The digital transformation in the finance sector has been possible largely due to the adoption of advanced technology, spurred on by changing customer needs and driven by easing government regulations. Leading the fintech revolution are the tech startups that are modernizing all aspects of banking –from investments to insurance.
Fintech app development has been leveraging the power of the internet, improved mobile coverage, advancements in internet speed, reduced costs and enhanced customer service.
One of the reasons for the rapid evolution of fintech can be attributed as a response to the inadequacies highlighted by the financial crisis. Most of the financial services were offered by a very small group of providers. However, these days several fintech app development solutions are being provided by startups using advanced technologies.
Massive Increase in Fintech Funding
In 2020, Fintech companies raised close to $44 billion in venture funding – an enormous value after a decade of steady growth. Fintech seems to be one of the fastest-growing sectors globally, with many major players betting big money on app development.
Within the first two weeks of 2021, fintech startups bagged ten deals worth more than $100 million. It is a massive increase in funding compared to just 3 deals during the same period in 2020.
Fintech Apps Usage Sees A Spike During the Pandemic
Along with the digital transformation in finance sector, the coronavirus pandemic has accelerated the growth of fintech app usage by a massive 61% since the start of 2020.
The spike in fintech apps’ adoption can be seen as a response to the increase in eCommerce sales during the pandemic. 2020, even though it started slowly for the financial sector, improved its standing during the latter half of the year. It was the time for a few financial innovations to take shape. And the global fintech market started raking in fresh capital to bring their offerings up to date.
Major Trends in the Fintech Market
The pandemic has increased the pace with which fintech app development companies offered advanced technological solutions to people. The financial advisory organization, deVere Group, explains that the surge in the usage of fintech apps can be a result of the change in which people managed their finances before the pandemic.
The need for contactless and paperless transactions, better payment choices and an increase in eCommerce patronage contributed to the growth of the digital economy.
According to the fintech app development solutions forum experts, these are some of the major trends seen in the market.
- According to a report by Apptopia, an application intelligence provider, the total number of sessions on payment apps had increased by nearly 49% compared to the first half of 2019 with the first half of 2020. Customers are using mobiles to conduct their financial transactions while maintaining social distancing – this trend can be credited to the compulsions of the pandemic.
- The combined sessions of banking and payment apps also saw a steep increase of 26% across the world during the same period.
- Investment apps also saw a major boost – an average 88% increase in session per day between January 2020 and June 2020. Investment apps offered by platforms to trade stocks directly from mobile phones are making trading easier and accessible to users.
- Mobile payments are also slated to see massive growth during the next 5 years. It is predicted to see a 250% jump in revenue between the years 2020 and 2025. While many countries have already adopted the mobile payments system on a large scale, this trend will only increase in the coming years.
- If you look at the countries that are leading the mobile payment adoption trend, it is China. It is safe to say that they are a few years ahead of the rest of the world when it comes to mobile payments. The cities have seen over 90% adoption rates, while the rural areas register 50% rate.
The digital boom has ensured that people, like never before, embrace the potential and enjoy the convenience that fintech apps provide – access and opportunity to manage their money.
Will the Digital Boom Continue to Push Fintech App Development?
Industry experts believe that the change that the fintech world is undergoing will continue. Since the new users of this technology will be less likely to go back to the traditional methods of money management. However, it still is a wait-and-watch period for the fintech app development companies as the usage trend could see a dip in the post-pandemic future.
The present seismic changes in the financial sector are transformative and far-reaching. It has changed how customers’ needs were perceived by the industry leaders and services were designed.
Talking about this pandemic age, people of different age groups and classes have different finance needs. The fintech industry has to reshape their models to meet challenges of the pandemic age and diverse requirements.
One of the key benefits of digitizing the financial sector is the opening up of banking services to people who didn’t have the opportunities earlier.
It is bringing financial inclusion of people who weren’t able to use these services because of the compulsions of traditional financial institutions.
It is also paving the way for financial institutions to expand, diversify, keep pace with changing market needs, implement regulatory requirements and provide enhanced customer service.
Let’s take an example of microfinance institutions. A fintech app can reshape the future of microfinance companies by expanding its reach to people who are yet to avail banking facilities. Microfinance companies can give a short to medium term loan to people even if they do not have bank accounts.
A microfinance app acts as a bridge between lenders and customers. The app can readily analyze the information given by applicants and decide the credit score based on various prevalent standards set by the central bank. AI, data analytics, and other advanced technologies are useful for analyzing the applicant’s financial details and background for deciding the credit score.
This automated process is quick and easy for lenders and customers alike. Based on the credit score, the microfinance institutions can disburse the loan to applicants.
In a way, the loan disbursal process becomes speedy and applicants can get the loan quickly to meet their expenses. In a way, digitization makes the loan application and disbursal process quick and easy.
The eager adoption of the fintech apps is an encouraging sign, especially at a time when the world is still grappling with an ‘almost worldwide recession.’ It could be another sign that the pandemic’s long-lasting legacy will be the creation of an entirely digital society.
On the one hand, the digital transformation in the finance sector can result from consumers’ need to better manage their money and investments – at their convenience. On the other, the sudden spike in the adoption of fintech app development solutions can also be attributed to the changes brought in by the pandemic.
It is clear that these changes ushered by the digital boom are pushing the world towards a more technical and more digitized future.
This new groundbreaking phenomenon is only expected to gain momentum even after the pandemic restrictions are loosened up. The new users of this technology will not be too keen on going back to the traditional banking methods after enjoying the benefits of financial freedom.