Topics to be covered:
- What is Fintech and what is Fintech application?
- The Advantages of Fintech Applications
- Statistics on Fintech
- Different types of Fintech Application
- 5 best practices of Fintech Development
1. What is Fintech and what is Fintech application?
The phrase “Fintech” is a mix of the words “finance” and “technology.” It refers to any company that uses technological solutions to create, automate, or improve financial services and operations. Fintech is a large category that includes many different technologies. However, the basic goals of Fintech app developers are to transform old methods of accessing funds. This will help people and the organizations and compete with traditional financial services as well.
Fintech has been around for a lot longer than one can imagine. While the most recent iteration of Fintech helps you to pay for a cup of coffee using a smartphone app. However, the history of financial technology traces back to the first credit cards, widely used in the late 1950s.
Following the credit card, financial technology advanced and introduced numerous key milestones to the general market. These included ATMs, electronic stock exchanges, bank mainframe computers, and online stock exchanges. Most people didn’t realize that every new piece of technology, they used daily also improved the financial infrastructure for them.
Fintech applications differ widely from one another. Many apply machine learning algorithms, data science technology, and cutting-edge solutions like blockchain to do diverse activities. These activities included credit risk processing and management of hedge funds.
2. Advantages of Fintech Applications
- Lowers Cost
The innovation of Fintech reduces the cost of the businesses as well as the consumers. Since there are no expenses linked with traditional businesses like salaries, rent, and advertising, these costs can be reduced by these companies, allowing them to invest in their clients.
- Provides Great Convenience
Fintech utilizes mobile connections to enhance the convenience and efficiency of online transactions. Customers get a better experience, as it increases openness, and information is readily available to the general public as well. Since this information is now accessible to customers, the public receives better services. Furthermore, financial technology aids in the availability of financial goods to persons who do not have bank accounts. It further helps every single person in the world, those who require financial services.
Fintech app developers frequently include data analytics tools in their applications. This enables us to simply track and respond to changing client demands. Thanks to all these data, businesses can provide completely individualized experiences and goods to consumers.
- Fast Approval Rate
Fintech applications are used by businesses to automate and ramp up the approval process, completing it in almost 24 hours. As clients always demand prompt services. Therefore, with less information supplied by the customers, they can avail themselves of all the services they require even in a matter of seconds.
- Provides Better Security
Security is important to any Fintech application. Companies ask Fintech app developers to develop their products using advanced and secure mobile technology. They invest in security to ensure the safety of consumer data. Biometric authentication and data encryption are the most prevalent security techniques in this context.
3. Fintech Statistics of 2020 and 2021
- Mobile transactions will increase by 121% by 2022. Therefore, they will account for 88% of all banking transactions.
- In 2022, consumer spending in-app shops will climb by 92 % to a massive $157 billion globally.
- By 2022, more than 78% of millennials in the United States will utilize digital banking solutions.
- Between 2019 and 2023, banking-related interactions by chatbots will grow by 3150%.
- By 2023, Chatbots will save $7.3 billion in operating costs for the banking industry.
- The global financial industry is expected to be valued at $26.5 trillion in 2022, rising at a CAGR of 6%.
- In the first half of 2019, the market share of the 48 most significant Fintech startups was more than $187 billion. This is barely more than 1% of the worldwide financial industry.
- In the US, 60% of credit unions and 49% of traditional banks feel that collaborating with Fintech companies will be beneficial.
4. What are the Different types of Fintech Applications
Payments: Payment applications, provided by new digital processing methods and networks, are reshaping the whole finance industry. They improve digital connection, reduce processing costs, and preserve user identification. Asset management and payment transaction processing are the essential areas, to be focused upon.
Mobile Payments: Fintech is influencing mobile payments a lot. Nowadays, most people opt for online transactions using mobile apps. Every transaction includes the processing of payments; hence they are made more secure and easy for daily use. Mobile payment platforms overcome the limitations of traditional payment methods. Google Wallet and Apple Pay are some of the most well-known digital wallets.
Crowding Platforms: Platforms like Patreon and others enable users to send and receive money from other users on the same platform. They are also enabling businesses or people to have financial support from several sources all in one spot. It has now become easy to approach investors directly to pitch in a business concept and get their support as well.
Insurance: The insurance business has not lagged behind either. InsurTech, as it is now known, encompasses everything from house insurance to vehicle insurance. These technologies are reshaping the way insurance products function, offering benefits such as more personalization, customized offers, and online markets.
Investment Management: The life of an investor has become easier due to the development of Fintech applications. It enables the traders to trade online since they can now buy, sell, and trade stocks using their mobile devices.
Blockchain: Based on the ideals of equity and decentralization, Blockchain in the Fintech industry can give us a significantly smooth and effective alternative to banking. Blockchain-based Fintech allows fast fund transfers, top-tier security, and transparent financial tracking.
Regulatory applications (RegTech): It is a subset of Fintech that aims to enhance how businesses handle regulatory compliance. This sector uses new solutions to improve compliance and the delivery of secure, cost-effective, and easy-to-integrate regulations. Machine learning, natural language processing, blockchain, and AI are used by RegTech businesses to bring digital transformation to the field of regulatory compliance.
Consumer banking: Banks are adopting digital technology to improve their services. They are investing in mobile apps to provide easy-to-access banking solutions to clients. This kind of Fintech application improves the user experience, lowers expenses, and reduces friction from operations as compared to traditional banking methods.
5. Five best practices of Fintech Development
- Plan a Strategy for Growth
It is very important to have thorough planning before launching the app in the market. First, check that your framework and coding are designed with scalability and expansion in mind. During the initial launch, be positive about the future of your app. If your app suddenly becomes successful, then don’t bother your users with downtime or complex upgrades. This will in turn annoy them and might get disinterested. As a result, business owners might risk losing the momentum that the launch provided. So, it’s important to plan your development strategy from the beginning.
- Create a strong AML policy
Banks have always used anti-money laundering (AML) policies to ensure regulatory compliance and prevent any kind of difficulties. Due to increased anonymity and fraud within financial software, Fintech should closely follow AML standards. This will prevent them from paying a high amount of penalty charges.
- Security should be prioritized
If the Fintech app developers create a secured app, then your customers will be relieved that their data is secured. The application must use industry-standard encryption and security methods. Make sure to implement secure account access and novel authentication methods. One can even include a password generator. Advise your customers about security issues too. Add multifactor authentication to guarantee that the authorized user has access to the app. The app must be capable of verifying user identification safely.
- Know Your Customer (KYC)
Know your customer (KYC) compliance is also a challenge for Fintech. Nowadays, banks are placing a higher emphasis on detecting fraud and preventing terrorist funding. Hence, there should be flawless KYC compliance with Fintech.
- Test the App thoroughly
It’s important that customer testing and feedback sessions must include all of your target audience’s potential demographics. Also, be prepared for the unknown category of users to access your product. Your App must have a simple UX and simple functionality. Because even if your targeted audience is technologically skilled or not, the app should be easy to use for everyone.
FinTech Application Development has changed the Banking and Finance Industry. It can modify the nature of the company through technology and following trends. This will further improve merchant-customer relationships and would tackle the problem of financial inclusion as well. Along with Blockchain, Big Data, AI, ML, and other cutting-edge technologies, businesses are instructed to adopt Fintech culture in their business models. If you want to get a Fintech app developed, reach out to the appropriate Fintech app developers for the same. It is important to work with dependable and trustworthy partners who are experienced in developing financial apps.