Today, the FinTech industry is rapidly advancing in its development. In its recent study, Allied Market Research has found out that the global FinTech market size is expected to grow 6 times in 10 years from $110.57 bln in 2020 to $698.48 bln in 2030, growing at a CAGR of 20.3% in these years.
The main driving factors for the industry growth are the increasing popularity of online financial services among consumers, wider application of innovative technologies across banks and financial institutions, and recent socio-economic changes caused by the Covid-19 pandemics. As a result, more and more conventional financial institutions as well as tech-savvy startups strive to create their own FinTech products to keep the competitive edge in the market.
In this article, we’ve looked into the major recent trends in the FinTech industry and prepared a detailed guide on how to create a successful FinTech app.
Important Trends in Fintech
The fast development of the FinTech industry has completely changed the methods of how consumers manage their finances and various financial institutions provide their services. This has become possible due to the implementation of advanced IT technologies in FinTech solutions. Here are the most important trends in FinTech that have significantly influenced the industry.
Artificial Intelligence (AI) and Machine Learning (ML)
AI and ML are the technologies that are widely implemented in FinTech solutions. They help tech experts to process large amounts of various data from customer preferences to global financial trends. Here are just some examples of how AI and ML algorithms are used in finance:
- Financial decision-making – combined together with visualization tools, AI and ML provide FinTech app users with deep insights on how to better manage their finance in simple and visual forms. Therefore, users can apply complex data when making their financial decisions.
- Security and fraud detection – when processing big amounts of data, AI and ML can detect and trace common patterns cyber criminals use to access user financial data. Timely informing customers of suspicious activities allows for preventing many financial frauds and enhances customer safety. Besides that, AI and ML help banks and financial institutions improve their security by automatically applying complex regulations in practice such as Know Your Customer (KYC) and Anti Money Laundering (AML). The technologies quickly analyze massive amounts of data and find connections between globally distributed information sources.
- Customer service personalization – AI and ML gather customer data and study their behavior just to make banking and financial services more personalized. For example, AI and ML-empowered apps can suggest how to better manage finances or short-cut long operational paths, making them automated. Another practical AI and ML application for customer service is to use chatbots and Robo-advisors when providing customer support. This allows banks and financial institutions to cut down user service costs as well as increase customer service by improving its accessibility.
- Asset management – AI and ML effectively track world financial trends and make investment predictions. As a result, customers can better manage their wealth and gain more profits when investing. Another valuable feature is that AI and ML solutions remove intermediaries from the investment process, making it more automated and much cheaper. Therefore, a larger number of customers gain access to investment markets.
Blockchain is a rapidly developing technology that has generated much hype in the financial sector in recent years. The two main areas Blockchain is utilized in FinTech are secure transactions and cryptocurrency as an alternative to fiat money.
Thanks to Blockchain’s decentralized nature and encryption, it allows for managing transactions and data safely and efficiently. Meanwhile, using AI and Blockchain together in one app makes data monitoring, processing, and auditing much simpler and far less prone to error. Therefore, more and more companies embed Blockchain combined with AI into their digital apps.
Here is how Blockchain is utilized in FinTech:
- Secure and swift P2P payments – now, two parties can send payments to each other much faster as all the data is encrypted and checked within the Blockchain and there is no need to turn to a middleman to fulfill transactions
- Crypto trading – Blockchain allows trading various digital cryptos using just one mobile application
- Regulatory compliance – with Blockchain it’s much easier to ensure that a financial institution complies with all the needed global and local regulatory requirements. Moreover, regulatory rules can be applied to several Blockchain participants, ensuring regulatory consistency in such complex operations as providing insurance, syndicated loans, transactions with several parties involved, and more
- Establishment of digital identity – to enter a Blockchain network, each user can be validated to prevent fraud. Moreover, in such networks, it’s easy to trace each participant’s activity from the very first day of registering in the system.
Using microservice architecture in software development is a new trend many software developers adopt in their work. That’s because microservices offer more freedom in building small and large applications, allow frequently upgrading the developed solutions with new features, and ensure quick time-to-market.
How do microservices work? Microservice architecture is compiled of small blocks of stand-alone services gathered into one full-fledged application. This way, software developers can add or remove any blocks from the app without disrupting its functionality.
Why use microservices for building FinTech solutions? The microservice architecture ensures:
- Increased app agility – it’s easy to add, remove, or upgrade the developed solution. This allows effectively adapting to sudden market changes, implementing new technologies, quickly reacting to negative user feedback, and making improvements
- Simple scalability – companies can adjust their FinTech solutions to their workflow and add more functionality and computing power at seasonal peaks and remove them with the decline in demand
- Enhanced reusability – once developed, microservice components for one app can be reused in other FinTech solutions. Moreover, it’s easy to upgrade one feature over several solutions where it was implemented
- High reliability – an app created of several components has fewer chances to break down completely. In case a microservice fails in the app, the system continues working, notifying the owner that there is only one component that should be replaced
- Simple integration with other systems – it’s easy to connect microservice architecture to various systems just by using APIs. Also, it’s possible to put the needed libraries or third-party tools into the app to enhance its ability to integrate
- Faster development – software developers don’t have to build each microservice from scratch. Moreover, they can use the microservice-specific components they don’t work much with and successfully add them to the developed solutions. Given this, using microservices, software developers can quickly create and release MVPs to the market and effectively implement changes based on user feedback.
Types of Fintech Applications
Each year there appear new directions where FinTech specialists can apply their knowledge and create convenient apps to swiftly perform finance-related operations. Here are the most popular apps companies choose to build when opting for FinTech product development.
Online Payment Services
Although online payments and money transfers are among the most popular financial services and there are many competitors in this market, a wide range of companies still prefer investing in this type of FinTech solution. The reasons for that are simple – banks and financial institutions still have inflexible and slow services, meanwhile, they can be enhanced in multiple ways – from payment gateways to QR-code payments, to P2P transfers, and more.
With FinTech solutions, lending and mortgage services have become more accessible, transparent, and easier to perform. Conventional lending services require much paperwork and verification, therefore, they can turn into a tedious time-consuming activity. FinTech lending automates most of the manual tasks as well as credit score checks, making the process much faster and smoother.
Providing microfinancing services that require soft or alternative credit scoring, FinTech lending apps offer wider access to lending services for the underbanked population as well as for households with low income.
Many banks and financial institutions have been using FinTech apps to provide their services online. However, online banking isn’t limited to only brick-and-mortar banks offering their services via web and mobile apps. Some FinTech companies make an alternative to conventional banking in the form of neobanks. These are online-only facilities that offer simple banking services at much lower rates to the public, attracting more and more consumers today.
Crypto Platforms and Crypto Wallets
Cryptocurrency is a rapidly developing notion in the financial world. Many experts predict that cryptocurrencies will transform the global financial system and we already can see this happening. There are more and more companies that start accepting crypto as an alternative payment or launching their own crypto exchange platforms, wallets, and coins.
The major businesses that recognize crypto as a viable payment asset are Microsoft, Starbucks, PayPal, Etsy, and many others. Find out more about how to start a crypto business and build your own exchange platform and how to utilize crypto wallets.
Like brick-and-mortar banks, which have enhanced their services with FinTech solutions, many insurance companies have also started using FinTech to provide InsurTech services. InsurTech is a digital insurance business that relies on the latest technologies such as AI, IoT, Blockchain, Big Data, and others to offer improved insurance services. Read more on how insurance companies enhance their offerings with advanced software technologies.
Key Features for A Fintech App
When creating a new FinTech app, businesses have to decide which features are a must in their digital solution and which ones they can add later or remove at all to stay within the software development project budget. Here is the list of must-have features that are the most commonly used in FinTech software.
- Adaptive UI – flexible and easy-to-customize for the needs of particular customer apps gain more popularity among potential FinTech users. Make sure that your app user interface can change from minimal views to full detail, allow creating shortcuts, switch to dark mode, and more.
- Advanced security – losing user credibility or leaking user data is unacceptable in finance-related apps. Therefore, it’s essential to ensure a high level of security in your FinTech solution. For this, consider the onboarding and authentication processes, encrypted data exchange with other financial organizations, data storage, and more.
- Notifications and reminders are an excellent way for an app to remind its users about upcoming events such as planned payments, balance replenishment, tax dates, and much more
- Online chat – establishing an online chat helps finance-related organizations to relieve tension from their customer-support teams. Moreover, AI-powered chatbots allow many users to solve their issues 24/7, therefore, elevating your customer services
- Easy integration with banks – bank integration is one of the core features of most FinTech solutions. Customers want to perform their operations seamlessly, avoiding long queues in brick-and-mortar facilities. Therefore, make sure that your app integrates with as many local for users’ banks as possible.
- Payment gateway – payment gateway is another core feature for FinTech apps. It allows performing digital payments and money transfers – virtually, one of the main reasons for users to install FinTech software on their devices. Find out how to choose and integrate a solid payment gateway into your digital solution.
How to Build a Fintech App: Steps
When businesses have outlined the main idea of their app – they know the type of FinTech solution they want to create and have decided on the main features to include in it, they’ve completed half of the way towards their app realization. The other half is to conduct the project and market research and find the software development team. Here are the steps to follow.
Step 1: Research the Market
At this step, the business needs to decide if its FinTech solution is worth creating and if it’ll be important for the users. For this, they need to conduct small market research and study similar propositions in the market. Other important factors to pay attention to are:
- The region where the app will operate
- Which legislation the app should comply with in the region
- Who are the end-users of the developed solution
- If the time to market is essential and whether it’s necessary to develop the MVP solution first to gather customer feedback
Step 2: Estimate the Project
After studying the market, the business will have formed the idea who are the potential users for their app and which aspects are essential to consider first when developing the software. Now, they’re ready to consider the scope of work they need to perform to create the app and estimate the approximate budget and timeline for the project.
The budget and timeline heavily depend on the tech stack businesses choose for their apps. Therefore, the final decision on both aspects will be made after discussing the project with the software development team.
Step 3: Find the Team
Finding professionals to build a solid and effective FinTech solution can be quite challenging. As it often requires a fully-equipped and highly-experienced team rather than individual software developers. Therefore, if a business doesn’t have an in-house team the most budget-saving and optimal decision would be to turn to outsourcing software development companies.
However, if a business has an in-house team that has some issues with the software development project. Another option would be to hire stand-alone specialists from a reliable outsourcing vendor. Such team augmentation with knowledgeable specialists will help an inner IT department launch and develop a successful FinTech product.
Building a FinTech solution is a popular decision big and small companies make to improve their customer satisfaction and raise substantial revenues. There are a variety of FinTech app types to choose from and many more advanced tech features to implement.
However, launching and developing a FinTech project isn’t easy. Therefore, many businesses opt for FinTech software development services provided by outsourcing software development vendors.
If you’re seeking highly-skilled specialists for your FinTech project, then we’re ready to help you with that. We’ve got teams of FinTech development experts who have successfully delivered various finance-related apps for our partners from around the world.
As a FinTech expert with a comprehensive understanding of the industry, it's evident that the landscape is evolving rapidly, fueled by innovative technologies and responding to shifts in consumer behavior. The data presented by Allied Market Research, forecasting a sixfold growth in the global FinTech market from $110.57 billion in 2020 to $698.48 billion in 2030 at a CAGR of 20.3%, underscores the dynamic nature of this sector.
Now, let's delve into the key concepts mentioned in the article:
Artificial Intelligence (AI) and Machine Learning (ML) in FinTech:
- Financial Decision-Making: AI and ML, combined with visualization tools, provide deep insights to FinTech app users on managing finances visually and efficiently.
- Security and Fraud Detection: AI and ML help in detecting patterns used by cybercriminals, enhancing customer safety by preventing financial frauds. They also aid in compliance with regulations like KYC and AML.
- Customer Service Personalization: AI and ML analyze customer data to personalize banking and financial services, offering suggestions and automating processes through chatbots and Robo-advisors.
- Asset Management: AI and ML track global financial trends, enabling better wealth management and more profitable investments by predicting market trends.
Blockchain in FinTech:
- Secure P2P Payments: Blockchain's decentralized and encrypted nature facilitates secure and swift peer-to-peer payments without intermediaries.
- Crypto Trading: Blockchain enables trading various digital cryptocurrencies through a single mobile application.
- Regulatory Compliance: Blockchain simplifies compliance with global and local regulatory requirements, ensuring consistency in complex operations such as insurance and syndicated loans.
- Digital Identity Establishment: Blockchain validates users to prevent fraud and allows easy tracking of participant activity within the network.
Microservices in FinTech Development:
- Increased App Agility: Microservices allow easy addition, removal, or upgrading of features, adapting to market changes, new technologies, and user feedback.
- Simple Scalability: Companies can adjust FinTech solutions to workflow demands, enhancing functionality and computing power during peaks and reducing them during declines.
- Enhanced Reusability: Microservice components can be reused across various FinTech solutions, facilitating upgrades and improvements.
- Simple Integration with Other Systems: Microservices easily integrate with various systems through APIs, enhancing the ability to connect to external tools and libraries.
- Faster Development: Microservices enable quick creation and release of Minimum Viable Products (MVPs) and efficient implementation of changes based on user feedback.
Types of FinTech Applications:
- Online Payment Services: Despite market saturation, there's still significant investment in online payment services due to the potential for enhancement, such as payment gateways, QR-code payments, and P2P transfers.
- Lending Services: FinTech has automated lending processes, making them more accessible, transparent, and quicker compared to traditional lending services.
- Online Banking: Beyond traditional online banking, FinTech introduces neobanks, online-only facilities providing simple banking services at lower rates.
- Crypto Platforms and Wallets: Cryptocurrency is gaining traction, with businesses accepting crypto payments and launching their exchange platforms, wallets, and coins.
- Insurtech: Insurance companies leverage FinTech to provide digital insurance services, incorporating technologies like AI, IoT, Blockchain, and Big Data.
Key Features for a FinTech App:
- Adaptive UI: Customizable interfaces that cater to specific customer needs, offering flexibility and personalization.
- Advanced Security: Robust security measures to prevent data breaches and ensure user credibility.
- Notifications and Reminders: Alerts for upcoming events, payments, and tax dates to keep users informed.
- Online Chat: AI-powered chatbots and online chat functionalities to enhance customer support.
- Easy Integration with Banks: Seamless integration with local banks to facilitate smooth financial operations.
- Payment Gateway: Core feature enabling digital payments and money transfers, a primary reason users install FinTech software.
Steps to Build a FinTech App:
- Step 1: Research the Market: Conduct market research to assess the viability of the FinTech solution, considering factors like region, legislation, end-users, and the need for an MVP.
- Step 2: Estimate the Project: Determine the scope of work, tech stack, and estimate the budget and timeline for the project.
- Step 3: Find the Team: Consider outsourcing to a highly-experienced team to ensure the successful development of a FinTech product.
In conclusion, the FinTech industry is undergoing transformative changes driven by AI, ML, Blockchain, microservices, and innovative application types. Building a successful FinTech app requires a thorough understanding of market dynamics, strategic planning, and collaboration with a skilled development team.