The financial world has been characterized by similar systems, tools, and processes for far too long now. Even though business models have been profitable for insurance companies as well as banks, they were still static. As far as progress or innovation is concerned, there wasn’t much on the table.
This is mostly because everyone has no issues with the status quo. And yet, things have started to change. Indifference has been taken over by disruption. Tech companies have started to command positions of influence in the financial world as evidenced from Bitcoin Prime Bot.
Wherever you look, the financial world is in the midst of fresh innovation. You can get a glimpse of this progress across sectors ranging from banking and insurance to investment and payment processing. You can see the unfolding of newer and more thrilling changes, much of which has to do with the use of fintech solutions that are very user-friendly.
As expected, they have caught the eyes of business owners and decision-makers. It is too early to predict which of these innovations will survive or which might be replaced. What you can count on, however, are some rather promising trends that are sure to introduce positive change in the world of finance. Let’s run through some major changes.
Online lending has become a pretty common activity as of 2019. But would you believe if I tell you that not too long ago, it was considered to be too revolutionary? This is because there wasn’t much proof to back it up. The 2007-08 financial crisis gave birth to this idea. This was when banks had enacted very strict rules and regulations pertaining to lending.
This was to cover for lending behavior in the previous five years that was deemed irresponsible. Additionally, individuals were unable to get loans, despite having a strong credit profile. The banks were not very enthusiastic about risk-taking. This caused a snapping of the money flow between individual borrowers and traditional lenders.
This is where the online lending facility emerged in order to fill up the gap created by the financial crisis. But this was just one of the many alternatives, as traditional banks not lending money caused the creation of many more. Ever since then, banks have become much more lenient in terms of lending restrictions. Superior technology is what has enabled the growth of this industry.
From the perspective of the consumer, online lending has been much appreciated due to its convenience, ease, flexibility, and quickness. Online lending hasn’t exactly substituted its traditional counterpart; it has complimented it.
Another reason why this industry has been able to grow so fast is the increased access as well as the diversity regarding loan product. The core reason, however, continues to be technology. Big data means speedier application, smoother underwriting, and eventually, faster approval.
Blockchain and decentralized banking
It is the bank that always decided who should get money and the amount that they should receive and the terms associated with it. However, with the inception of online lending, that influence has started to wane. Today we are in the world of Blockchain, a technology giving shape to this shift.
Even though it has not been adopted by a massive section of the population, there are adequate resources for the expansion of this technology. Mass adoption will change the face of financial transactions forever. Due to its decentralized nature, individuals can receive and send money without any hassle. More importantly, banks will not be a part of the frame. From purchasing a house to buying a candy vending machine, everything gets simple.
Artificial Intelligence and Trading Algorithms
AI has made many significant inroads in the financial and investment world. Machine learning, in particular, has assisted investment banks and hedge funds in making better predictions. For example, Sentient has created an algorithm for trading that employs huge amounts of data. Its function is to derive particular trading patterns and act upon the likeliest of the trends.
According to Amelia Matters, an industry insider, this technology takes trading situations in the trillions for predicting a particular stock outcome. The data collected provides interesting patterns and strategies for working them out. These strategies later assist in live trading. In a very short time, algorithms based on AI will make all decisions regarding investment in major industries.
Intensification of cybersecurity concerns
As the industry continues to transcend more into the virtual space, cybersecurity also escalates accordingly. A 2016 study conducted among CEOs the world over revealed that 69 percent of the financial services’ CEOs were concerned about cyber threats in varying degrees.
This was a considerable rise compared to 61 percent the previous year. These concerns will only increase with the increased use of mobile technologies and third-party vendors. There will be an increase in spending after security.