Trends Reshaping the Fintech Space

With digitisation taking over the banking and financial sector, deploying technology-driven trends in the domain opens up plausible opportunities in the fintech space.                                                       

FREMONT, CA: The fintech sector has undergone a multi-dimensional transformation in recent times and is anticipated to undergo a seamless transformation in the future. As a result, the domain will be valued at nearly 174 billion USD at the end of 2023. The banking industry’s solutions are critically transforming into fintech-driven, especially to cope with the surging tech-savvy consumers’ demand via various solutions like embedded finance and software-as-a-service (SaaS services).

One such critical approach to transforming fintech businesses is artificial intelligence (AI) and machine learning (ML), which hold an induced capability in banking for payments, investments, and risk management. Deploying AI often enables machines to have an induced ability to perceive the environment, thereby taking relative actions to eliminate losses. Wherein, an ML leverages algorithms in learning from data, thereby identifying patterns on an effective note.

Hence, fintech organisations often opt for both AI and machine learning to automate their processes like loan origination and fraud protection by providing accurate insights into customer behaviour. These tools favour reducing costs often associated with manual labour, in addition to increasing overall performance accuracy and efficiency. Similarly, embedded finance—the analysis of a broad criterion of financial services and products utilised within a framework and platform—has gained monumental importance in recent times. This, in turn, allows users to better manage their finances without having to switch between several applications and websites, with services highly embedded inside an existing platform.

For instance, buy now, pay later has been raised as a critical embedded finance model, enabling consumers to make purchases based on their desired likes and needs in the first place, followed by split-out payments over time. Various researchers have elucidated that the embedded finance services market will accelerate by nearly 40.4 per cent annually in future periods.

Alongside this, SaaS services are advancing on a critical note in the fintech space, with an expected levelling up of their value to nearly USD 623 billion USD in the future, per a consistent compound annual growth rate (CAGR) of 18 per cent. Deploying software-as-a-service solutions assists businesses in the critical assessment and payment of software applications, often hosted in the cloud, regardless of their installation on servers and computers. It eliminates the associated overhead costs in the arena, favouring an intensified focus for fintech enterprises over their resources and, thereby, developing customer experiences.

A number of key technological advancements, including cognitive computing, IoT, automation, and integration, are likely to drive fintech's success in the years to come.