Synergized human intelligence and artificial intelligence are taking us towards an unpredictable future. As the evident amount of people are prone towards digital banking due to ease of access in technology, especially during the pandemic of COVID-19.
Keeping in view customer demands, financial infrastructures are acquiring advanced financial technology features for efficient usage and to deter chargebacks. Companies are investing a healthy amount for the incorporation of advanced, precise, and frictionless financial services and solutions to combat illicit money transfers and fraudulent activities.
During the first half of 2019, the fintech market share across 48 fintech startups are now worth over US$ 187 billion. Moreover, it is predicted that the global financial sector is expected to expand up to US$ 26.5 trillion in the upcoming years. In the United States, about 49% of financial sectors and 60% of thrift institutions think that fintech partnership is mandatory in this era.
Financial Sectors Are Rapidly Acquiring Fintech Technologies
Fintech is an innovation that is competing against traditional financial transaction methods during this modern era of digitization, where everyone is trying their best to avoid physical contact, especially during the COVID-19 pandemic. Ease of access to technology has made prominent increments in internet users as well as a number of hackers. That’s why businesses are considering acquiring highly efficient and accurate financial services and solutions.
Dilip Krishna, head of innovation and managing director for Deloitte & Touche LLP’s financial services businesses states that,
“Aggressive actions are taken by an enormous number of clients in order to determine how they can utilize these technologies within their ecosystem. They are working as venture capitalized and are investing in their internal projects to analyze what specific problems can be resolved with the help of these technologies.”
Significance of ID Verification in Fintech
Digital transformation is becoming a new normal during this era of technological advancements. Identity verification must be done remotely especially in financial infrastructures as everyone is prone to digitization. The number of hackers is rising in parallel to the digital evolution which ensures the significance of identity verification services and solutions to verify the identity of end-users. Businesses and individuals are prone to fintech technologies, resulting in an increasing rate of illicit money transfers and fraudulent activities.
Avneesh Prakash, the head of digital identity IDEMIA said that
“Digital identity verification is significant to how ventures interact with their end-users. It helps in developing mutual understanding and trust between both parties and allows them to perform transactions both in-person and online.”
Blockchain and Fintech
Blockchain is prominently reshaping the financial ecosystem. Peer to peer transactions is enabled in financial infrastructures with the help of blockchain technology. Cryptocurrency startups are also influenced by the utilization of fintech and blockchain. Blockchain technology successfully eliminates the requirement of central mediators to do asset transfers. Asset transfers are not limited to money. This could be home sales, titles, vehicles, etc.
Prakash Santhana, the managing director in Deloitte transactions and business analytics LLP stated that
“Settlements can take two to three days. Blockchain compresses the numerous steps into one step which can be performed within a few seconds or minutes.”
Santhana added that
“The third benefit is the creation of an audit trail. Blockchain relies on a distributed database. All of the user information is copied on each copy of the database and all the data is public. You can have a deep insight into the blockchain ledger. It is ensured that the record is not corrupted or modified as long as it resides on the distributed ledger because it’s immutable. As a result, there are many financial service industries that can enhance their performance using fintech innovations to increase the speed of transaction and to develop a transparent relationship between business and end-user.”
Operational Challenges Faced During Implementation
Disruptive technologies which also include fintech face a tremendous amount of challenges during the phase of development and deployment.
Dilip Krishna, managing director and head of innovation for Deloitte & Touche LLP’s financial services businesses states that,
“There has been broad recognition that innovative technologies could be utilized in order to solve the problems that occur during the incorporation of innovative fintech solutions and services. Although there has been enthusiasm about how transformative these technologies can be, yet many different operational challenges can be faced during the process of implementation. But undoubtedly, these risks can be significantly rewarding.”
Hype In The Fintech Space
There has been a tremendous amount of hype in the fintech space especially since after the pandemic of COVID-19. There has been much chaos about what these technologies are capable of and how much they can be influential for the financial service industry.
Vikram Bhatt, a principal in Deloitte & Touche LLP’s Cyber Risk Services practice, states that
“Most of these technologies are not fully developed. Moreover, it’s not clear how they will integrate with enhanced financial services and perform in the near future. These are all the questions which should be answered mandatorily.”
It is predicted that in the upcoming years, the whole world would be accommodated by digital banking and more advancements can be seen in financial services. Blockchain technology would be a topic of discussion and would be acquired to develop a transparent relationship between business merchants and end-users. Organizations are investing a large amount of money for the advancement and enhancement of online transactions. Artificial intelligence would be synergized with fintech companies in the upcoming years to provide accurate and efficient identification verification and biometric authentication services. Almost every week we see plenty of headlines based on financial crimes. The future of fintech and banking sectors relies on the implementation of agile technology and aims to strengthen data security policies.