For a long time, new entrants have been finding it difficult to enter the market. But not anymore! Financial disruptors are taking over the industry with new technology and fast paced methods to make finance an easier stick to handle. Startups are flocking the market with innovations that are not only profitable and scalable but also altering the traditional methods.
The Finance world, while having established itself as a secure industry is also the one that frequently becomes the victim of a number of glaring issues like lack of transparency, a still less real-time ecosystem, and a case of slow digitized adoption. Also, given the level of sensitive data being dealt with, Fintech companies have highlighted security as their topmost concern.
The threat to security along with the need to bridge the gap between the general population and the real-time access of their money, has brought up a dire need of adding technological innovations into the traditional financial processes to improve its status quo and deliver better services to the end users.
A technological innovation called Fintech.
Fintech or Financial technology is revamping the finance industry as well as other business verticals by significant numbers. The pace at which FinTech is moving has ensured that the popularized segment will contribute to majority of the revenues that the Financial sector would draw.
This has increased the necessity to develop a Fintech app and embrace the Fintech solutions into our business, about which we will discuss in this blog – starting with the importance of considering Fintech app development followed by how Fintech works.
Why Invest in Fintech App Development
From Coinbase to Avant, Credit Karma, Mint, and Stripe, several fintech solutions have changed the way companies have been doing business so far. They have transformed the traditional business models and made it beneficial for businesses to invest in Fintech mobile app development in 2020 and beyond, if they wish to avail benefits such as:-
1. Easier Payment Process
The foremost reason to develop a Fintech app for businesses is an easier payment process. The Fintech solutions prevent the consumers and business owners from going through the cumbersome, time-consuming process of cash and credit/debit card based payment. The transactions can be easily made online using banking apps, digital wallets and even Cryptocurrencies (which are gradually resulting in the rise of Blockchain wallets in the market).
*Side Note* Fintech, by embracing Blockchain technology, is not just set to revamp the future of transaction, but has eliminated the intermediaries, added transparency and security to the process, and accelerated the whole mechanism, which has brought a sense of satisfaction among both the customers and business owners.
2. Evaluating Risks Effectively
Fintech solutions have taken the market by storm by making it easier to predict and overcome risks. It scans a vast amount of information from different sources and uses a wiser approach while lending loan or making any transaction, which is cutting down the risk of errors and frauds.
3. Faster Investment
Fintech has eliminated the need of hiring a human financial advisor by providing 24×7 consultation and advice through mobile apps. This has accelerated the process as well as provided us escape from biased suggestions. Besides, Fintech solutions have brought the banking and non-banking organizations on the same platform which has opened new doors for Entrepreneurs in terms of gaining loans and investments.
4. Lower Cost
As per the market insights, the primary challenge to entry into the financial business has been cost. By making the financial services available on devices that millions of people have, i.e. the smartphones, Fintech effect on business has improved the PoS (Point of Sales) system and cut down the expenses of the businesses, along with gaining sophisticated analytics data to better engage their audience.
While these are some of the prime reasons making investment in Fintech a profitable deal, there are various factors that have placed Fintech at a prominent place in not just the present but also the future of a number of business segments.
Something that we are covering now.
What makes Fintech the Driving Force of Future Businesses?
The Fintech impact on financial services is proving to be a disruptive force business verticals as well. It is helping them improve their business models and lessen the associated risks – be it payment, lending process, wealth management, or any other such finance-related activity.
The technology is adding higher value to the consumer experience and market strategies by incorporating cutting-edge techniques and tactics into the process, which is eventually drawing the time of disruption of the future of the business world.
A few factors that are ensuring the prominent presence of FinTech in the world around us are:
1. Rise of Millenials
The foremost factor that made Fintech a disruptive force in the business world is the millennial generation. The millennials highly depend on social media platforms for gaining information or financial advice, which has been a challenge for the conventional financial institutions. They are more demanding and less loyal – asking for personalized services at the speed of light.
According to Morgan Stanley’s report, millennials will be the largest generation ever in the United States by 2034, peaking at 78 million people, quicker than the Congressional Budget Office’s models. By 2040, millennials may account for a third of all consumer debt in the United States, as their borrowing levels rise in the 2030s. This has increased the need for technological advancement in the Financial industry, i.e, the rise of Fintech solutions.
Fintech startups and established companies, as compared to the conventional financial institutions, are offering better services at data utilization and customizing the options as per the users’ needs and preferences using Artificial Intelligence for millennials which makes them satisfied and helps businesses gain higher revenue.
2. Payment Apps and Digital Wallets
The surplus use of P2P payment apps and digital wallets, has not just triggered a rise in the query on how to develop a P2P app, but is also proving Fintech to be a disruptive force in the market. These payment apps and digital wallets are providing users with quick and secure access to their money and send/receive any amount at any time and pay their utility bills without running for their pocket or purse.
This convenience is gaining higher momentum in the market and encouraging the business to invest in Fintech app development, in an ode to join the list of most frequently used payment apps.
Now as you know what factors make Fintech a catalyst in the business world, let’s look into the impact of Fintech trends on different sectors:-
Different Sectors Where Fintech is Bringing Considerable Changes:-
After revolutionizing the different processes of the banking sector, the Fintech impact on business solutions can’t be ignored. But before we explore each business vertical individually, let’s look into what percentage of respondents in different industries think that Fintech will disrupt their domain, as shared in the image below:-
1. On-demand Economy
Fintech is transforming the On-demand economy in a multitude of ways – both for customers and drivers.
It is making the ride payment process one that is not suffering from any time lags by allowing users to connect their bank account with the ride-sharing apps, thus preventing any daly and time gap. We can also see the insurance sector embracing mobile app development for business expansion and scalability.
It is providing drivers with small business banking tools like expense management and automatic invoices which will ease the financial processes and upgrade their productivity.
The impact of financial services technology in the Ride-Sharing economy is so much, various insurance companies and Fintech startups are investing heavily in the taxi-hailing industry, offering all the services to the users on the same platform.
In addition to this, the top Blockchain-based Fintech apps like Coinbase are increasing their interest in promoting making transactions and sharing e-gift cards in the On-demand mobile apps.
Fintech is spawning new opportunities in the healthcare industry, helping with mitigation of the current challenges and providing exemplary experience to both the patients and healthcare service providers.
On one side, the Financial technology is serving the industry with seamless payment solutions, while, on the other side, poised to pave new ways for several lending and insurance purposes. Various medtech startups have added Fintech to their services in an ode to provide all the medical-related services under one roof, an example of which is Practo.
Also, a significant rise will be observed in the adoption of Blockchain technology in Healthcare industry, implying payment will be possible through virtual currencies (Cryptocurrencies) in addition to a higher level of data security through Smart Contracts.
The retail industry is enjoying a wave of revolution with Fintech app development, especially in the payment and customer experience facet. It is providing users with an omnichannel experience, making it possible for the customers to interact with the Retail stores via different platforms. It is also simplifying the payment and checkout process, helping the retailers to cater to a wider audience. Two relevant examples of how Fintech is impacting the business in Retail business are Fingopay and Perpule.
It is estimated that the technology will boost the marketing strategy by empowering retailers to know what order have the customers placed, paid for and returned and thus, plan a loyalty program accordingly.
Besides this, digital payment apps and social messaging apps will coincide, making it possible to perform retail centered payment from all the social media apps and message via payment apps. The retail platform, through the payment gateway integration process will aim at creating an omni-channel presence by making it possible for the users to checkout from everywhere – the app, website and social media.
4. Government Ruled Banks
Fintech is also reinforcing the government banks by offering them multiple digital services and platforms to connect with users and deliver transparent and impactful solutions. One way through which they would be achieving this, is through the introduction of Open banking.
Open banking- a collaborative model where banking data can be shared among two or more independent parties via APIs – enables the government organizations to enhance customer experience, generate better revenue, and build a sustainable service model for conventionally underserved markets via a decentralized approach which is far beyond lending and data sharing. This is empowering multiple fintech innovators as well as various one-off bank agreements, which was not possible with the traditional financial industry model.
Earlier, it was tough to gain visibility in the market and raise fund effectively due to lack of platforms, resources and historical data preventing startups and established brands from getting into the claws of the frauds. But, with the introduction of Fintech apps, the Crowdfunding process is becoming a lot more streamlined. The technology is bringing more effective and profitable approaches by fostering P2P payment, easing the process of follow up with the investors and assisting the fundraising process.
It is also encouraging that the technological impact of financial services is leading financial institutions like banks and NBFC to turn towards online fundraising platforms to extend their reach and offer better services in the market as “alternative investment”. In this way, fintech technology is contributing to bridge the gap between public and private investment, which will open up new avenues to get funds from.
Though we have covered Fintech is important and how Fintech is changing the financial industry and bringing a major transformation, having a look at the future fintech trends can help you plan a better strategy. So taking the same thought forward, here are some of the Fintech app development trends:-
FinTech App Development Trends
According to a report published by the Statista Research Department, in 2018, global Fintech revenues totaled 92 billion euros. According to the report, the sector’s revenue is predicted to expand at a rate of approximately 12% per year, reaching a total value of 188 billion euros by 2024. There are a number of technologies and trends in the Fintech realm that will foster innovation in different business verticals. Such as –
1. Blockchain will Become a Prominent Part of Fintech Strategy
Blockchain, the technology behind Bitcoin and Cryptocurrencies, have already been considered to improve the Fintech services across different sectors.
While the impact of Blockchain on Fintech has mainly been restricted to banking and other sectors for trading and supply chain management, the technology will create more opportunities in the field of Payments Infrastructure, Digital Identity Management and Funds Transfer Infrastructure. It will be considered by most of the financial companies for creating immutable record of their sensitive financial information and use them safely and securely.
2. AI will Enhance Financial Consumer Strategy
The fact that Artificial Intelligence is one of the biggest disruptions in the business economy with almost every business vertical either embracing the technology or planning to add it into their process by the next 5 years (as shown in the image below), Fintech mobile app developers will show a profound interest in this technology.
Fintech organizations and development companies will add AI, Machine Learning and Predictive analytics to their tech stack to understand the customer behavior, choices and preferences, and deliver better customer experience along with automating a significant amount of work at their end.
3. New Payment Solutions will be Introduced
With the advent of mobile payment solutions, physical visits to banks have reduced by significant value and it is further expected to drop by 36% by the year 2022. In the same time period, mobile payments will grow by 121% with over 90% of users expected to be turning towards digital wallets and contactless payment solutions.
Besides, a major disruption will be noticed in this context with the adoption of Bitcoin and other cryptocurrencies because of their characteristics like faster transactions, ease of cross-border payment and enhancement in infrastructure. It will all ultimately result in an heightened investment in Blockchain Wallets – a decentralized concept that we have talked about in great lengths in our Blockchain Wallet guide.
4. CyberSecurity will Get More Attention
To combat cyber security threats, the organizations will embrace different Fintech technologies – majorly Big Data and Biometric authentication. They will employ Big Data to analyze and predict the upcoming internal and external security issues and respond at the earliest. Besides, they will add biometric authentication to their processes to ensure that no unauthorized person could get access to their data, which will increase security, build trust and reduce the efforts and cost of securing their data via traditional means.
5. Digital-Only Banks will Gain Momentum
With the increasing mobile based banking and other financial solutions, there will be lower-to-no need of a traditional bank in the future. This will boost the concept of Digital-only banks, i.e, banks that have no brick-and-mortar outlets but provide the users with an access to all the banking resources and services virtually and swiftly.
Fintech, as we have covered in this article, has opened up a new world of opportunities for the business world – helping them deliver more innovative services, make better profits and that too on a fraction of money they have been investing earlier.
The segment has been bringing a major impact on the present and future of the business world, implying every business owner need to look forward to investing in Fintech app development to provide the users with higher value and generate higher revenue.
So, contact our team today to add the optimal fintech solutions to your business model.
Frequently Asked Questions
Q. What is the advantage of Fintech to a company?
A. Fintech has enabled the integration of physical and digital payment methods that consolidate multiple bank accounts or cards using a single interface. This capability empowers businesses with easier transaction methods and reduced overall costs.
Q. Why is Fintech better than banks?
A. Fintech is forward-thinking, customer-focused, and simplifies complex financial processes, making them more accessible to the general public. Fintech companies can also offer products and services that are less expensive than traditional banks due to a more streamlined corporate structure.
Q. How does Fintech help small businesses?
A. Fintech aids small firms in streamlining processes and increasing operational efficiencies, as well as gaining greater financial access. Fintech’s ease of use and simplicity appeal to small enterprises. Fintech adoption can also be a competitive difference.
Q. What basic security measures would you implement for a financial app?
A. By incorporating a multi-factor or two-factor authentication option – such as generating one-time passwords or biometric authentication methods such as fingerprints – you can add an extra layer of protection that cannot be easily circumvented.
Q. How to create a Fintech app?
A. It’s critical to ensure that fintech app development is done correctly in order to avoid security risks and provide high-quality functionality. Follow these steps to get a fintech app produced for your company.
- Determine your niche and ensure legal compliance
- Decide features & estimate costs
- Hire a professional app development team
- Integrate innovation in the UI/UX design
- Develop an MVP first
- Improve and support your Fintech app