First of all, FinTech is an acronym for Financial Technology. It is a growing or startup industry which uses technology to provide efficient & smart financial services, thereby creating disruption in the traditional banking or financial industry. It is seen as a threat to some of large & ‘too-big-to-fail’ banks & financial institutions.
We are all well aware that in no time, Nokia & Blackberry got wiped out due to smartphones which changed the mobile industry. Similarly, when the camera was introduced in mobile phones, some of the prominent camera companies started making losses.
There are so many Fintech innovations that keep happening around the world that it is difficult to list them all. However, I will briefly explain a few which I came across recently for readers’ benefits.
I have to confess that initially I published the blog with following first 7 Fintech trends but based on feedback I have received after publishing the blog, I had to add few more to the list which were earlier missed out.
1. Watch banking
Mobile banking is common as many of us are using it. However with the arrival of the Apple Watch, several banks have launched Watch banking, whereby you can transact through the Apple Watch. Since such watches are still expensive, it will be some time before this kind of banking will become popular.
2. Mobile banking minus internet
This is another mobile banking app but this does not require internet connectivity. Isn’t it disruptive?
3. ATM withdrawal using fingerprints
I am sure most of us would have experienced confiscation of ATM card at least once due to incorrect PIN. To overcome the lost PIN, new technology is being introduced in the ATM that will allow you to transact using fingerprint in combination of your social security number, thereby making ATM card & PIN redundant. Interesting, isn’t it?
4. Unified payments
We all are aware of IMPS, which in present form offers 24×7 interbank electronic fund transfer service through mobile phones. However, Unified payments are an advanced version of IMPS, which will make money transfer as easy as sending text messages. The main feature of this is that one can initiate a debit request asking for a payment, which no other payments technology company provides. Also, one can link multiple bank accounts, cards, wallets etc. thereby bringing all payment modes under one umbrella. Transfer can be done 24×7 using virtual address, mobile number or social security number in real-time.
Blockchain can become one of the most disrupting technologies in the future. It creates public record of digital & decentralized transactions that is tamper-proof, anonymous & secure. Blockchain technology makes all these records available to the public instead of banks and FIs that keep it private. This record consisting of ownership, transaction amount & entity details are maintained in a distributed & decentralized ledger on public domain & allows anyone with read access to view this record.
This distributed ledger is updated and verified through the consensus of all the stakeholders. Once added it cannot be altered and, if it looks correct to everyone, the update is approved.
This essentially means that you don’t need banking accounts.
6. Mobile Bank
Then, there is ‘Atom bank’, which has been built exclusively for mobile only. There will not be any branches for this bank. Customers will have the complete bank at their fingertips & it will offer innovative features like login using face & voice recognition apart from forecasting periodic interest. Due to few overheads they will be able to offer better interest rates to customers. Isn’t this disruptive banking?
7. Crowd funding – lending
Using advanced technology & strong algorithm, peer-to-peer lending platforms are giving an option for a cost effective & fast service that most banks cannot match by any standards. This cuts the cost and complexities of traditional bank loans and passes the savings to borrowers. At the same time, it earns attractive risk-adjusted returns by quickly and easily investing in a diversified portfolio of loans for lenders.
8. Apple Pay
It is a mobile payment & digital wallet service by Apple Inc. that lets one to pay using the latest Apple devices like iPhone 6, iPad Air2 & Apple watch. For making any payments, one needs to bring device close to the POS terminal & authenticate using finger bio-metrics on Touch ID. The beauty of this payment mechanism is that it does not store card details etc. on the device & hence, it is never shared with the retailer, thereby making it safe & secure. This is one of NFC (Near field communication) payment mechanism.
9. Payment through Facebook
Most of us use Facebook to connect with family & friends. However few of us are aware that one can send & receive money through Facebook. One needs to click on $ button on Facebook messenger & then one can receive or request payment using Facebook. This is presently available in the US only.
10. Payment through Bio-metrics
Similar to fingerprint authentication being used by Apple Pay, there are several other payment mechanisms that are becoming popular in different pockets of the world. Some of the banks across world have already implemented payment authentication using Voice bio-metrics, Retina bio-metrics, Heartbeat (ECG Scanning) or facial recognition technology.
According to PHD ventures, 66% of world’s population will be online in the next 4 years (i.e. 2020). This is the reason that in next 5 to 10 years, Banking & Finance will be the most disrupted industry in the world and one should expect that the biggest banks in 2025 will be actually Technology Company & not traditional banks
If you feel that there are any other Fintech innovations that need to be mentioned here, do let me know. Also, do share your feedback.