Key Trends in Fintech & Payments: What's Shaping the Future?

Fintech, or financial technology, has brought huge changes in how people handle their financial transactions. Fintech & payment solutions have been seamlessly included in our lives, making daily transactions easier.

Besides the convenience, it is speed and safety with which one can transact that makes fintech and payment solutions a boon for customers. Be it mobile apps, digital banking solutions or crypto, fintech tools are accessible to everyone with equal ease and comfort.

So, what more can one expect in the fintech and payment solutions sector in the future? Here are a few key trends.

Important Trends in Fintech & Payments

The world of fintech and payments is dominated by a few trends, which are discussed below.

Growing Customer Confidence

Post the Covid-19 pandemic and the economic slowdown in 2022, people have been actively seeking long-term reliable fintech & payment solutions. This is a result of the financial uncertainty in the economy. People want a strong hold over their financial situation and, thus, an increasing adoption rate of Fintech applications. Fintech apps are important owing to their convenience and security.

Fintech Apps as Financial Advisors

Fintech companies have mobile applications today. Customers can access their accounts at their fingertips without going to the bank. They can also consider investment options through the app and receive suggestions on how to manage their finances. Hence, this gives the individual confidence.

Digital Wallets and Mobile Payments

Digital wallets such as Phonepe and Gpay are quick and contactless. Irrespective of age or socioeconomic strata, anyone can use these applications. There will be a surge in the demand for such apps in the coming years due to the convenience of carrying ‘no cash’ and the safety of contactless payments.

Neo-banking

Neo-banking refers to digital banks which do not have any physical presence. In the fintech & payments solutions area, neo-banking has witnessed an upward trend. The interface is easy to use. Cost-efficient and quick, neobanks offer an excellent alternative to conventional banks.

Embedded Finance

This refers to the inclusion of fintech and payment solutions into non-financial services.

For example, games, in-game purchases, payroll automation and the inclusion of e-wallets in the app. It is also prevalent on non-financial platforms such as Uber and Shopify. This is a great feature for fintech and payment solutions.

InsurTech

Fintech & payments solutions have been applied in recent years to the insurance industry, where businesses create and aggregate digital insurance products. Customers can buy insurance policies on their mobile app or through the website after comparing policies. Artificial intelligence is being applied for underwriting. In the case of online chatbots, machine learning is also used. Ease of usage and competitive pricing are some of the benefits of InsurTech.

Examples of InsurTech companies in India are Digit Insurance, Policy Bazar, Turtlemint Insurance etc.

RegTech

Regulatory technology or regTech start-ups offer solutions that help financial institutions manage compliance. Regtech is also effective in reducing costs and reduce risks. It improves overall operational efficiency and routine compliance tasks can be automated. Some examples include Identity verification and KYC, tools that manage privacy consent and flag off suspicious or fraudulent transactions. Fintech products in this area enable businesses to focus on growth rather than carrying out routine compliances.

Challenges in Fintech & Payments Solutions

With advantages, fintech & payment solutions also have a few challenges. Here are the potential risk factors associated with it.

Threat to Cybersecurity

Fintech companies are responsible for sensitive and personal information about customers. Data related to the financial history and personal details of clients are available from companies. Stringent data protection protocol must be followed to ensure the safety of customers.

Biometric and two-factor authentication are essential features for a fintech & payment solutions application.

Risks in operation

Noncompliance with Government regulations or failure to follow changes can lead to stringent fines being imposed or a threat to operations. RBI regulations, KYC, and AML requirements are some pertinent laws that fintech firms should compulsorily follow. It is important that companies consult an expert on legal matters and changes in government policies.

Software bugs are a common concern, which can expose fintech companies to errors in transactions and breaches of data.

Frauds and Identity

Phishing and fraudulent identities can infiltrate through fintech systems and cause loss of finance and reputation. The brand identity of the company also hurts in the process, which makes it challenging to retain customers and attract potential clients. MFA and biometrics for identity verification are compulsory steps that fintech firms must adopt. Regular employee training programs should also be implemented, and stringent access controls must be maintained.

Data breach

Ransomware is a serious concern. The company’s data may be encrypted. The attackers subsequently ask for a ransom, or else the system access is blocked, and there is a loss of data. Often, attackers may partner with the employees to reveal sensitive client information. Hence, it is imperative that firms have training programs for employees to make them aware of security threats.

Conclusion

Fintech is growing at a tremendous pace and improving business operations, efficiency and resource management. Through research, innovation and collaborative efforts, many more fintech & payment solutions can be produced by fintech companies.

NeoFinity is a leading Fintech solutions provider in India. It has introduced two fintech & payment solution products in the market- NeoZap and NeoX. While NeoZap is India’s first payment tag, NeoX is an excellent app created by AI that allows you to manage all your financial requirements. Choose NeoFinity to make your transactions fast, smooth, and secure.