Of the many types of tech startup transforming modern tech, finance is perhaps one of the most highly invested and anticipated areas.
Of the many types of tech startup transforming modern tech, finance is perhaps one of the most highly invested and anticipated areas. In 2017 alone, fintech funding topped $31b globally, according to KPMG. It’s clear, then, that investors have found at least one area of app development in which significant value can be derived. Why?
Market desire for fintech
Fintech works in a disruptive manner. It provides innovations, like mobile banking and on-the-fly credit scoring, that circumvent the products offered by banks. This is of great interest to many consumers; to take the example of the UK, a YouGov poll found that people think banks don’t work in their best interests, with just 36% of people finding their bank priority is then. For an app developer, moving into the fintech market is a case of identifying where consumers are lacking confidence and using technology to bridge the gap. Products like Monzo, Noddle and Moneybox are circumventing bank control entirely to help consumers manage their money in an easier manner.
Understanding the technology
Before fintech transformed the industry, banking was dominated by measures enacted by the banks to boost physical and digital security. Changes of address were enforced with physical proof, many transactions needed to be carried out in branch and so on. What hasn’t changed is the high level of encryption - emerging fintech technologies like blockchain and most banking apps employ the same levels of security to protect consumers, including the smartphone pervasive two step encryption standard.
Understanding future trends
The banking app technology is firmly established and many other ideas settling into the industry, such as gradual savings app such as Moneybox, Chip and the US’s Acorn. Finding a new niche is the challenge for newcomers. There are a few key trends to follow.
The first is automation. The use of augmented reality and AI has already been used in apps such as Cleo, which provides real-time updates to your spending to provide insights and provide advice. Similar techniques are used in savings apps, where algorithms calculate comfortable levels of saving. Integrating automation into any idea is likely to be mandatory moving forward for fintech designers, with a particular challenge in automating everyday banking while maintaining assurance. The second is through credit data. Currently, according to Forbes, many companies rely on conventional banking and lending to create a credit score. With a higher level of contractless services, remote banking and individual savings accounts spring up, credit needs to evolve. Finding a solution that is both accurate and intuitive will be a challenge for tomorrow’s fintech developers.
Fintech is a gigantic segment of the global tech industry. With such a huge global system invested in banking and finance, its little surprise. The innovations of tomorrow will continue to disrupt the industry and find new ways of working, and fintech developers will benefit if they can adjust.