Innovation has the power to change just about everything, and the tech world is constantly striving to improve and streamline processes. In the finance sectors, this means finding ways to speed up the lending process, keeping data secure and safe and finding new ways to make things easier for customers and companies alike.
We have already seen Fintech innovations transform banking with the introduction of online-only banks, and not too long ago, changes in lending particularly with the introduction of a payday loan direct lender, giving consumers quick access to credit. But what is next around the corner for finance companies? 72% of UK CEOs believe Artificial Intelligence will significantly change the way they do business over the next 5 years, according to PwC’s 22nd annual CEO survey, with 35% of UK CEOs planning to introduce AI into their businesses in the next 3 years. With organisations looking to take advantage of what artificial intelligence can bring to their business, what’s next in Fintech?
Much like how consumers have gotten used to keeping their smartphones secure with their fingerprint, biometric payments are fast becoming a reality. You may have already used Apple Pay or Google Pay as a convenient and quick way to pay for goods using this method, but the technology is moving into wider use for biometric payment and money transfer authorisations. The option of fingerprint recognition for contactless card payments instead of a traditional PIN number is being explored. MasterCard announced in late 2018 a 16-week biometric card pilot with Italian bank Intesa San Paolo. This uses a fingerprint biometric sensor created by the Swedish based company Fingerprints AB.
Also, VISA launched a pilot of a dual-interface biometric payment card through Mountain America Credit Union and Bank of Cyprus. The benefits for biometric authorisation are said to offer much stronger security with the fingerprint only stored on the card and will be compatible with existing payment terminals. The biometric sensor itself is powered by the payment terminal, so no charging necessary. A study by Juniper Research predicts that by 2023, over $2 trillion of in-store and remote mobile payment transactions will be authenticated annually in this way.
Ever since the world emerged from the financial crises over a decade ago, traditional banks have seen competition emerge. While there once was little choice back then outside of the major banks if consumers wanted to borrow money, in the present day, many Fintech start-ups
have emerged providing plenty of choice for consumers. The rise of digital-only banks such as Monzo, Starling and Revolut, have made competition rife.
Open banking is becoming more accepted by financial institutions throughout Europe with almost 61% feeling positive about the concept. However, 42% of key decision-makers at financial institutions feel their organisation does not yet have a clear strategy to realise the benefits, according to research from Tink, one of those open banking platforms. The idea of open banking is to give providers secure access to your financial information through new products and services, with the aim for customer and businesses to get a better deal overall. There are many regulated providers already of open banking, including Barclays and Citibank, with many more expected over the coming years.
In terms of funding for Fintech innovations, last month the UK still held onto being the most active, with many large deals including for open-banking platforms Railsbank and Yapily. In 2019, the UK accounted for 50% of total European investment in Fintech overall. It will be interesting to see how the rest of 2020 pans out for Fintech innovation, and with almost 90% of UK consumers advising that strong technology is important to them when choosing who to bank with, the consumer attitude towards it is strong.