5 Financial Technology Trends Shaping the Business World Today

Without a doubt, the pandemic has sent so many of our activities online, including a wide variety of financial transactions. So now, we would like to discuss five notable financial technology trends happening in the Covid-19 era and explain what they mean for our future.

1. Online Interactions Replacing Many In-Person Transactions

Current financial technology trends suggest that investors and bank customers are starting to embrace online interactions that substitute for in-branch experiences. As accelerated by COVID-related closures and reduced business hours, even previously reluctant customers are signing on. In a 2019 Financial Health Network study of low-to-moderate-income older adults in the U.S., as cited by Forbes Advisor, two-thirds of smartphone users aged 50+ hesitated to conduct financial tasks on their phones. Now, contrast that with an April 2020 survey by The Senior List, a product review website. According to the survey, 77% of respondents over 60 reported recent online financial transactions. Interestingly, increases in online transactions aren’t unique to older adults. In a June 2020 survey, Boston Consulting Group (BCG) found that 44% of 18-to-34-year-olds signed up for mobile or online banking for the first time during the pandemic, and almost one-fourth of respondents plan to stop going to the bank or reduce their branch visits in the future. Furthermore, contactless payment adoption is currently at a record high, with systems like Square and Apple Pay becoming increasingly popular.

2. Increased Use of Financial Software

According to a whitepaper published by Trintech and cited in UK-based Enterprise Times, 70% of the finance and IT leaders surveyed in May 2020 utilized financial reporting software, and 86% of the remaining respondents were planning to begin utilizing it within two years. Additionally, 51% of respondents said they used financial transaction matching, while 37% used close process and task management software. The whitepaper also recommended that CIOs and CFOs work together more closely to make the most of their financial software purchases and implementation.

3. The Rise of Artificial Intelligence

80% of survey respondents from the Fintech whitepaper believed that AI would “play a large or central role in their organization’s next wave of financial management technology.” Respondents reported benefits like increased accuracy and speed, while also noting decreased manual effort. Pattern recognition systems help financial institutions fight fraud, and natural language processing powers legal document scanning, banking chatbots, and other useful tools. AI is also improving, thanks to technologies like Transformers, BERT, and GPT-3. Dennis de Reus, Head of Artificial Intelligence at the Dutch bank ABN AMRO, remarked on his view of the changing AI landscape and the broadening uses for AI in The Next Web: “…[banks] won’t just finance your inventory, they’ll provide the tools to manage it, and the insights to optimize your business. They won’t just finance the solar panels on your roof. They’ll help you get optimal benefits from them by optimizing their operation and integrating with the right energy provider.”

4. Blockchain Adoption and Integration

Before long, we may notice a “gradual integration of traditional and blockchain-based banking systems,” as indicated by The Next Web. Blockchain-based financial technology will become especially crucial to electronic funds transfer services, identity management, and decentralized finance (DeFi) lending, said Marshall Hayner, CEO, and co-founder of Metal Pay. “As interest rates lower, decentralized open models become more appealing”, he added.

5. Application Programming Interfaces Open Up the Financial Sector

Although application programming interfaces (APIs) aren’t new, open banking APIs represent an emerging trend. By linking companies, applications, and platforms, APIs make various online services interoperable. With APIs, businesses can automate their payment requests, receive real-time insights of all kinds, and speed up payments and other services.

Readers Weigh In

Clearly, there is plenty of room for optimism about how financial technology will continue to improve how both individuals and businesses make payments and conduct financial transactions. At VerifyInvestor.com we leverage financial technology in order to provide convenient accredited investor verification services for Rule 506 C offerings. So, how about you? Tell us about an improvement you see happening now or that you envision in the next five years. Write to us in the comments.

Updated 6/13/2023

The COVID-19 Pandemic transformed the workplace, but it may be too soon to tell if those changes will last into the foreseeable future. With the shift to remote work, many employees are moving to more affordable areas, leading some employers to consider adjusting salaries based on the cost of living. This raises concerns about fairness and the financial hardships faced by many workers during the pandemic. Moreover, the ability to hire remote workers from anywhere has the potential to create a larger and more diverse talent pool, but it also opens up the possibility of offering lower starting wages.

Big tech companies such as Google, Microsoft, and Meta are in a race to develop and release advanced AI tools, particularly in the field of natural language processing (NLP). OpenAI's ChatGPT and Google's Bard are examples of conversational AI tools that utilize NLP algorithms to generate human-like text responses, although challenges such as factual errors and false information persist. Meta, on the other hand, has introduced LLaMA as a research tool to combat false information perpetuated by other language models. As these tools evolve at breakneck speed, many are calling for a pause in development to more thoroughly analyze the ethical and societal changes that may come from this evolution of technology.

Although blockchain is very popular and still early enough in its life to still be in its awkward growth stage, many crypto companies have landed in hot water recently. FTX filed for Chapter 11 Bankruptcy after mismanaging funds and experiencing a hack that drained over $600 million from user wallets. The bankruptcy has had a ripple effect, affecting other coins and companies, including BlockFi, which also filed for bankruptcy due to its loan to FTX US. The bankruptcy proceedings have begun, and government committees have expressed their intent to hold hearings into the FTX implosion. The incident has drawn attention to the crypto industry and may lead to increased regulatory measures to protect consumers.

The only way to legally sell securities not registered with the SEC is through an exemption, such as rule 506(c). With rule 506(c) offerings, investors can prove their accredited status by attaining an accredited investor status certificate. If your company is looking to raise capital through a 506(c) offering, discover how to verify accredited investors to stay compliant with SEC regulations and avoid the cumbersome process of registering securities.