Factors disrupting financial technology in 2021
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The financial service industry is experiencing mixed reactions—introducing digital services and the current Covid19 adjustments. The Majority of the traditional banking system is merging the new technologies to fit their services. The disruption is both positive and negative to the banks as many customers prefer the new money transfer methods. It a positive impact as it will help revolutionize the whole financial service system as years go by. Fintech is the new digital finance transformation disrupting the financial market.
Fintech research indicates that many people are embracing the new technologies. The Fintech system is transforming many sectors, with many industries going cashless. Today one can access easy loans from mobile banking apps, transfer funds globally and pay their credit cards on time using digital platforms. A Fintech research company helps organizations innovate new banking services for their clients. Fintech has introduced different sectors such as insurance and regulations, insurance and technology, machine learning, Artificial intelligence (AI), cryptocurrency, and Blockchain.
Factors and trends affecting Financial Technology
- Artificial Intelligence and Robotic Process Automation.
Technology has created software that can connect user devices and merge the data in one system. The need to collect data in one pool has led to the creation of personalized insurance tools. Regulatory tech (RegTech) can trace user’s KYC details through the software. The anti-money laundering system is also linked with Artificial intelligence to help curb theft.
Fintech companies will continue to increase as they provide compliance, risk management, transaction monitoring, and regulatory reporting. This needs more innovation and skill, a product Fintech is willing to provide, unlike traditional banking systems. Robotic process automation (RPA) is expected to grow by 2022. These are automated programs that imitate human actions. Robotic process automation will eventually eliminate the need for a workforce. They can do the same task as humans with less time and resources. This will help financial institutions increase their production. However, it will affect humans as many will lose to the Robotic system.
- Mobile banking and payment
A prediction report shows that mobile payment will increase by 60% in the next two years—this shows a significant increase, especially in sub-Saharan Africa and Latin America. The mobile payment system is highly used globally as billion-plus dollars are transacted every day. Many people in the world adopt the service as traditional banks don’t positively embrace the change. Fintech has, however, implemented new systems which help transfer and receiving of money through mobile apps. Mobile payment saves resources and time.
- Smart contracts and the real estate industry
Smart contracts are the next significant development for the real estate industry. The Majority of estate transactions use smart contracts. Real estates are filled with inefficiencies; smart contract help remove the need for intermediaries. Which always slows the real estate industry and transactions.
- Regulatory technology
RegTech investment is expected to grow by 500 percent in the year 2020-21. The amount is expected to increase from $10.6billion (2017) to $53 billion (2020-21). The amount of regulatory lapse propels this increase due to Fintech and the increase of RegTech solutions. This allows large financial institutions to use tech instead of hiring more employees.
The RegTech helps address regulatory reporting, compliance checks, identity management, transaction monitoring, and risk management. All solutions under the RegTech system allow financial institutions to use a different system to improve business efficiency.
The regulations system is a hindrance for many financial institutions and companies. Since they have to observe all the regulations set. RegTech, on the other hand, allows financial institutions and companies to fulfill the regulation using easy practices. They can easily contribute to KYC and AML without any hassle. RegTech has a positive impact on many financial industries and investment companies.
