FinTech has been a focal point for many banks, businesses and financial institutions over the last few years. As a result, these institutions have actively implemented new technologies and digital strategies to mitigate the risks associated with doing business online through security measures such as information and cybersecurity, as well as instituting compliance and governance measures.
It has become essential for these institutions to align their business strategies and implement standards within their organisation to keep up with the global move towards automated and innovative technological solutions.
AES explores 7 of the top emerging FinTech trends expected to expand in 2020 and beyond.
RegTech will continue to increase
Regulatory Technology (RegTech) is the use of technology to regulate processes such as monitoring, reporting and compliance within the financial industry. Regulatory technology has in previous years been more of a focus for financial institutions and banks, but in recent years we have seen an increase of this tech being implemented in the business sector too.
A subsection within the RegTech industry itself are companies that offer a range of computing technology, such as SaaS (software as a service) which enables businesses to develop and maintain important processes such as compliance. The focus for compliance trends being strong customer authentication (SCA) within the Open Banking and financial institutions.
As technological solutions increase so too will cyber-attacks, data or information breaches, third party risk, money laundering and more. It is becoming essential for businesses and banks to implement processes and systems that will secure their innovative advancements and customer information by implementing tech solutions. This means that regulation will continue to dominate finance and banking in 2020.
For example, due to many banks failing to meet the deadline in implementing processes that mitigate their compliance, PSD2, or the second Payment Service Directive will remain a topical issue for 2020. As PSD3 is hot on the heels of the finance and banking sector, banks will be required to mature in implementing PSD2 into their business models before moving forward.
For banks to meet regulatory requirements, it is essential for them to put a robust and flexible digital strategy in place. The rate of growth in this matter requires a significant increase in resources and skilled workers, not just in South Africa but the global tech industry.
Cybersecurity in FinTech
Cybersecurity is growing as both the banking and financial industry continues to digitally transform. Financial institutions will be looking to the FinTech implementers of the future when it comes to protecting their customers and companies from information and IT hackers, the misuse of data, money laundering, fraud and identity fraud to name a few.
Businesses will start to invest more in putting Cybersecurity and Information security measures in place, in the years to come. As banks develop strategies designed to prevent and mitigate Cybercrime, they will need to lean on the implementation of trending FinTech solutions to survive and maintain consumer trust.
The digital transformation of banks
The traditional banking structures and processes have been completely disrupted by emerging technologies over the past couple of years. Banks and FinTech are evolving into application-driven services for their clients. Banking processes no longer takes weeks and mountains of paperwork but can happen at the push of a button. Most traditional banking services are available and executed through mobile apps.
Enhancing the user experience is said to be a growing trend in the banking sector and FinTech for 2020. People are looking for convenience, availability and instant service, which opens the doors to many new technological developments within this space.
Big Data is a concept and has become big news in the tech industry over the past few years. It is a collection of trends reported through an automated analysis algorithm, which provides mass amounts of data which can be mined and converted into useful insights. It is a way to provide the best possible service and security to consumers and businesses.
There are several benefits of employing Big Data, this type of technology will quickly expose any fraudulent or suspicious activity which enables companies to respond to these breaches faster and limit the impact of these activities. Security measures can be put in place to govern privacy, information, cyber risk and more.
It is expected that this trend will continue to grow exponentially in the following years as more businesses and banks are looking to equip themselves with the ability to manage mass amounts of information and data.
RPA (Robotic Process Automation)
The automation of simple administrative tasks is likely to be overrun by the new technologies embedded within the Robotic Process Automation (RPA) trend. RPA is flexible because it is rule-based and programmed depending on the need, which means that human error can be avoided, costs can be reduced, and overall customer satisfaction can be improved upon. The automating of compliance and regulation is one of the benefits of RPA implementation.
Artificial Intelligence in FinTech
The Virtual Assistants market including technologies such as Siri and Alexa are predicted to reach $19.6 billion by 2025 which means the demand and usage of these products will be on the rise in 2020. Included in the AI trend is the use of Chatbots, not only does this technology streamline administrative processes between institutions and users, but it also opens up opportunities for a more controlled and secure environment.
2020 will likely see a rise in machine learning, Chatbots and other artificial intelligence technology being implemented and continuing to mature into the future. It is predicted that the cost of the operational process will decline in the banking industry by 20% in the next few years.
Consulting in FinTech
With the innovation and invention of new technology solutions comes an increased need for resources and expertise in these very specific areas, especially when it comes to implementation thereof. Financial institutions will need to rely heavily on consulting services in the coming years, especially with the pressure to comply with regulatory requirements.
There are many aspects in the maturing process when a business or financial institution decides to grow into an automated, digital working environment. The best strategies lie in the hands of experts in the FinTech consulting realm. It is possible to avoid unnecessary trial and error periods, which can take months or years and cost a lot of money without the right expertise when you partner with a FinTech consulting company.