While technology and finance have been going hand in hand for years, in the last few years we’re witnessing constant innovations reshaping the world of finance as we know it.
Voice banking, mobile apps, 24/7 customer support are just some of the ways fintech companies are addressing the growing demands of their customers, trying hard to keep their competitive advantage on the market.
But what waits for us in the year ahead? Here are 5 of the most notable trends.
AI-driven chatbots and virtual assistants
Financing institutions and banks are moving away from traditional processes toward the needs of their clients, trying to overcome the limited availability of their services and the negative impact it may have on the satisfaction of their customers.
At the moment, live chat platforms are often used, providing an opportunity for easy and fast communication with customers. Human service representatives are often replaced with AI-powered chatbots or a robo-advisor to handle certain requests. While their human counterparts are prone to making mistakes, getting tired, bored or clouded by emotions, AI-driven chatbot can focus on tasks, thus being more accurate and efficient.
According to a study by Accenture, 71 percent of customers welcome the use of automated support, recognizing its power to deliver personalized and tailored service.
Establishing a universal financial industry message scheme
Already adopted in more than 70 countries’ payment systems, ISO 20022 is about to become a standard and get everyone in the financial world on the same page. The standard covers financial data transferred between financial institutions and includes financial, credit and debit card transactions, securities trading and other relevant financial information. Its main goal is to simplify the exchange of messages and improve efficiency and compliance.
The adoption of the new standard requires fintech companies to adapt their infrastructure and business models to this transition. Technology can again make this shift easier with the help of ISO 20022 migration, which enables companies to keep their current infrastructure and business models while still being compliant with the new ISO standard.
Diversification of cryptocurrencies
With more than 1600 cryptocurrencies, Bitcoin and Etherum being the most notable, we can only expect their expansion and growing acceptance in the years to come.
Facebook has announced its own cryptocurrency called Libra, which will be as a payment option on the company’s platforms, including Facebook, Messenger, WhatsApp, and Instagram with the goal of becoming a stablecoin.
Certain governments have plans to develop their own cryptocurrencies too – Sweden is planning to abolish the use of cash by 2023 completely and introduce e-Krona instead.
The biggest challenge that is preventing cryptocurrencies from showing their true powers is the scalability. As the number of users is rising, transactions are becoming slower – every block needs to be mined so that a miner could put a new transaction in it, and since there is no central entity to verify the transaction, each of the users have to verify it for themselves, until a consensus is finally made.
When compared to mainstream payment systems, cryptocurrencies are still very slow – Visa manages 1667 transactions for a second, while Bitcoin manages only 7.
Blockchain integration
While blockchain is best known for its relation to cryptocurrencies, this decentralized technology will have other applications too in 2020. Some of the areas where it can prove to be beneficial are:
- KYC statements – The policy of Knowing Your Customer – getting and storing customers’ data, is the most strict in the financial area. Blockchain is compliant with this standard, safeguarding financial institutions from major loses.
- Security – Blockchain offers financial institutions an opportunity to decentralize their databases, so they can keep their customers’ data secure on multiple blockchain servers, protected from fraud and cyber attacks so cyber security is one of the most important components.
- Innovative payments – Blockchain can replace current money transfer methods and render global transactions much cheaper.
These changes are already taking place in the world of finance and will continue in 2020.
Automated processes
One of the business trends we will be seeing more in the year to come is the automation of certain business processes. AI innovations are seen as advancements that can make a competitive difference on the market, and financial institutions are looking for ways to implement them into their everyday practice. Some of the financial processes AI will be engaged with, in 2020 are:
- Logistics – Fintech companies involved with supply chain management and logistics will use AI to plan and supervise transportation.
- Business Analytics – AI will audit businesses and provide resourceful insights on how to improve their performance.
- Online trading – AI is at the very core of e-trading, significantly reducing expenses, both at the benefit of customers and financial institutions.
- Minimizing Risks – AI is used to analyze and identify possible risks at the market, which can be beneficial for preventing loses.
Financial institutions of all sizes should keep a steady eye on these trends, as they are about to bring crucial changes in the world of finance. Most of them will take years to develop, but early adopters will have the greatest share of the profits.
