The foundation of fintech development is technological advancement and innovation. This is also fueling new, disruptive business models in the financial services industry. Seven important technologies, according to a McKinsey report, will propel fintech development and alter the financial industry’s competitive landscape over the coming ten years:
1. A lot of value will be created thanks to artificial intelligence.
The adoption of an AI-first approach by banks and other financial institutions is predicted to improve their ability to fend off the invasion of growing technology companies. Automatic factor discovery, or the machine-based identification of the factors that cause outperformance, will spread throughout the financial services industry. Knowledge graphs and graph computing will also take on a bigger role as an important application of AI semantic representation. In the coming years, their capacity to create connections and spot patterns across intricate financial networks by utilizing a broad range of sometimes dissimilar data sources will have a significant impact.
2. Blockchain will challenge current financial practices
The use of distributed ledger technology (DLT) enables the simultaneous recording, sharing, and synchronization of transactions and data across a distributed network of users as well as across various data stores.
Some DTLs send and store their data using blockchains. They record and synchronize the data across the network using algorithmic and cryptographic techniques.
By enabling the simultaneous storage of financial transactions in many locations, DTL will progressively support ecosystem funding. Cross-chain technology enables chains built on various protocols to share and transmit data and value across tasks and industries. This includes payment processing and supply chain management, which will increasingly simplify blockchain interoperability.
The fundamental components of current fintech breakthroughs like digital wallets, digital assets, decentralized finance (DeFi), and non-fungible tokens (NFT) will continue to be smart contracts, zero-knowledge proof, distributed data storage, and exchange technologies.
3. Financial services players will be freed by cloud computing
Public cloud, hybrid cloud, and private cloud are the three main types of cloud services. Financial institutions should be aware. The public cloud refers to an infrastructure controlled by cloud computing service providers. The providers then resell their cloud services to the general public or a wide range of businesses. Two or more types of cloud (private, public) make up a hybrid cloud infrastructure. Private cloud refers to infrastructure that is created specifically for one customer’s use only, deployable in business data centers, or through other hosting facilities.
4. A new era of financial trust will be driven by IoT
IoT is finally maturing after spending years on the lowest reaches of the hype cycle, with significant implications for the financial sector. IoT systems are made up of three layers. These include application and operations support, wireless communication networks, and perception and intelligent sensor systems. RFID tagging, which relates to sensors, still has a lot of unrealized promise for automating item identification and logistics administration. IoT communication methods are developing as well, enabling a greater range of devices to interact via wired and wireless networks, near-field communication technologies, low-power wide area networks, narrow-band IOT, connected end-point devices, and centralized control management. Last but not least, smart and embedded technologies are advancing quickly and enabling more intelligent communication with objects.
