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Fintech App Development: How Customer Behavior and Technology Will Change the Future of Financial Se
- Emorphis Technologies
- Jul 22, 2020
- 4 min read
In the twenty-first century, the rise of the Internet, the sharing economy, and the massive development of technology have brought changes to a large range of industries. The world is becoming increasingly decentralized, and increasingly interested in technology, from entertainment to publishing to travel.
The complexity and pace of economic, consumer behavior, and technological change- combined with the advent of new rivals — means that the future of banking will not be a past continuation. New technology should change the banking system as we know it, giving financial institutions both opportunities and challenges.
Financial services won’t be exempt from these changes. In fact, financial services disruption is just beginning. The following five factors will be major players in the financial services industry’s disruption in the coming years:
Cryptocurrency and Blockchain
Blockchain has come to a common understanding as the infrastructure underpinning Bitcoin’s digital currency. The sheer nature of cryptocurrencies in the next few years will dramatically change the working of the financial services. Companies work in fiat currencies; even the companies that are now starting to embrace Bitcoin and other cryptocurrencies only usually convert their funds into fiat currencies.
The next few years will see businesses working mainly in cryptocurrencies but will almost certainly see growing blockchain uses as well. Researchers are working on designing ways to track contracts, electronic identities, and much more for blockchain.
Some financial institutions have already begun exploring the use of blockchain for inter-bank transactions. Whereas, others have been experimenting in the payment space, the fraud, knowing the customer, and handling loans. Some see enormous advantages in streamlining and automating smart contracting processes. Regulators would also need to develop specific guidelines for banks that use blockchain technology.
Alternative Lending
In recent years, businesses and individuals have borrowed money from a few, limited types of lenders. Big loans, such as mortgages, car loans, or large commercial property, comes from banks or credit unions. Smaller loans came in the form of credit cards and revolving credit. When the 2007 and 2008 financial crisis shut down most of the smaller lending at major banks around the country, smaller alternative lenders stepped in to fill the void.
Cyber-Security
Cybersecurity is already a major factor in all online transactions. However, as more transactions are moving online, it seems only logical that the threats will grow. Cybercrime is now extremely lucrative, and there aren’t signs of reducing the interest. Financial services firms are likely to be under increased pressure to ensure that their networks are safe with secure transactions and that they do all they can to ensure that information about their clients is safe.
This will be especially true as more and more information is being stored in the cloud. It’s probably easier to secure a properly secured cloud network than many physical data banks, but public awareness hasn’t caught up with IT reality. Financial services firms will find themselves in a unique position to educate customers because almost all Americans engage in some way with financial services.
Lending and Peer-To-Peer
When companies were searching for working capital in full swing before the era of the Internet, they had just a few options. They might approach and attract investors, obtain a loan from a bank, or mortgage their house, obtain a credit card, and hope for the best.
Companies today have far more ways to finance and fund their plans. Kickstarters, microloan websites, and more offer vastly different options from business owners to automobile buyers. It is now up to financial service providers to decide whether they are comfortable allowing the given company to be taken away from them, or whether they want to adjust the goods that they sell to be more profitable.
Personalization
Customers are concerned about personalization and contextual significance. Nevertheless, financial services providers have failed to deliver it adequately up to now. 70% of financial institutions believe that “comprehension of individual consumer interests and ideas for local benefit” has been one of their key challenges in meeting customer expectations.
Users are also prepared to reach companies halfway, with 63% of global banking customers able to exchange their data for personalized advice.
Digital Technology and Digital Wallet
Nowadays, to carrying a wallet is outdated. From saving club cards to payment methods, they are scanning their phones and using other digital techniques to pay their bills. It is the time when financial organizations can boom in the market with their unique financial products that are easy to use with inevitable digital wallets.
Currently, there are relatively few non-major companies that allow their credit or debit cards, for example, to be used with Apple or Samsung’s digital payment options. When companies do not allow it, they are likely to see their customers switch to those companies that offer more technical flexibility.
Closure:
Customers take ownership of their relationships with the banks. Based on customer behavior, banks find ways to get in their new goods and services to the market swiftly. Financial firms face criticism for not respond to customers’ demands because of the legacy of their front-end payment systems. They ‘re trapped in the Stone Age. Built on antiquated ones, the systems are simply too expensive, too complex, and too dangerous.
When Fintech app development companies looks to the future, one of the biggest hurdles they will face has nothing at all to do with technology. For years, traditional financial institutions have formulated their services from the inside out: “This is what we are going to sell,” rather than “what do our customers want.” But that pattern doesn’t work anymore. And the skills and interests of the IT team leaders and third-party talent of today may not be up to the demands of the technological world of tomorrow, where collaboration with customers will be key.
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