How the Future of Fintech Is Shaping Financial Services

The reinvention of the financial industry to meet 21st-century needs has resulted in a merger of finance and technology — creating the field of fintech (financial technology). Fintech businesses have emerged to deliver services traditionally offered by banks and credit unions, providing expanded access and increased competition.

To equip finance leaders of tomorrow with required skills in data, information technology (IT), and other critical competencies, university programs in finance increasingly gear their curricula toward innovations in fintech. If the opportunity to be on the cutting edge of a new field excites you, it’s worth considering an online degree in finance.

Fintech is booming. By Accenture’s latest count, venture capital investment in the field has reached new peaks — increasing as much as 30% in the U.S. since 2010, to $11.3 billion. As fintech startups and financial innovators race to meet market demands, these fledgling businesses continue to shape the future of finance and spearhead trends in the industry.

Digital-Only Banks

 A group of fintech professionals stand underneath digital data visualizations.

If you’ve ever stood in line to make a deposit or struggled to arrive at the bank before closing time, you already know the value of digital banking. Providing financial services exclusively through online platforms, digital-only banks adapt quickly to the evolving needs of their customer base — around the clock and across the country. Dispensing with physical branches, these banks not only pass savings on to their customers, they also provide accessible options to populations often excluded from the financial system, according to CNBC.

Already popular in Europe, digital-only banks are gaining market share stateside as well. These banks often appeal to younger demographics first and foremost, according to Forbes, making them central to the future of finance. Already, two-thirds of Americans rely on digital channels for their banking (whether it’s an all-online or brick and mortar financial institution), according to ABA Banking Journal.

The Impact of Technology on Government and Monetary Policies

As finance becomes increasingly digital, U.S. governing bodies have raced to create policies that will guide and shape the future of fintech. The Financial Services Innovation Act, introduced by Congress in 2016, sought to directly address shifts in finance and asked financial services providers to explore new technologies and regulations.

Other shifts, such as the rise of cryptocurrency, have left government agencies scrambling to regulate the market. Initiatives launched by policymakers aim to institute compliance and ease concerns around the safety of fintech. Policies may apply to the use of distributed ledger technology (DLT) and blockchain as well as to a variety of financial interactions via these platforms, including making payments, receiving loans, and dispensing financial advice.

Many of these laws are in their infancy, and as fintech continues to grow and evolve, policies are likely to adapt and change with the industry.

Biometric Technology for Increased Security

With the rise in financial transactions made via apps and online, it’s only natural that cyber security must tighten. Safeguarding against fraud, biometric technology is one avenue developers have taken to ensure that the future of finance is trusted and viable.

While it may seem like something out of a science fiction movie, biometrics safeguard our data. Based on unique physical traits of individual users, like a fingerprint or the retina of an eye, biometrics confirm the user’s identity. MEDICI reports that 75% of millennials are comfortable with using biometric data to confirm their identities, and they’re increasingly shifting away from passwords — especially unsafe, reused ones. Biometric authentication is already widely used in governments and is crossing over into the consumer side.

Online Lending and Big Data

Many believe big data is key to the future of finance, especially the future of loans. American Banker reports that, early on, online lenders made the savvy move of writing algorithms that predicted potential defaults better than FICO scores do. They also leveraged data to precisely target the most valuable potential customers through social media, with profitable results.

Automated Technology for Investment and Portfolio Management

Many consumers stand to benefit from investments, but often feel intimidated by the process or are otherwise excluded. Technology-enabled automated services make it easier for consumers to invest and build wealth. Algorithms use personal preference and real-time market changes to build customized portfolios for their customers. They then track market changes to manage the portfolios, allowing for a primarily hands-off experience. Barron’s reports that robo-investing managed more than $200 billion of assets in 2017, indicating just how powerful this industry is.

Preparing for the Future of Finance

The emergence of fintech has created many opportunities in the world of finance. It opens the markets to new investors and enables tech-focused developers and investors to advance new technologies that meet modern needs.

As the finance industry keeps pace with these new trends, companies will continue to seek a trained workforce of professionals with the fintech expertise to drive their businesses toward success. Explore Maryville University’s online business degrees to find a program that suits your needs, and get started on your path to a dynamic career in finance.

Accenture, “Global Venture Capital Investment in Fintech Industry Set Record in 2017, Driven by Surge in India, U.S., and U.K., Accenture Analysis Finds”

American Banker, “Are Online Lending Platforms Beating Banks at Big Data?”

Barron’s, “As Robo-Advisors Cross $200 Billion in Assets, Schwab Leads in Performance”

Bloomberg, Fintech

CNBC, “Five Fintech Trends That Are Transforming Financial Services”, H.R.6118 — Financial Services Innovation Act of 2016

Forbes, “The Fintech Revolution Is Here. Can It Help Build a Better Economy?”

Forbes, “The Future of Banking: Fintech or Techfin?”

MEDICI, “The Rise of Biometrics in Finance”

Medium, “Fintech and the Federal Government”

Be Brave

Bring us your ambition and we’ll guide you along a personalized path to a quality education that’s designed to change your life.