Whether you’ve heard of it or not, fintech is increasingly becoming a huge part of our lives and as a fast-moving industry, there are frequently new developments on the horizon. In this article, we’ll explain what fintech is and what some of the most recent developments in fintech are.
What is fintech?
Fintech stands for “‘financial technology.’ It refers to any technology that enhances, simplifies or alters traditional financial services. This includes software and hardware, algorithms and apps.
Fintech already features in many people’s personal and professional lives, though some people might not even realise it or recognise it as such for example – a budgeting app on your phone to help you organise your household finances.
Fintech helps to accelerate processes that previously took a long time, such as applying for a mortgage or sending international money transfers, for example, and it also streamlines day-to-day financial transactions like paying for purchases using a card stored on your phone or splitting the bill at a lunch.
With normal financial services disrupted by advances in fintech, many companies are getting on board and significantly transforming their operations. This often requires expert help and advice and many will utilise the services of a fintech law firm to ensure they’ve considered the legal, ethical and practical risks involved.
What are some of the recent fintech developments?
The Forbes Fintech 50 for 2022 lists some of the most innovative new platforms in financial technology, from investments and banking to cryptocurrency and insurance. Here are some of the most recent developments in fintech.
Artificial Intelligence (AI) applications are set to infiltrate all financial industry operations. Customer-facing applications for AI include personalised user experience technology, facial recognition tech, customer service chat robots and robo-advisors. Other applications include smart processes, authentication tools and natural language processing AI to assist with fraud detection.
Distributed Ledger Technology (DLT) enables data and transactions to be recorded and shared across multiple stores at the same time. Some DTLs use blockchains to store and transmit data and this is set to increase. Other blockchain applications include real-time transaction settlements, digital asset support services, authentication ecosystems and decentralised finance.
Effective use of cloud computing in fintech can increase efficiency, improve integration, reduce downtime and lower costs. It also provides economical computing and storage services, freeing financial companies from the requirement for IT infrastructure and data centres, unless these are necessary for the core business. Upcoming cloud-computing trends include edge computing and edge cloud, cloud containers and AI cloud integration.
IoT or the Internet of Things, describes a network of connected physical objects with sensors and processing capabilities. IoT has implications for many fields of fintech. Insurers, for example, can use it to offer more accurate and personalised underwriting and claims. Instead of relying on broad indicators of risk, such as a person’s age, driving experience to date or their credit score, they can instead collect and analyse driver behaviour directly, tracking average speed and commute times, for example. This removes barriers between financial service providers and their customers. Other applications include property financing, trade finance and digital payments.