The FinTech industries, particularly within Banking and Finance, has evolved at a rapid rate over the last few years thanks to the boom of mobile technology and machine learning. Because of this, there is more scope for FinTech start-ups. In 2017, it was reported that FinTech start-ups in the United States raised more than $12 billion in funding, out-growing forecasts by 30%. In 2019, this catapulted to $34B.
Some of the world’s biggest banking and financial companies are constantly looking at ways to incorporate FinTech. A combination of the words “Finance” and “Technology”, it describes how financial services can deliver to customers from a finance product and service perspective.
Here are five different ways in which banking and finance can benefit, or are already benefitting from FinTech:
1. Fraud Prevention and Protection
Financial and banking companies have to protect their clients from any fraudulent activity. Fraud detection applies to many other industries, not just finance or banking. Identifying fraudulent activity is difficult for a human to perform. This is an outdated approach that can now be replaced with a sophisticated solution that identifies and analyses potential fraudulent transactions with data. The benefit is that the algorithm would be developed to ensure a highly accurate response. According to Deltec Bank, Bahamas, “In comparison to rule-based fraud detection, machine learning-based fraud detection will detect hidden or irregularities of correlations in real-time.”
2. Savings and Investments
Many companies have benefitted from FinTech with regards to better and easier access to investments and savings. The exposure of saving and investment accounts, bonds, and general opportunities has become much easier to do through online apps and accessing your money via multiple smart devices. The way FinTech uses online finance and budgeting capabilities changes the behavior of consumers but is a lower-cost alternative in managing money efficiently.
3. Process Automation
Slowly but surely, humans that manage internal operations may no longer be required. Virtual assistants and chatbots can be implemented to perform automated tasks to mirror a human element, by producing workflows and channels that allow for responses to be triggered based on consumer behaviors. Automation helps to provide financial advisory teams to efficiently build relationships with customers and deliver a more streamlined experience. For example, through the use of FinTech machine learning, it can transform operational processes through the automation of administrative tasks, analyze data through the interpretation of attitudes and trends, and output an accurate intelligent response.
4. Stock Market and Investment Predictions
Through Machine Learning, financial marketers can invest in advanced insight capabilities to future forecast and predict outcomes earlier than expected for traditional investment methods. Machine learning has delivered virtual assistants to consume vast amounts of data and deliver the appropriate accurate output from consumed tasks. JPMorgan and Morgan Stanley are currently using chatbots to assist in making investment decisions as an auto advisor. The algorithms are also able to predict stock market prices, the status of the economy and revenue margins.
5. Mobile Banking
Mobile banking has played a huge part in the rise of FinTech. Through the vigorous demand of consumers for better accessibility of banking services, consumers can now actively access bank accounts through their smartphones. All banks now offer and encourage consumers to bank online, its meteoric rise in popularity has predicted that 71% of consumers will use online banking, with in-branch services expected to significantly decrease. The boom of mobile banking has allowed consumers to take advantage of access to money to suit their needs.
Financial institutions are regularly investing in start-ups to regularly develop innovations that keep up with the demands of the market. The focus and strategy of the banking and finance sectors are to deliver a streamlined experience that opens an opportunity for investments and efficient operations to keep up the digital revolution.
To sum up, FinTech has benefitted the banking and finance sector in five ways by developing technologies that bring opportunity for further insight, new innovations and efficiency in internal operations, and the abilities of its technologies can only get better.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.