Top Innovative Trends Shaping FinTech Industry in 2020

The FinTech sector has exploded in recent years and has become a fast-moving field, disrupting the financial sector and luring billions in investment worldwide. In today’s digital age, the sector is in its infancy and nascent but poised to rise steeply in the coming years.

FinTech is essentially the collaboration of technology and innovation where financial companies perform with tech companies. The sector aims to compete with traditional financial methods in the delivery of financial services. It is an evolving industry utilizing technology in order to advance finance activities.

Here are top trends that shape the FinTech industry in 2020, helping community banks and credit unions to stay on top of fintech trends to accomplish and cater to new opportunities.

Involvement of Large Banks into Innovation

Large banks always involved in the innovation game, whether creating all-purpose credit cards or ATMs. They’re establishing agile teams and labs to build new ideas. JPMorgan, for instance, employs 50,000 technologists while Bank of America is the world’s largest blockchain patent holder. Even, small banks are Increasingly partnering with fintech startups. Since large banks are progressively innovating around the customer experience, small and midsize banks will need to meet customers’ evolving expectations.

Digital Disruption in Traditional Paychecks

For the decades ago, banks could expect to receive 100% of a direct deposit customer’s paycheck. But now many startups are disrupting the traditional paycheck, aiming to make the consumer experience as seamless as possible. As almost 72 percent of customers mostly access their bank accounts online today, just 18 percent typically go to a bank branch. And a major number of customers or digital-first customers prefer the convenience of moving money from their mobile phones.

Massive Capital Investment into FinTech Companies

Today, big tech companies are pouring huge capital into fintech startups. As a result, venture-capital-backed companies in the fintech sector clinched around $40 billion last year. This investment has enabled them to expand into new areas. For instance, Wealthfront, a Palo Alto, CA-based investment management company, now provides savings accounts, loans, and real estate advice. Conversely, Robinhood, a U.S.-based financial services company, is applying for a bank charter to offer deposits and secured credit cards.

Incremental Growth of AI

In small business lending, banks leverage artificial intelligence in order to streamline the customer application experience and partially automate simple underwriting decisions, freeing up loan officers to spend more time on personal customer service. Search engine Google, e-commerce giant Amazon, and many more companies offer AI-as-a-service platform, enabling developers without data science backgrounds to integrate this emerging technology into their products. AI has vast potential to automate straightforward processes, allowing banks to provide a better, simpler, faster customer experience.