Fintech is a technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. Fintech industry, which brings technology and financial needs together in one pot and turns all eyes on it with its innovative inventions, is rewriting the needs and rules of the age.
Collaborations and projects of financial companies with institutions with technology infrastructure enable digital transformations to be gathered in the field of banking and finance. Fintech companies are seen as the most important partners by banks and financial institutions. Geographical differences also play an important role in the development of the fintech industry in the world. One of the most important processes that Fintech plans to develop is online payment processes, which are considered risky by many.
Technologies Used in Fintech
1. Artificial Intelligence
Artificial intelligence is the simulation of human intelligence processes by machines, especially computer systems.
Specific applications of AI include;
- Expert systems
- Natural language processing
- Speech recognition
- Machine vision
Artificial intelligence is a system or machine that mimics human intelligence to perform tasks and can be repeatedly improved based on the information it collects. If you want to know more about artificial intelligence, please also read "Brief History of AI".
Financial firms may use artificial intelligence to evaluate and manage data from various sources to deliver important insights. These creative findings assist banks in overcoming the challenges they confront daily when offering services such as loan administration and payment processing. Many solutions targeted at improving security safeguards are powered by AI in the financial sector. Banks, for example, have apps that may only be accessed with facial or fingerprint recognition. This is made feasible in great part thanks to Artificial Intelligence.
The benefits of AI for FinTech include the ability to handle data and develop data models more effectively than humans, but the drawbacks include a lack of depth of understanding, questionable diversity inclusion, and financial regulations.
2. Deep Learning - Robotics
Robotics is a field of engineering that deals with the conception, design, manufacturing, and operation of robots. The goal in the field of robotics is to create intelligent machines that can support humans in different ways. Robotics can take many forms. Robots may resemble humans or take the form of robotic applications such as Robotic Process Automation (RPA) that simulate how humans interact with software to perform repetitive rule-based tasks. You can also. In the fintech industry, the use of robotic process automation (RPA) offers significant advantages over traditional workflows. However, there are significant hurdles to implementing a well-integrated system that can take your business to the next level.
RPA refers to the use of software to automate repetitive rule-based operations using cross-application programs, sometimes referred to as robots. Robots have certain types of activities that are superior to humans, so they are not used solely for cost savings. A well-designed robot will not get tired or mistaken. Therefore, robots are especially advantageous for very conscientious and time-critical activities.
RPA in the banking industry means using specialized software and tools to perform a large number of repetitive, rule-based tasks. By choosing intelligent automation services, organizations can expand their problem-solving potential, increase employee productivity and accuracy, and thereby demonstrate superior business outcomes.
RPA works by performing specific workflows that give robots detailed instructions on what to do at each step. Given a roadmap, robotic process automation software can autonomously execute the required programs and perform tasks according to requirements. Today, many banks and financial institutions use RPA automation tools for account opening, anti-money laundering strategies, customer inquiry processing, and other repetitive tasks.
Blockchain is a distributed database shared between nodes on a computer network. As a database, the blockchain stores information electronically in digital format. Blockchain is best known for its important role in cryptocurrency systems like Bitcoin for maintaining secure and decentralized records of transactions.
Blockchain exists as an immutable block. With this technology, you can develop the entire FinTech app ecosystem. Blockchain technology can transform a normal financial process into a completely transparent procedure based on secure and efficient transactions. With the right use of blockchain, you can create a FinTech ecosystem that can completely revolutionize finance. Financial transactions on the block do not require an intermediary, and you can build peer-to-peer networks, high-speed trading, and complete transparency.
However, the application of blockchain in finance can do more than just transparent transactions. Blockchain technology will ultimately allow users to regain full control of their wealth, paving the way for a fully democratized financial environment.
4. Cloud Computing
Cloud computing is a technological development that uses the Internet to store and manage data on remote servers and access data over the Internet. In this type of system, the user can operate with remote control. Cloud computing customers do not own the physical infrastructure. They borrow usage from a third party.
Cloud Computing and the essential characteristics of cloud services are;
- On-demand self-service
- Broad network access
- Resource pooling
- Rapid elasticity
- Various features are optimal server utilization.
- Cloud Services On-Demand
- Dynamic Scalability
- Virtualization Technology
Cloud Computing is an important enabler for fintech companies. This allows organizations of all types and sizes across the financial sector to incorporate scalability and flexibility into their business models, providing agility and staying competitive in rapidly changing markets. Financial institutions can also leverage cloud computing to improve security, adapt to stringent compliance requirements, and simplify traditional complex infrastructure. FinTech start-ups do not need to support legacy systems and have the advantage of being able to build on innovative technologies such as cloud, mobile and blockchain.
The Internet of Things (IoT) is a network of physical objects—"things"—embedded with sensors, software, and other technologies for connecting and exchanging data with other devices and systems through the internet. Finance was among the first sectors to embrace the digital revolution. The usage of real-time data is a major mainstay in the finance industry. To address these demands, the sector employs IoT and real-time analytics. Nowadays, it is difficult to envision life without analytics, which links and examines customer purchasing behaviour by employing customer data.
However, this is one of the reasons why financial institutions are so appealing to hackers: once they breach the security, they have rapid access to consumer financial data. This results in huge monetary loss for the institutions who experience a breach, but more importantly, it results in a loss of trust from their customers and investors. With financial data being such a sensitive category of data, it comes as no surprise that the industry faces a multitude of security concerns by adopting IoT technologies.
Some of the common security concerns mentioned above for the finance industry are as follows:
- Risk of Sensitive Data
- Financial Phishing Mail
- Mobile Banking Malware
- DDOS and Ransomware Attacks
6. Open-Source SaaS
Software as a Service (or SaaS) is a way to deliver applications as a service over the Internet. Instead of installing and maintaining software, simply accessing it over the Internet frees you from managing complex software and hardware. SaaS built on top of open-source code is called open SaaS. Open SaaS, like SaaS apps, is a web-based program hosted, supported, and maintained by your service provider.
Software as a Service (SaaS) gives enterprises access to cloud-based technology instead of downloading software, leading the FinTech industry and enabling the financial services sector to stay competitive.
SaaS reduces infrastructure costs for banks, telephone companies, insurance companies, and other payment companies while providing the following benefits:
- End-to-end cost reductions
- Data security
Furthermore, because cloud-based SaaS systems are constantly updated, financial institutions benefit from the most recent technological breakthroughs.
As you read in our article, these key technologies and trends are becoming increasingly intertwined and integrated, giving massive impetus to fintech and financial industry innovation. If you like our content and want to be informed about our upcoming posts, you can follow our LinkedIn account to be informed about our new posts and developments in the industry.