The Evolving Fintech Industry: Current + Future Trends [Infographic]
In the finance industry, there has been an emerging innovation that focuses on improving financial services with the use of technology. Smartphones and cryptocurrency are just a few technological examples that are becoming more regularly accessible. This is called Financial technology, also known as Fintech.
Fintech is defined as a combination of technology and finance, where technology is integrated to improve the delivery methods of financial services.
This evolving industry has resulted in the introduction of startup companies, along with stronger already established institutions that intend to transition and enhance their current financial services.
In the last year, 2018, fintech investments were up to $30.8 billion from 2011 where it was reported $1.8 billion in investments. This demonstrates a significant increase in interest which is making this industry so successful.
Current Fintech Trends
TREND#1: HIT A NEW GLOBAL RECORD
In 2018, it was reported that countries such as the United States, United Kingdom, and China are accounting for 39% of fintech deals which shows the capability of a growing industry on a global scale.
Among these countries, Asia is reported to have the biggest boost in deals with 38% YOY as funding has been raised to $22.65 Billion.
TREND#2: FINTECH UNICORNS
With an increasing interest in fintech, 16 fintech unicorns have emerged in 2018 alone. The term unicorns are to represent successful privately held companies that are valued at one 1 billion.
Currently, 38 fintech unicorns exist globally with a value of $147.37 billion.
In 2019, it was reported that fintech firms are beginning to expand their lines of business resulting in the following:
- Smaller financial companies to be bought out.
- An establishment of partnerships between companies
- The rebuilding of their offered services to create a competitive edge.
Fintech companies are racing for customer deposits. Attaining deposits means acquiring money through interests and a possibility for future products (for eg. savings and investment accounts). This will set companies for future growth.
In a survey conducted by Morgan Stanley in 2017, it was reported that millennials are
86% very interested or interested in sustainable investing
61% made at least 1 sustainable investment action in the last year
75% think their investments can influence climate change
This indicates that millennials are currently looking for choices that have a positive return on investment (ROI) and impact. This is good news for fintech companies that intend to establish services for specific markets.
Future Fintech Trends
As blockchain begins to evolve from a retail focus to more institutional use, blockchain is expected to become an essential part of fintech. Blockchain will assist in tracking the lifecycle of a financial transaction, create security, and assist in the functionality of financial services.
According to the global market, blockchain is expected to reach 7.6 million USD and with 77% of financial service, incumbents to adopt blockchain technology by the year 2022.
TREND#2: ADVANCES IN ROBOTICS AND AI
Advances in robotics and AI will assist in reducing costs and mitigate risks among financial services. This technology contains the capability for natural language processing, contains physical sensors and the ability to navigate, and a social-emotional intelligence which will allow the completion of complex tasks throughout the full cycle of a financial transaction.
TREND#3: RISKS IN CYBER-SECURITY
In 2016, a global CEO survey reported 69% of financial services CEOs were somewhat or extremely concerned with cyber-threats. It is suggested that due to the changes in the following years, such as third-party vendors, advancements in more complex technologies, and increased use of mobile technologies by the public, this will generate an increase in security threats. Fintech companies will need to develop new ways to address these situations.
TREND#4: CASHLESS ECONOMY
With the spread of mobile technology, there is also an emergence of contactless payment systems like Alipay and WeChat Pay. Contactless payment systems have been willingly adopted and actively used in Asia, specifically China, where it is demonstrating a huge interest to transition to a cashless economy.
In China, it is reported that
38% of the public use WeChat
54% use Alipay
8% choose to use other options.
What does this mean for UX Design?
As technology and advancement in the fintech industry continue to evolve, what are some of the UX design trends that can emerge in the fintech industry?
TREND #1: UNDERSTANDING CUSTOMER NEEDS
One of the key factors that will affect the development of the financial industry is customers and their needs. As technology advances, fintech companies will begin a more customer- centred approach in order to understand the capabilities of this technology with customer intelligence.
In future years, companies will begin to find ways to understand customer interaction in order to develop a seamless connection between technology and humans.
TREND#2: PERSONALIZED CUSTOMER EXPERIENCES
To enhance customer experiences means to create a personalized experience for each customer. As a result, the customer will be encouraged to see financial services as more than just service providers. This can influence the impact of customer experiences through the generation of a positive response.
This requires a specialized understanding of how to map a customer journey through financial services and find ways to maximize their experiences. This could relate to enhancing the functionality of financial services, identifying user insights, or increasing the speed and convenience of these transactions.
TREND#3: UTILIZING PROACTIVE INSIGHTS
Companies that understand the benefit of proactive insights can leverage themselves among other companies as this can provide predictive analytics. This will lead to a better understanding of how to improve services for their customers. Additionally, this can lead to services that can combat risks to cyber-security through services that offer fraud prevention, and ultimately lead to enhanced customer experience.
TREND#4: IMPORTANCE OF INTERACTION
With the advancement of AI technology and AR/VR, this brings greater importance in customer interaction. UI and UX principles will be required to assist in creating a seamless engagement between humans and AI/AR/VR technology.
Ant Financial Group introduced a VR-based payment service which allows customers to shop and pay in VR mode.
To know more about UX guidelines for fintech have look here.
In summary, the future of financial companies and fintech will demonstrate a highly integrated technological advancement which might require changes in their platforms, offered services, and business models.
Year by year there is an emergence of fintech unicorns and the act of partnerships, rebuilding, or buying of other companies. How does one find leverage? Through a more customer-based approach, this can create a more positive customer experience which will lead to greater ROI.
Idea Theorem™ is a Toronto based UI UX Agency. We create simple and usable products for web and mobile. Our human-centred design approach lets us understand your customers, identify their pain points & deliver solutions that enhance their experience with your brand. Contact Us if you have any questions and we will be happy to help you.