A look at trends in the modern fintech industry.
With the development of modern technologies, the financial industry has moved to a completely new level. The fintech industry is now one of the most innovative industries. Its speedy development impresses and amazes. It is not surprising that the requirements for fintech software development are growing increasingly.
Several trends are observed in the modern fintech industry. Here, we will discuss the main of them and will check how a company can manage them.
Innovation: a Strength or a Challenge?
The fintech industry shall be always on top of trends to achieve success. The financial and technical solutions are changing constantly. New technologies and solutions appear. New tools and toolsets are developed. Everything shall be considered and applied if it is reasonable.
However, in this trend, there are some discrepancies:
- From one side, personalization is valued.
- On the other hand, machine learning and AI are on the rise.
This is one of the main challenges of the fintech industry. It is needed to create a proper balance between human and technology.
This is what the fintech companies struggle with. People want to interact with people. You might remember that irritating feeling when you need to solve an issue, and a bot replies in a chat.
On the other side, bots can provide a reply fast if the question is common. Thus, instead of waiting until a human operator replies, a client can get an immediate reply from a bot.
This is a contradiction that many fintech companies find difficult to resolve.
Regulation: Is It So Complicated?
The financial industry is regulated in the smallest details. Thus, this has a reflection on the fintech industry, too.
On the other side, in the world, the confidentiality of personal information is valued increasingly. New regulations are issued to protect the personal data of people.
Fintech companies are focused on the speed and efficiency of their services. But it is difficult to do if one tries to comply with all the laws such as PSD2, GDPR, as well as KYC, and AML requirements. Thus many fintech companies ignored some requirements in the past. It created mistrust between them and the banks from one side, and between them and people, from the other side.
Now, fintech companies do their best to comply with all the regulations and requirements. This is one of the main challenges for now. Fintech companies need to train their staff and prepare the needed policies to comply with all the requirements that work in this highly regulated field.
What about the Competition?
We shall admit that fintech is one of the most competitive fields nowadays. It is one of the incredibly promising fields thus, many companies are after it.
Another challenge is the banks. They mistrust the fintech industry. To some extent, they are right. In the past, many companies didn`t operate as required by legislation.
However, one more factor adds to this distrust. Banks perceive promising fintech companies as serious competitors. Thus, they reject financial services to such companies.
Such mistrust from the side of the banking sector is a serious obstacle in the development of the fintech sector. Thus, this is a serious challenge many fintech companies have to face. However, we shall admit that most progressive banks started embracing the newest fintech trends and try to incorporate the most promising solutions into their systems.
While the fintech industry is one of the fastest developing industries, there are still many issues. Some of them are pretty simple-to-handle. Others though are serious obstacles in fintech development in general and in its international expansion specifically. For example, the legislation might differ significantly in different countries. To comply with all the requirements, a fintech company has to adjust its solutions to all the requirements in every single country where the company is planning its presence.
However, even though challenges are serious, the fintech industry is one of the most popular industries today. It is expected that in the future, its popularity will be increasing. Moreover, it is possible that with time, the traditional banking system will become outdated, and instead of it, fintech solutions will be applied.