Technology and financial services have been going hand in hand for more than 50 years. Fintech is rapidly evolving and gets more and more advantages. With its help, the financial sector becomes more competitive, reduces prices, and makes it easier for companies to enter the international market. These trends have a positive impact on the global economy. We have collected 5 trends that will dominate in 2020.
Widespread Implementation Of RPA Systems
RPA is a software that allows the automatization of business processes. The system is designed to perform the usual tasks for people but better and faster. Therefore, manual data entry and processing as such may disappear soon. This should improve the efficiency of banks: employees will not spend time on primitive and repetitive tasks but will focus on complex and important issues.
In recent years, the RPA system has achieved phenomenal growth. According to Gartner’s forecasts, RPA’s business will grow by 57% in 2020. The system has a number of important advantages: error-free data analysis; reduced labor costs from 25% to 60% (many employees will be replaced by automated systems). In addition, fraudulent transactions will be minimized, and the speed of solving problems will increase.
Withdrawal Of Physical Money
We live in a digital age where the money is less often associated with paper notes and coins. With Apple Pay, Google Pay, Samsung Pay, and other systems, payments become easier and faster day-to-day. This is beneficial not only for users but also for many banking companies.
In 2019, Digital Money Index, international financial conglomerate Citi and Imperial College business school published a joint study. It follows that in 2018, the number of digital money transfers amounted to approximately $225 billion. The paper also compiled a rating of 84 countries as they abandon cash. For example, in Sweden in 2016, cash was used in only 1% of transactions. Some companies no longer accept cash at the checkout, more than half of them claim to stop their turnover until 2025. Today, in Sweden, only 13% of the total population has not yet given up cash. This year, the country plans to create its own digital currency called e-Krona.
Expanding Access To Banking Services
In the UK, more than 1.5 million adults do not have a Bank account or even a card. Lack of access to banking services (if this is not a personal refusal of a person) can mean an unstable financial situation in the country. In large regions such as Latin America and, above all, Africa, few people actually used banking services. However, thanks to mobile phones and electronic payments, the situation began to change. According to the World Bank, the number of instant payments in sub-Saharan Africa increased in 2017 compared to 2014. In 2017, 21% of the population has mastered the technology of mobile transfers, and this figure continues to grow. Also in 2017, more than $1 billion a day was transferred using mobile payment systems around the world. Banks will come to these regions, and, according to experts, this figure will grow by 60% in Latin America and Africa by 2020.
Asia Is A New Center For Technological Innovation
The world is experiencing rapid growth of the middle class, especially in emerging economies. This segment is expected to grow from 2 billion to almost 5 billion people within two decades, with China and India most affected. The middle class of these countries will be considered by the world economy as the main source of global demand — a key factor of economic growth. According to Worldbank experts, by 2030, more than 70% of the Chinese population will consume goods and services worth almost $10 trillion. In the next 30 years, about 1.8 billion people will move to Africa and Asia, creating new opportunities for financial institutions. This trend is directly related to technological innovations. They allowed Western companies to move production to the Philippines and India, thereby creating jobs with relatively affordable pay, which eventually led to improved infrastructure in cities. This model gives many employers access to global markets.
Regtech, or regulatory technologies, helps companies meet regulatory requirements through big data, cloud computing, artificial intelligence, blockchain, and other innovations. Regtech targets high-demand industries-usually the financial market and government agencies.
According to experts, about 15% of Bank employees are associated with one of the largest areas of Regtech — compliance. The AI can search for new or revised rules, report, and share the results of changes with stakeholders. Algorithms automatically perform these tasks and analyze data at key stages of decision-making by compliance specialists. The software will help to avoid GDP fines since no law will go unnoticed. Rabobank, a large Dutch Bank, has already implemented Regtech in Its system, which has reduced compliance monitoring from fifteen to three minutes. Some experts predict that investment in Regtech in the financial services market will grow by at least 500% by 2020, that is, it will increase to more than $53 billion compared to $10.6 billion in 2017.
Having studied the Fintech trends that will dominate in 2020, we can conclude that the financial sector will invest in new technologies and artificial intelligence systems. They will help increase productivity, reduce costs, and improve customer service. Digital money will become more and more popular, and the mobile banking market will open up new directions.
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