Cutting-edge innovations like blockchain and artificial intelligence are ushering in new ways of doing business in the financial industry. Fields including electronic payments, banking, insurance, personal loans, and wealth management are all getting a digital facelift. KPMG’s Pulse of FinTech Setup CI infra to run DevTools 2020 report cites that many large financial institutions recognize the pressing demand for and use of digital platforms, digital banking, and all other fintech related services. These institutions are making substantial investments and partnerships in the growing technology space.
Is Fintech an industry?
Fintech, the word, is a combination of “financial technology”. Fintech now includes different sectors and industries such as education, retail banking, fundraising and nonprofit, and investment management to name a few. Fintech also includes the development and use of crypto-currencies such as bitcoin.
A whopping 30% of finance companies expect to incorporate blockchain technologies into their strategy by 2020, according to PwC. In the first half of 2018, companies invested $41.7 billion in fintech worldwide, surpassing the total record spend for 2017. Fintech is undeniably advantageous for organizations as technology continues to redefine our daily lives. Even though one cannot foresee all the opportunities future holds, there are some likely trends and opportunities for the FinTech industry for now and for the future. Mobile delivery refers to the delivery of financial services via a smartphone or tablet. Big data is an evolving term that describes any voluminous amount of data that has the potential to be mined for information and subjected to new analysis techniques to gain insights into customer behavior.
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Many emerging technologies are promising to take cybersecurity to the next orbit. Artificial Intelligence has been touted as a silver bullet for solving many of humankind’s problems. AI-based technologies like machine learning and deep learning hold tremendous potential in preventing cyber-fraud. Similarly, other technologies fintech industry like blockchain, quantum cryptology are also playing critical roles in combating advanced attacks. Banks originate loans on behalf of alternative lenders, use technology developed by alternative lenders to originate loans themselves, and direct customers to alternative lenders in exchange for marketing and referral fees.
However, its proof-of-concept days are slowly passing, and its reach continues to grow. The Nasdaq has been one of the most avid supporters of blockchain technology, mentioning it during 32 conference calls in 2018. Loan origination in digital lending was $41.1 billion in 2017, a 30.1% year-on-year growth according to fintech statistics. The future is uncertain for these startups, as established corporations are also starting to take on this business model. In H1 2020, the bank-owned Zelle platform almost doubled the payment volume ($133 billion) of Venmo and PayPal’s fintech payment processing app ($68 billion).
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As a result, the risk of regulatory scrutiny and obligations have increased simultaneously, causing the need for compliance experts to rise. The demand for talented cybersecurity professionals is at an all-time high and is projected to continue rising. The fintech domain needs experts and specialists to develop security measures that thwart malicious threats.
Though largely reliant on China’s relatively closed domestic market, several industry leaders are setting their sights abroad. China’s expanding outbound tourism industry offers an easy entry point for Chinese fintech firms. World Tourism Organization, 135 million Chinese tourists spent a total of $261 billion abroad in 2016, far outstripping the United States, the world’s second-largest market for outbound tourism.
Similarly, financial industries such as life insurance and general insurance can also follow this initiative to attract the customers, for new policy and renewing the policies. The reports from the World Economic Forumhave already predicted that the mentioned challenges are going to continue as a risk in the market. In the earlier decades, the exceptional fintech industry growth and the capitalism to its best have now created the market to adapt to tighter credit, slow pace of globalization, government intervention, and no growth in the economy. Since the regulations are changing in the United States and the lack of credit availability, the financial industries are facing risks in the business growth.
This is an efficiency ratio, which indicates the average liquidity of the inventory or whether a business has over or under stocked inventory. This ratio is also known as “inventory turnover” and is often calculated using “cost of sales” rather than “total revenue.” This ratio is not very relevant for financial, construction and real estate industries. This ratio is a rough indication of a firm’s ability to service its current obligations. Generally, the higher the current ratio, the greater the “cushion” between current obligations and a firm’s ability to pay them.
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Financial services firms operating for at least 10 years accounted for 93 percent of Delaware’s financial services employment, up from 88 percent in 2007. The financial services sector accounts for 9 percent of all jobs in Delaware, a figure nearly twice the U.S. average. Delaware accounts for around 75% of all fintech investment in the Philadelphia region. Amounting to around $50 million, this figure, in all probability, does not capture the significant equity investments in fast-growth Delaware firms like Marlette Funding and Fair Square Financial. FSFL is a nonprofit dedicated to nurturing and growing the financial technology ecosystem in Delaware by convening and collaborating across industries, disciplines, and demographics. With that being said, we are here with the top fintech trends of 2021.
Posted by: Callum Cliffe