Fintech has played a fundamental role in transforming the face of two industries – banking and finance. From how we manage our finances at a personal level to the way banks handle modern day transactions, fintech apps have pretty much disrupted traditional banking methods completely. How? By introducing fintech software solutions that are more user-friendly, accessible, and efficient! 

Let’s look at all the ways in which fintech digital banking is changing modern financial services. 

The Rise of Fintech 

Fintech includes many technologies, each playing a notable role in enhancing and automating the delivery and use of financial services. The rise of financial technology in banking can be attributed to several factors, but the primary ones are advancements in digital technology, changing consumer expectations, and the need for more efficient and secure banking and finance services. 

In fact, according to a Statista report, the revenue of fintech industry worldwide is expected to cross $140 billion by the year 2028. This trend highlights the growing demand for innovative solutions in financial technology and banking. 

Digital Services in Banking – The New Norm 

The impact of fintech on banks is evident through the rise of digital banking. The growing popularity of fintech in banking has forced the traditional banking organizations to offer innovative digital services for today’s tech-savvy generation. There are also several digital-only banks that provide a seamless banking experience through mobile apps. Certain examples are Revolut, N26, and Chime among others.  

Then there are digital wallets and mobile payments that are revolutionizing how financial transactions are carried out. There exist services like PayPal, Google Pay, Apple Pay, and Venmo that have made sending and receiving money, bill payments, and online shopping simpler beyond imagination. The COVID-19 pandemic accelerated the adoption of contactless payments further.  

Blockchain technology is another important pillar of digital services in banking as it offers a decentralized and secure way of recording transactions, reducing fraud, and improving transparency. Bitcoin and Ethereum, two of the most common cryptocurrencies, are widely used as alternative forms of payment methods and digital assets. 

Banking fintech has democratized investing through robo-advisors and automated investment platforms. Most leading fintech companies including Robinhood and Betterment use powerful machine learning algorithms to offer personalized investment advice and management. 

Peer-to-peer lending platforms like Prosper and LendingClub are disrupting traditional lending by connecting borrowers with investors directly. Not only do these platforms offer lower interest rates for borrowers but also provide investors with higher returns than the conventional banks promise. 

Then comes regulatory technology, better known as RegTech. This technology helps financial institutions comply with regulations more efficiently by automating most compliance processes, reducing the risk of regulatory breaches, and bringing the costs down. A report by Grand View Research predicts that the global RegTech market will reach $55.28 billion by 2025, growing at a CAGR of 52.8%. 

The Future of Fintech & Banking 

The future of fintech and banking promises continued innovation in this domain. New and emerging technologies, primarily AI and machine learning, are expected to enhance financial services further. For instance, AI and ML will be used to improve fraud detection, credit scoring, customer service and other relevant aspects through chatbots and virtual assistants. Additionally, technologies like IoT can be used to enable smart banking devices and enhance data collection for better decision making. 

The Bottom Line 

Fintech has impacted modern banking and finance profoundly by driving major changes in how financial services are consumed and delivered. Fintech software development is helping create more efficient and personalized solutions in different forms including but not limited to digital banking, automated investing, mobile payments, blockchain, and more. 

As technology evolves further, the room for opportunities in the fintech and banking domain will also expand!