From mobile banking to stock trading apps, financial technology (FinTech) has seen a surge in new innovations in recent years and there are no signs of this stopping. From improved cyber security, to fully-automated processes, I’ll be outlining some of the ways new developments will revolutionise the FinTech industry.
Cyber security
Security is rapidly becoming a hot topic when it comes to technology and the internet. In the financial industry, security is extremely important as hackers and cyberattacks are a serious threat. Luckily, cyber security is seeing some new developments in technology.
Artificial intelligence (AI) is now being used to track and analyse behaviours, picking up abnormalities that could be cyberthreats. By knowing the specific behaviour of these threats, AI can develop ways to prevent them from happening in the future, all without any human input. For example, using AI, banks can get an idea of your usual spending habits then, if anything suspicious happens, they have ways to alert you in case of fraud.
When it comes to sensitive data, which is particularly common in FinTech, computer and technology companies are working hard to come up with new ways of protecting it, and they’ve now created new authentication systems.
These systems rely on more than just a simple password to gain access to them, which is where two-factor authentication comes in. This second level of authentication usually comes in the form of a randomly generated code that’s given to a specific user to allow them to gain access to the system.
Alternatively, some systems use a ‘token’, which can be a USB or mobile device and, without this device, users can’t use a particular programme. Or, just like modern phones, these systems can even use fingerprints and facial recognition to grant access, meaning outside threats are less likely. Some gaming platforms, like Steam, and even big tech companies, like Microsoft and Apple, have started rolling in this two-factor authentication system to protect users’ sensitive data.
Peer-to-peer (P2P) lending
Now becoming mainstream, peer-to-peer (P2P) lending is revolutionising the FinTech industry by providing a new platform for investment opportunities. It connects those who want to lend money with those who want to secure a personal loan. When bank loans are becoming increasingly harder to obtain, P2P lending is a much more efficient way of doing things, as some loans can be given within a matter of hours. Because it’s such a modern phenomenon, the processes behind P2P are generally entirely digital, which allows for much more control and faster results.
Some P2P loans go to small businesses and budding entrepreneurs. With P2P lending, it’s a lot easier for new businesses to grow and for investors to see a return on their lending. These loans remove the need for a middleman in the form of banks and credit unions, and can tailor lending and interest rates according to each individual — it’s often a better, more personalised option for both parties.
Platform as a service (PaaS)
Platform as a service (PaaS) involves a third-party company that provides the hardware and software tools, via a cloud-type network, that other companies need to create, develop, and use new applications. This means that users don’t need to download, update, or fix platforms to carry out tasks, because it’ll all be done for them by the third-party vendor, reducing the amount of time IT teams need to spend on updating and maintaining operating systems.
PaaS means that users can use these platforms from anywhere with access to internet, which is great at a time when remote working is becoming more common. As a growing market, PaaS is potentially a big opportunity for investors to consider.
Regulatory processes
At Lending Works, we focus on automating business processes to increase efficiency. Advances in technology mean processes, such as regulatory reporting, compliance checks, identity and access management, and monitoring transactions can be automated, too, so there’s less need to hire groups of people to do these tasks for you. Automated regulatory practices not only make company processes more efficient and streamlined, but they also mean companies are constantly up-to-date with new laws and regulations — it’s much easier to update a programme than to train a full team of staff.
In fact, robotic process automation (RPA) will mean that most of the more mundane repetitive tasks in FinTech, such as data analysis, can be carried out by AI. This will also streamline and make processes more efficient, as well as reduce the risk of human error.
Improvements in cyber security, P2P lending, automated processes, and PaaS, are just some of the advancements and solutions we’re seeing within the FinTech industry. These technologies are on course to make our work safer and more efficient in a world that’s becoming increasingly more reliant on IT and computerised processes.