The emergence of financial technology around the globe is driven by efforts to deconstruct and reimagine business models embedded within financial services. Entrepreneurial endeavours to this end are diverse. Indeed, the propensity toward complexity is considerable, bridging a range of financial services, markets, innovations, industry participants, infrastructures, and technologies. This study aims to improve comprehension of the global FinTech landscape. Within financial organizations, technology is extensively used across the value chain and is a driver of innovation within financial services. Yet the academic community has provided little insight into the landscape of recent innovations related to the Fintech Revolution. In this study, we will be looking at the emerging trends in Fintech such as :
1. Startups
2. New bank products
3. Automation
4. Blockchain
Startups
At the basic level, is used to help a wide range of growers such as new companies, business owners, and even consumers so as to help them at managing financial operation and processes. This is done by used specialized programs and algorithms of a higher level in computers and especially smartphones. Fintech firms are distinguishable from the legacy incumbent financial services companies by their use of technology to reimagine the products, services and capabilities of the traditional financial services sector. The FinTech revolution is characterized by the application and synthesis of technological capabilities to reduce barriers to entry and allow newcomers to insert themselves into value chains, as providers of innovative products and services. To have a successful startup, one must make sure that underfunding doesn't take place. Underfunding is a major backdrop for startups and strikes much quicker than the estimation. There can be a time lag of 3 months to one year if proper care is not taken. Budding businessmen should start raising a venture capital at 6 months prior to need. In addition, FinTech startups looking to raise a fun from the venture capitals must be careful enough to choose those with both an experience and an understanding. Thirdly, the financial services that provide to these startups are regulated and some are even ultra-specialized which includes laws abiding the capital markets, borrowers, privacy etc. So, it is very important to take a deep look at these aspects and never overlook the legal issues. Moreover, payments may seem the easiest in a finch startup but, it is also the most difficult to succeed in. This is one of the major reasons why this sector is highly crowded. In particular, these companies are rolling out payment options such as Alipay, APllepay, Google pay, Facebook payments, etc. These startups must consider the fact that payments are not an easy part of this sector and they must consider several options such as selling to multiple stakeholders whether retail or corporate.
Examples of such FinTech companies are :
Paytm: This is a payment processor built specifically for India’s mobile shoppers. ( US $2.4 B)
Policybazaar: This is a portal that brings an unbiased comparison of financial services from all the major insurance companies. ( US $277 M)
Freecharge: This is India’s digital payments platform. ( US $80.6 M)
New Bank Products
The business needs innovation in bank products and the banks should not be so traditional and conservative anymore. In order to hold and attract customers, banks should innovate their products, processes and organization. One of the main reason why FinTech introduces new bank products is for the need for product diversification and to search for new opportunities to enter new markets so as to increase market shares. Developing new products is necessary for FinTech companies for activities such as daily payments, paying taxes, transactions, etc. These companies are not conservative institutions such as the traditional commercial banks and are always looking for a change and innovation. This is done in order to be attractive to their customers, process and market. However, these new bank products must satisfy certain criteria to be classified as innovative bank products. They must represent a novelty, offer a higher utility than the existing ones, lead a positive change and bring out specific results. Moreover, innovation is also done in order to follow the increasing level of customer requirements and to keep up with the competition over the other members of this sector. Almost all bank product innovations in the FinTech are related to the technical process, and these innovations have dramatically altered the banking industry. In the 21st century, technology is so developed that it completely changed the face of banking and now allows banks to create a branch for operations with actually hiring manpower. These branches are working all year long through ATMs, Internet Banking, Mobile Banking etc. This is the most efficient way since it reaches the maximum number of customers with minimal cost. One of the best advantages of these banking systems is that it gives both the bakers and the customers a win-win situation since both of them are benefited from this modernization. In conclusion, banks are obligated to innovate their products to enhance the quality of their shrive towards the public. Also, having the right and precise categorization of business bank products gives great help in the process of innovation. Hence, the key to quality innovation is to have an easy going, understandable, and simple products to be used for the transactions by the customers. Furthermore, the technology boom is increasingly adequate in the bank-to-business relationship.
Automation
The concept of trust as financial technology platforms, banking industry automation, and strategies advance during the early 21st century is very significant. It examines whether investors will trust FinTech platforms to perform financial transactions and trades in their best interests as they have trusted conventional banks, defines FinTech and FinTech platforms, and discusses artificial intelligence (AI) technologies. Robotic process automation's workflow efficiency benefits have been of great value to financial services organizations. Bots can perform repetitive, clerical tasks such as processing customer applications and responding to basic customer query faster and more accurately than human workers. Bots also behave more predictably than people. They don't deviate from their programming so they won't make mistakes or circumvent processes. Accordingly, RPA is a powerful risk management resource that many financial institutions already use to monitor compliance and create audit trails.
But RPA's contribution to operational efficiency is just the tip of the iceberg. Financial organizations that venture deeper into RPA's capabilities will find a wealth of transformational opportunities that can reshape the customer experience. In particular, RPA is an enabler of new digital financial technology (FinTech) that enhances the quality of service and convenience for employees and customers alike. Robotic process automation can also reduce the testing surface of new custom developments and FinTech applications. Software robots, which have roots in software QA automation, can be used to validate the output of new custom developments. Consequently, new financial services can be developed with minimal risk to existing processes.
Applied to customer-facing services, RPA is directly responsible for some of the most common FinTech utilities. Case in point, bots can automatically populate data fields based on photos of documents that are uploaded via a mobile camera to a FinTech application. This works for basic banking functions, such as mobile deposits, but also more advanced processes such as applying for a loan or even initiating peer-to-peer lending.
Robotic process automation can also catalyze new classes of FinTech products. Consider the example of what American Banker calls "robot-advisory services" for wealth management. Investment values and information can change by the minute. Software bots can continuously interface with various data sources to track market conditions, and customers can automatically receive recommendations based on the most up-to-date information.
Blockchain
The blockchain, is as it sounds, a chain of information broken up into blocks of data. Cryptocurrencies, like bitcoin and others, use the blockchain as a conduit. A blockchain is sort of like DNA in that each ‘gene’ (block) contains a specific piece of information. Each block of data represents a transaction of currency and you can follow the chain to build up a picture of each transaction, right through to the current one. You could take the analogy further and describe the individual units (nucleotides of the gene, i.e. ATGC) as being a simple codon, a little like the encryption in the blockchain. In the blockchain, the block of data is protected using public-private key encryption and you can only access these data if you hold the private key. This is also what obfuscates the information within cryptocurrencies and therefore helps to prevent data theft. The evolution of bitcoins mechanisms has been acknowledged by banks and has the potential to go beyond this and be revolutionary. The FinTech sector has been exploring the use of cryptocurrencies as a new innovation to challenge some of the more legacy business models in banking that may stall progress. Many banks, including CitiBank, Santander and UBS, are starting to embrace that this disruption can exert a positive influence on future banking innovation. Because the blockchain encrypted transactions are registered in an authenticated ledger system, it allows individuals and banks to transfer assets worldwide in a secure and traceable way. Security is always paramount to finance. One of the areas being explored by the financial sector is how cryptocurrency technology can remove the need for intermediaries due to its inherent cryptography based security. It offers an automated intermediary system, removing the need for the current system of centralised ledgers that act as a custodian. In the blockchain, there is no central ledger -instead, it is a decentralized trust model not dependent on a single entity. Financial market researchers the TABB Group, whilst speculating that blockchain syndicated loans can happen very soon also caution that the financial sector needs to agree to standards and set up checks and balances before the blockchain technology can truly make inroads into the sector.