Friday, April 19

The evolution of financial technology: trends and challenges

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Financial technologies and their business opportunities

Technological progress affects various processes, including consumer behaviour. Whereas it used to take several years to implement innovations, today, they are part of everyday life in less than a year. Of particular note are modern financial technologies, which have transformed the payment system and opened up huge opportunities for businesses and end consumers.
The modern payment ecosystem is a unified environment in which the transfer of money takes place through the interaction of electronic devices, banks and financial companies. This integration makes transactions between sellers and buyers as fast and secure as possible. The introduction of innovations in the financial sector has led to the emergence of an entirely new industry – FinTech – which is developing rapidly. According to forecasts, the fintech market will reach USD 305 billion by 2025, which indicates its high potential.
A significant impetus for the development of online payments was the pandemic, which made traditional payment transactions impossible. As a result, businesses and consumers switched to cashless payments, and cash lost its former dominance. The development of e-commerce has been a major contributor to this trend. Indeed, new ways of doing business have become essential.
Analysts have carried out a study of the cashless payments sector and forecast its development over the next few years:
– by the end of 2024, the volume of contactless transactions in the global market will be around USD 6 trillion. This compares to USD 2 trillion in 2020;
– the e-commerce sector will reach around USD 6.2 trillion. According to Statista research, nearly 22% of all retail sales will be made online.
More than 2.8 billion credit cards are currently in use worldwide, demonstrating the popularity of contactless payments. Demand for such services will continue to grow, requiring improved payment processing and various payment methods.

financial technologies development

Fintech for business

It is particularly important to develop financial technology for businesses in order to improve the quality of services offered to customers. In addition, modernising payment processing greatly simplifies the mechanisms for interacting with suppliers, consumers and regulators. FinTech already offers small and medium-sized business solutions such as mPOS payment terminals. There has been a steady increase in the functionality of these terminals, and the demand for these devices is on the rise. A more advanced solution is tap-on-phone, offered by major payment systems such as MasterCard and Visa. In addition, similar systems are already available from many banks and payment services. Real-time payments allow interbank payments to be made as quickly and reliably as possible. In this case, confirmations and transfers are automatic and require no further action.
Another technological trend is cross-border payments, which can be complex to process. New encryption methods and blockchain have reduced costs and simplified compliance.

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