According to a Market Data Forecast prediction, by 2026, the fintech market is expected to grow to $374 billion at a CAGR of 25.18% over the forecast period of 2022 to 2027.
Do you know what this means for fintech custom software development? If you are into fintech software development, now is the time to capitalize on this boom. But wait, your competitors are also gearing up for the same. So how do you outsmart them and retain your competitive edge?
Read on to understand how.
Custom development of any industrial sector software is defined by its upcoming trends. For the fintech sector too, the upcoming trends will define the utility of custom software development. So, understand the upcoming trends and incorporate them in your fintech software design to enable functional sustainability.
Let us take a quick look at the latest trends set to significantly impact the fintech sector in 2023.
- Cybersecurity: A growing fintech industry means it is also vulnerable to cyberthreats. A fintech software captures a lot of sensitive data. This is a red flag for hackers. So, you need to ensure that your software has the latest cybersecurity practices integrated within it. Take a proactive approach, prioritize penetration testing and implement stronger authentication/verification procedures like:
- Voice Recognition
- Behavioral Biometrics
- Homomorphic Encryption
Cloud computing helps increase data security exponentially. So, ensure the scalability of your software and make it cloud-ready.
- Regtech or Regulatory technology: Fintech companies and financial institutions can leverage this rapidly growing technology to:
- Comply with regulatory requirements
- Improve their risk management
- Enhance process transparency
- Introduce workflow accountability
The increasing complexities of fintech regulations are challenging to follow. To top it off, there are frequent changes that keep getting implemented in these regulations and compliances. Complying with the latest regulations and statutory requirements is a non-negotiable fact. But how does the fintech industry keep track manually?
By integrating a powerful Regtech solution in your fintech software, you can automate many compliance processes. This integration will also help enhance the software’s risk management practices.
Regtech solutions feature real-time data monitoring and analysis which enable faster detection and mitigation of potential risks. Further, it can also improve reporting and audit trails thereby enhancing the overall security features of your developed fintech software.
- AI and ML: Incorporate these technologies during your fintech custom software development process to:
- Improve speed and accuracy of financial transactions
- Automate financial workflows
- Ensure a seamless customer experience
One way you can achieve this is by integrating Predictive Analytics AI algorithms. With its ability to analyze humongous amounts of data, it can predict financial trends and behavior and help fintech companies to:
- Create client-specific financial plans
- Help clients make informed investment decisions
- Offer targeted products and services
Further fintech companies can make use of this feature to assess client creditworthiness more accurately and provide credit facilities to the underserved.
Another very useful way of leveraging AI is to develop a chatbot or virtual assistant. With this, you can improve your fintech client’s customer engagement, reduce their customer service costs and increase customer engagement.
RPA or Robotic Process Automation is another application of AI that you can capitalize on to automate time-consuming repetitive tasks for your fintech clients like:
- Data entry
- Customer onboarding
- Report generation
- Compliance Reporting
Your fintech client will benefit from a reduction in errors and an improvement in their efficiency.
- Digital banking and Neo-banking: Recent years have seen an exponential rise in mobile technology accessibility and the proliferation of the internet. This led to the evolution of customer expectations and demands. Consequently, the fintech industry also underwent a massive digital transformation to meet them.
Current trends predict a rise in digital banking done using mobile and other online platforms. Neo-banking is a very novel concept wherein digital banks are formed that operate online completely. Neo-banks have no physical presence.
Both of these have increased banking convenience for customers, especially in areas where there is:
- A complete absence of traditional banking
- No scope of implementing a conventional banking system
By ensuring that your fintech custom software development incorporates facilities to implement digital banking and neo-banking, you can make it future-ready.
- Blockchain technology: While we have generally associated blockchain with cryptocurrency, there are several other critical uses that can benefit the financial sector in a big way. This distributed ledger technology is still in its nascent stage but it is already becoming synonymous with:
- Improved security in payments and money transfers
- Reduction in transaction fees and other costs
- Enhanced efficiency in fraud prevention, regulatory compliance and identity verification
By keeping the above-mentioned fintech trends in mind, you can incorporate them when you develop custom software for them. These trends will enhance the utility and functionality of your software. You can easily stay ahead of your competition and set high standards for quality and performance.