Fintech, also known as financial technology refers to the application of cutting edge innovations to transform finance by enhancing business operation and delivering improved customer service. Financial technology also involves business-related software, services, and business institutions which provide advanced solutions to improve the efficiency of financial transactions. Take a look at these four top fintech technologies that are impacting the banking industry right now.
1. Big data & analytics
Fintech companies have their eyes fixed on big data because they know that it’s one of the biggest things to happen in the world of finance. The top leaders in the business world today are companies which invest in big data and analytic tools. When fintech companies are able to collect the right data and gain relevant insights, they can meet consumer preferences, develop investment strategies, track consumer expenses, and perform predictive analysis. With predictive analysis, for example, financial service companies can accurately determine the behavior of their consumers by making use of previous data to extrapolate into the future. All in all, the pools of big data mined by fintech companies can allow them to formulate profitable marketing strategies and also detect fraudulent activities.
2. AI & machine learning
At the heart of the fintech revolution lies artificial intelligence and machine learning. These tools are playing huge roles in the transformational shift to the fintech revolution, and they will continue to do that moving into the future. Some applications of artificial intelligence and machine learning are credit scoring, compliance and regulation, detection of fraudulent transactions and management of wealth.
Apart from the mechanical robots in factory assembly lines, robots also exist in fintech companies. Robotic process automation (also known as RPA) involves the use of financial robots to take over manual and repetitive tasks in the financial sector. These allow financial institutions to streamline their workflows, increase efficiency, and also reduce workload. As it stands now, banking automation is something that’s modernizing the financial industry. While there are downsides to talk about, including security and lay-off of bankers, automation has come to stay because its advantages speak for themselves. Thanks to automation, banks can digitize their requests processes, create smart forms, manage assets, generate real-time reports, and improve their customers’ satisfaction. The following points further summarize some applications of automation in financial companies:
- Statistical analysis
- Collection of data
- Regulatory compliance
- E-mail marketing and chatbots
- Management of transactions
As a public digital ledger book, blockchain has now become the bedrock of popular cryptocurrencies such as bitcoin (BTC). When Satoshi Nakamoto pioneered the idea of bitcoin and cryptocurrencies around 2009, blockchain technology became the foundation of decentralized digital currencies. And fast-forward to today, the financial industry is also adopting blockchain technology due to its unmatched level of security. Due to its advanced encryption and immutability, blockchain can be used to store the records of financial transactions and confidential data securely. Every blockchain transaction is encrypted, and the data doesn’t sit at a central location; it’s scattered around the blocks. Consequently, blockchain technology has been tagged as an effective cybersecurity solution.