offices.
6. The opening of AIP and Internet of Things
One of the biggest challenges for the development of FinTech startup is a comfortable integration with banking institutions. And of course, banks are trying to secure access to their client resources. Any technical development can connect to existing infrastructure, including bank accounts. A refrigerator will be able to order food and the tanked car will pay for having fueled itself. There are reasons to believe that the “open world” will become a reality in the coming years.
These were six FinTech innovations. Were they impressive for you? Share your opinion in the comments below.