2018 is turning out to be an interesting year! The latest Fintech advances are helping to focus and provide services to individuals, and businesses are steadily keeping up with the digital transformation requirements that are being thrust upon them. Next thing to take the fintech center-stage is the collaboration between the banks and fintech companies. This collaboration will help to increase efficiencies and user-satisfaction alike. To help us quantify the progress there will be indicators such as:
- Efficient financial business strategies
- Increased user and customer experience
- Easy deployment of new technologies
- Introduction of new upgrades and smarter products
- Well-organized asset and wealth management
It’s amazing how fintech has benefited the mainstream thought-process. New technological innovations such as blockchain, AI IoT and big data will be the driving force for the financial industry to help power the need to get smarter and move forward on a more-connected ecosystem that meets and hopefully exceeds financial goals of business and consumers.
Is Blockchain helping or hindering fintech?
With most of the banks actively working on blockchain projects, it makes sense for banks to be actively working on fintech upgrades. Crypto currency is the main trend of the Fintech world!
The incredible ways how financial technologies have penetrated the mainstream belief for security and user satisfaction is why fintech has become a strong case. Blockchain has long been just a technology behind Bitcoin and other cryptocurrencies. But in the past few years everything changed, as many companies have realized its potential to transform financial, healthcare, logistics and many other industries with respect to its security properties. 2017 was the year that many industries began to investigate the potential benefits to their respective industries.
Benefits to fintech include the ability to have a decentralized ledger that is available digitally and can be distributed across a wide user base which will benefit financial services entities. No single entity is in charge of the data and the ledger cannot be altered in any way once the data gets recorded. This type of security will help to ensure financial information is highly secure.
Big Data applications will be very beneficial to fintech
To expand the usefulness of big data applications, there are a few technologies that will offer more secure and responsive computational performance of fintech technologies. Over the next five years these technologies will be disruptive to the FinTech market and which will be a rich source of information for discovering user patterns in large datasets. Data mining and decentralized apps (Dapps) will bring many positive benefits.
Data mining is one technology that has emerged as having the potential to assist organizations in complying with regulations. Because that data is permanent the data mining will be a will result in a wealth of data that has been sourced honestly and in a transparent manner that users will have opted into. The opportunity exists for data collectors to build a more positive and open approach to consumer data, while being careful not to betray the user trust.
Decentralized apps (Dapps) will explode using blockchain as its foundation. New online tools created by an innovative open-source ecosystem that will allow more options for secure transactions.
Using blockchain as their foundation, Dapps create an innovative open-source software ecosystem which is both secure and easy to operate. What makes them very secure and fault-tolerant and transparent to users is that Dapps are distributed across many nodes. Decentralization makes hacking and fraud less likely, because data stored on the blockchain it cannot be altered and changed at a later date.
Many of the features in Dapps will lead numerous fintech organizations and third parties to seek to utilize the technology for practices where security is paramount.
How to choose between Public and Private blockchain options
Public blockchains, such as bitcoin, allow anyone to see or send transactions as long as they’re part of the consensus process. In contrast, if you are looking for a way to restrict the ability to write to a distributed ledger to one organization, such as a group of employees within a corporation, or between a set number of organizations, such as a group of banks that agree to a network partnership, Private blockchains are the way to go.
To secure trade-clearing activities within a group of banks and their clearinghouse it might make sense to use a consortium blockchain technology option. With this type of blockchain each node is associated with a step in the verification process.
The user experience is paramount to fintech upgrades
As financial services organizations begin to partner with fintech firms, the main motivation is usually around enhancing the consumer experience. The deployment of advanced technologies will help achieve this goal through greater use of consumer insights. What has become very clear is that addressing the consumer experience is a core motivating factor. The strategic foundation for collaboration is much broader: financial organization should be pursuing revenue synergies, market expansion, or even access to innovation from partnerships. However, in today’s digital-first world, user experience is increasingly guiding collaboration decisions as much as individual product, market, or growth considerations.
Where do you start?
Discovery and defining your business case for fintech upgrades is crucial. Understanding the relationships with consumer and being open to the challenges with your technology to find areas to improve is first. Identifying all the needs then development of the business case—rather than just a technology project—helps frame the project plan, develop relevant metrics, quantify expected return, and identify risks. Achieving the best results will come from building the best business case to invest in new areas of innovation.