Five years ago, the mention of "Fintech" might cause your eyes to glaze over and now it has become one of the hottest industries in the startup world. Go figure! If you take a look at the truly remarkable and profit-driven innovations that have been coming out of Silicon Valley as of late, you'll understand why so many entrepreneurs and investors are jumping on the bandwagon.
Think about how much easier our online transactions have become over the last few years. A decade ago, aspiring entrepreneurs with a great idea and no money had little hope for making their dreams a reality. Then crowd-funding platforms (equipped with financial technology) arrived on the scene and those great ideas were able to see the light of day. This is one of the visible examples of how Fintech has made our lives easier, but there are also countless invisible ways that new technology has kept our information more secure, protected us against fraudsters, and provided us with a frictionless user experience (that we've now come to expect!).
Fintech continues to drastically change the landscape for numerous industries and it's not slowing down anytime soon. Here are some of the top trends you can look out for in 2017, according to the experts:
1. Credit/ debit cards will become useless
Are you one of the many people who prefer to handle all of your financial transactions through your phone? Don Mal, CEO of Vena Solutions, predicts that credit and debit cards won't be needed when we walk out house. "Consumer shopping habits are progressing such that having your phone is more important than your physical wallet," he says. "With contactless cards expected to double worldwide by 2021 (ABI Research), 2017 will be the year people begin to ditch the wallet as merchants start to standardize the acceptance of contactless digitized within mobile wallets and create incentives to pay this way, downloadable directly to your device." If people abandon using cards this will disrupt a large source of revenues for banks. Credit cards equal interest rates, and debit cards equal overdraft fees. If people aren't relying on their cards, and only using money they actually have, banks will lose billions as a result. A huge disruption in how they earn money.
2. Payment security will be enhanced through phones
Hackers are always on the prowl to steal financial information that is easy to access. Rob McMillon, VP product security of Verifone, expects payment security measures to shift towards biometric identification enabled by phones. "As hacks become more prevalent and consumer data more precious, security has morphed into a multi-step process of something you know and something you have," he says. "Now, as biometric technology begins to take hold, with fingerprints unlocking phones, the way of how we identify ourselves for payments and transactions will start to morph into something you have and something you are with a biometric imprint (fingerprint, facial recognition, iris scan)." As it becomes easier to handle payment transactions through mobile devices, it will become harder for financial information to get stolen. Unless hackers have the James Bond technology to recreate your fingerprint on their own finger, it will be almost impossible for them to hack into your financial information. These strong protection measures are needed as mobile payments are becoming the new norm.
3. Consumer's expectations for "instant service" becomes greater
When you request a service, how quickly do you expect it to be handled? Joshua Dziabiak, co-founder and COO of The Zebra, sees a world where consumer's expectations will demand nothing less than services that can be handled immediately. "Consumer's expectations are increasingly aligned with companies that provide immediate, alternative solutions to everyday life tasks," he says. "People expect things to be instant - whether you're talking about a package delivered from Amazon Prime or a ride appearing at a swipe of their fingertips via Uber." Companies will have to increase the speed and effectiveness of their services. Consumers are almost spoiled now, they love businesses that enhance their ease of life. Companies that are succeeding in the future will be focused on increasing the satisfaction of their user experience.
4. Invoicing will become less burdensome
We love getting paid, but hate having to fill out invoices and constantly follow-up to ensure they're paid, especially when you serve thousands of customers. Nilay Banker, founder and CEO of Inspyrus, has determined that companies will benefit from innovating the invoicing process. "While digitization solutions have been around for 30 years old, the next generation of solutions are now here - think invoice automation on steroids," he says. "In 2017, we will see real change and real innovation as enterprises begin to embrace Fintech concepts that take a fundamentally new approach to invoice automation that break away from legacy operations that are truly disruptive, as opposed to solutions that merely collect, image, and upload invoices to ERP or other back-office systems." If companies want to grow, they need to be able to collect money owed quickly and in an effective manner. Typically invoices are paid at the very last minute, but if better options are presented that make the payment process easier, this will increase how quickly invoices are paid.
5. Artificial intelligence will rise
It can take banks weeks to inform you of a decision that should have been communicated in considerably less time. Dennis Gada, Sales Head of Financial Services at Infosys, believes artificial intelligence will enhance the performances of banks. "AI will make an entrance: In making decisions, banks need to look at and analyze large sets of data, both structured and unstructured quickly," he says. "Here Artificial Intelligence, is being used to offer more intuitive user interfaces, better assisted customer interactions, robo-advice, etc." Fintech companies depend on making decisions quickly and giving their customers quick solutions - methods that banks will need to implement immediately to stay on the cutting edge.
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