2022 is just around the corner, and that means it’s time to start thinking about the trends that will shape the fintech and banking industries over the next few years.
Here are five trends to watch out for:
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Increased Use of AI and Machine Learning
The financial sector has always been an early adopter of new technologies, and that is certainly true of AI and machine learning. These technologies are being used in a variety of ways to improve the efficiency and accuracy of financial processes.
For example, machine learning is being used to develop better credit scoring models and to automate financial fraud detection. AI is also being used to check if a user is eligible for a short term loan or other type of loans or not? This technology is also used to create virtual customer service agents and to power chatbots that can help customers with basic banking tasks and loans related information. The use of these technologies is only likely to increase in the future, as financial institutions strive to stay ahead of the competition.
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Growth of Mobile Banking
In the past few years, there has been a dramatic shift in the way that people bank. Thanks to the growth of mobile banking, customers can now conduct transactions, transfer money, and check their balance using their smartphone or tablet. This convenience has been a major factor in the increasing popularity of mobile banking.
In fact, a recent study found that 43% of respondents said that they would be more likely to use a financial institution that offered mobile banking services. For many banks and credit unions, this represents a significant opportunity to attract new customers and grow their business.
However, it is important to note that mobile banking is not without its risks. As with any online activity, there is always the potential for fraud or data breaches. For this reason, it is important for financial institutions to take steps to protect their customers’ data and ensure the safety of their mobile banking platforms.
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Rise of Challenger Banks
In recent years, there has been a rise of so-called “challenger banks” in the financial technology (Fintech) and banking industries. These new players usually have a digital-first or mobile-first approach and are often built on newer technologies such as cloud computing and artificial intelligence (AI).
They are also generally more nimble and agile than traditional banks, able to respond more quickly to changing customer needs. Challenger banks have been able to gain a significant foothold in some markets, particularly in Europe where they now hold around 10% of the market share.
In the United Kingdom, they have been slower to gain traction but are still growing rapidly. As traditional banks grapple with legacy systems and slow decision-making, it is likely the challenger banks will continue to gain market share in the coming years.
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Emergence of New Payment Technologies
In the past decade, there has been a dramatic shift in the way that people make payments. Gone are the days of writing checks and carrying around cash; today, people can make payments with just a few taps on their smartphones. This shift has been driven by the emergence of new payment technologies, which have made it easier and more convenient for people to pay for goods and services.
One of the most popular new payment technologies is mobile payments. Mobile payments allow people to make payments using their smartphones, which is convenient for both buyers and sellers. Mobile payments are particularly popular in China, where they account for over 50% of all digital payments. Another popular new payment technology is peer-to-peer (P2P) payments.
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Continued Consolidation in The Banking Industry
The banking industry has seen a lot of consolidation in recent years. The top four banks now control about two-thirds of all deposits in the United States, and the top six banks control about 80% of all credit card spending.
This consolidation has been driven by a number of factors, including regulatory changes, economies of scale, and the increasing importance of technology. As the banking industry has become more consolidated, there have been concerns that consumers will have fewer choices and that prices will rise.
However, consolidation has also brought some benefits, including increased efficiency and more robustness in the face of economic shocks. The ongoing consolidation in the banking industry is likely to continue in the coming years, driven by continued technological change and further regulatory reform.
Conclusion
The financial technology and banking industries are undergoing a lot of changes, and these changes are likely to continue in the coming years. Some of the key trends to watch include the continued popularity of mobile banking, the rise of challenger banks, the emergence of new payment technologies, and the continued consolidation in the banking industry. These trends will have a significant impact on how people bank and pay for goods and services in the future.
