Due to recent developments in financial technology, sometimes known as "fintech," the financial services sector is going through a period of quick upheaval.
fintech developments are changing both how financial services are delivered and how customers and businesses interact with the financial system.
The landscape of fintech is constantly changing, but some of the most significant shifts are in payments, loans, and investment.
The financial services technology trends that seem to be developing the most rapidly are the ones that are creating new ways to send and receive money, such as peer-to-peer payments, mobile payments, and cryptocurrencies.
These new payment methods are becoming more popular as more and more people are getting access to the internet.
When it comes to lending, fintech companies are utilizing data and technology to make it simpler for customers and businesses to get loans and make lending more productive and less dangerous for financial institutions.
fintech companies are developing new methods for consumers to invest their money, such as robo-advisors and online platforms that provide fractional shares of stocks and other assets. One example of this trend is the rise of the cryptocurrency market.
The regulation of financial services is another area that is being disrupted by fintech. Historically, the regulatory framework for the financial industry has been reluctant to catch up with emerging technology.
However, regulators are increasingly adopting a more proactive approach to fintech and attempting to build a regulatory framework that encourages innovation while safeguarding consumers and preserving the financial system's stability as the fintech industry trends change.
How is technology impacting the finance sector?
If we go back only a few years, we can see that the technology sector has always been light years ahead of the financial industry.
You would have to stand in line to withdraw and deposit cash and make repeated trips to the bank to drop off the checks, mail money orders, and other financial transactions. After that, the tellers would record these deposits by hand in the ledgers.
Direct deposit and online bill payment are two examples of the electronic payment methods available in banking with the introduction of personal computers and the internet.
Thanks to recent technological advancements, customers can make financial transactions without ever having to physically visit a bank office.
Today, mobile banking apps and internet banking platforms are further revolutionizing the banking industry, allowing customers to manage their accounts from anywhere. This is one of the many ways that the banking industry is developing.
Big data and artificial intelligence are two other recent technological developments causing comparable upheaval in today's society.
Big data is providing financial institutions with unprecedented information that can be utilized to better understand the behavior of their customers and produce products and services that are more specifically geared toward their needs.
AI is now being used to automate various financial functions, including customer service, risk management, and the identification of fraudulent activity. When these technologies are used together, they help make the financial sector more streamlined and efficient, as well as better able to meet the needs of customers.
The financial industry has always been one of the least quick to accept new technologies. However, this trend is beginning to shift. Recently, financial institutions have started putting money into cutting-edge technology to make the market more productive and competitive.
Revenue of the fintech industry has been growing
The fintech industry's revenue has been growing steadily over the past few years.
In 2017, the industry generated total revenue of $84.2 billion. This figure increased to $97.2 billion in 2018 and $111.5 billion in 2019. The industry is expected to continue growing in the coming years, with projected total revenue of $166.3 billion in 2022, $183.1 billion in 2023, and $197.8 billion in 2024. (Source)
Investments in fintech are increasing
There has been significant growth in investment in financial technology businesses since 2015.
In 2012, investments in this industry totaled $4 billion. By 2015, this number had grown to $67.1 billion, representing a 17-fold increase.
However, after 2015, there was a gradual decrease until 2018, when the number jumped to $149.9 billion. This trend continued, and by 2019, the total amount invested had reached $215.4 billion.
Investment in financial technology businesses reached an all-time high of $98 billion during the first half of 2021. (Source)
India is leading the pack when it comes to fintech
- Over the last decade, India's payment environment has evolved into the world's most sophisticated payment system in terms of the volume (compound annual growth rate) and value of digital payments.
- During the fiscal year 2022, the fintech industry in India received a capital of $8.53 billion (in 278 separate agreements).
- The Unified Payments Interface (UPI) in India has seen participation from 323 banks as of May 2022. It has registered 5.9 billion monthly transactions with a total value of over $130 billion.
- There are already 23 fintech companies in India that have reached "Unicorn Status," and the sector accounts for one in every five startup unicorns.
- The market for digital investments is projected to be worth $14.3 billion by 2025, up from $6.4 billion in 2021, with a compound annual growth rate (CAGR) of 22.4%. It is anticipated that India's market for digital payments will more than treble by 2026, going from $3 trillion to $10 trillion. (Source)
- One of the most important initiatives undertaken by the Indian government has been the setting up of the National Centre for Financial Education (NCFE). The NCFE is aimed at promoting financial literacy across India for all sections of the population. This is an important step in improving the overall financial inclusion in the country.
- Another important initiative has been the launch of the e-RUPI platform. e-RUPI is a digital payment instrument allowing contactless and cashless payment solutions. The platform is being adopted for cashless payments for COVID-19 vaccination.
- The India Stack is another important initiative launched by the Indian government. It is a set of APIs that allow governments, businesses, startups, and developers to use a unique digital infrastructure to solve India's hard problems towards presence-less, paperless, and cashless service delivery.
Five fintech trends to watch out for
Here are five major trends in the fast-growing fintech industry that affect its future:
1. Continued rise of mobile banking
In 2019, there were more than 1.8 billion active mobile banking users worldwide, and this number is only expected to grow in the years to come.
The convenience and flexibility of mobile banking apps have made them a popular choice for consumers. As more people adopt smartphones and other mobile devices, mobile banking will likely become even more widespread.
2. Growth of digital payments
The popularity of digital payments has been on the rise in recent years, and this trend is expected to continue in the years to come. In 2019, the total value of digital payments was expected to reach $32 trillion; by 2025, this number is expected to grow to $66 trillion.
3. Rise of Artificial Intelligence
AI is playing an increasingly important role in the fintech industry. From chatbots and virtual customer assistants to fraud detection and risk management, AI is being used to streamline and improve a wide range of financial services.
4. Growth of blockchain technology
A blockchain is a distributed database that allows for secure, transparent, and tamper-proof transactions. The technology is already being used in a number of different ways in the fintech industry, from payments and settlements to identity management and KYC.
5. Fintech regulation is becoming more stringent
As the fintech industry continues to grow and evolve, it's becoming subject to increasing regulation. In the past, many fintech companies have been able to operate with relatively little oversight, but this is changing as the industry matures.
In the years to come, we can expect to see more regulation of fintech, particularly in areas like data privacy and consumer protection.
These are just a few of the major fintech future trends that are shaping the tone of fintech. As the industry continues to grow and evolve, we can expect to see even more innovation in the years to come.
Skills required to build a career in fintech
Sound knowledge and experience in technology finance are expected from those interested in working in the fintech sector.
Fintech companies are looking for potential candidates with good exposure to the tools and technology they use, which could be in the form of fintech programs or fintech certification.
There are several free online fintech certifications available, but when it comes to the industry, which is as nascent as it is, candidates with a proper fintech certification are preferred over the ones who have attended free fintech programs.
Here are some of the important skills most fintech companies look for in candidates who are giving interviews after taking fintech programs:
- Understanding of financial concepts and principles: A successful career in fintech requires a strong understanding of financial concepts and principles. This includes knowledge of financial markets, investment strategies, and risk management.
- Experience with financial software and applications: To be successful in fintech, experience with financial software and applications is essential. This includes using spreadsheets to keep track of money and specific apps for budgeting, investing, and managing accounts.
- Ability to analyze data and identify trends: Analyzing data and identifying trends is a critical skill for anyone working in fintech. This includes being able to understand complex data sets as well as identifying patterns and trends that can be used to make predictions about future market movements.
- Effective communication and presentation skills: Those working in fintech must be able to present information to clients and colleagues effectively. This means being able to explain complicated financial ideas clearly and giving presentations in a professional and interesting way.
- Proven ability to work independently and collaboratively: Finally, those working in fintech must be able to work independently and collaboratively. This includes being able to take the initiative on projects as well as being able to collaborate effectively with others.
The trends in the fintech industry are ever-changing. This sector is growing rapidly and is having a major impact on how financial services are delivered.
Fintech companies are developing new ways to send, receive, lend, and invest money. These new methods are becoming more popular as more and more people are getting access to the internet.
Fintech is also disrupting the regulation of financial services. Regulators are becoming more proactive about fintech and trying to build a regulatory framework that encourages innovation while protecting consumers and maintaining the financial system's stability.
With so much happening in fintech, you don't want to miss an opportunity to work in this sector, as the demand for people with the skills required to work in financial technology is only growing.
Partnering with MIT, Hero Vired offers an Integrated Program in Finance and Financial Technologies. It is one of the most comprehensive and in-depth fintech courses available that covers the basics and also delves into the most important skills related to fintech, such as financial accounting, behavioral finance, technical analysis, financial regulation and analytics, machine learning, artificial intelligence, python programming, and more.
Some of the salient features of this course include more than ten industry projects and case studies developed in alliance with fintech industry leaders and it also comes with assured placements post the completion of the program.
If you are looking for an industry-accepted and acclaimed course to start a career in fintech, your search ends with the Integrated Program in Finance and Financial Technologies.