Top 5 Financial Technology trends in the UK in 2021
By Joy Dumasia
Financial technology (FinTech) is a term used to describe financial services which are predominantly technology-driven or applying technology to improve financial services. With the revolution of the internet and heavy penetration of smartphones, access to technology has become highly affordable, further boosting the growth of financial technology, which has grown explosively.
FinTech now includes various financial activities powered by technology such as instant money transfers, QR code-based payments from Smartphones, bypassing a bank to apply for loans, raising money for a business start-up and managing investments.
Some of the top FinTech trends could be seen here:
- Voice Technologies
AI-powered voice technology has evolved to not only be able to tell the weather forecast or play a song but also to improve customer service in the banking sector. AI-powered FinTech voice assistants offer convenience and simplicity in handling finance-related tasks.
The developing voice technology should streamline infrequent transactions as much as recurring payments, letting you reroute funds between accounts or send money to people via platforms like Square Cash, PayPal, Monzo, Pingit, etc. According to Business Insider, the rise of voice tech introduction is believed to continue from 8% to 31% of US adults will be using this function by 2022.
- Open Banking
Bringing FinTech and banks together, open banking enables data networking across financial institutions. With PSD2 (Second Payment Services Directive) forcing banks to release financial information in a secure, standardised form, the open banking practice lets users share that information with more ease, flexibility, and security than before. The open banking landscape got noticed in 2018, after generating almost 2 billion pounds. However, the sector already succeeded in quadrupling its worth in a year, hitting somewhere around 7.2 billion. Many industry players now predict open banking will reshape the banking sector as we know it. And not without reason.
Open Banking has generated $7.29 billion in 2018 and is expected to reach $43.15 billion by 2026. Financial institutions need FinTech, and FinTech requires community banks and credit unions. And emerging from this demand, open banking partnerships can provide customers with a genuinely consolidated view of their financial accounts so that they could be easier to manage.
- Artificial Intelligence and Machine Learning
Another banking and FinTech trend you need to know about is artificial intelligence and machine learning. Many services, such as digital marketing services have benefited from AI and ML. Advanced computer systems can simulate human capabilities or the task of getting computers and machines to do tasks that require intelligence when done by humans.
Under AI, the operational expenses of the banks will reduce drastically in the coming years. AI lays its role in the form of chatbots as well. They address customer queries, fraud prevalent tools to verify the authenticity of KYC documents, and other advanced functionalities. From regulatory technology to robot-advisers, AI/ ML systems enable companies to better monitor customer behaviour and detect opportunities and anomalies. The financial players of the future, like FinTech companies, would rely on data scalability.
- Autonomous Finance
Autonomous finance takes the burden off consumers’ shoulders and automates the financial decision-making process with Artificial Intelligence (AI) and Machine Learning. The technology helps customers make instant decisions about their money in terms of where to invest it, how to approve the loan at more favourable interest rates, or what to do with the overdrawn account, it performs all those tasks for you. Autonomous finance started from robo-advisors concerned with software-based financial planning (like the one concerned with setting retirement goals) and mutual funds management. Later, it evolved into automatic-saving applications and, eventually, into credit card debt management solutions, like those that help with student loans. Such applications algorithmically evaluate the available options and assist a user in leveraging the most advantageous ones.
- Financial Literacy
As embedded finance programs are growing at an unprecedented rate, the public has discovered a growing need for adequate financial education. Solutions to support financial literacy are designed to help customers be more careful with money. FinTech solutions offer practical tools for financial literacy, while guiding customers with primary financial education in making prudent financial decisions.
The trends mentioned above have emerged as an active response to consumers’ needs. They tend to help providers deliver better services and increase customer satisfaction; more people are showing an inclination towards FinTech digital solutions for their finances, 2021 will see great opportunities open up in the FinTech industry. Possibilities in FinTech are endless as the innovation thrives on the ever-evolving technology.
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