Technology has gotten into pretty much everything we do now, from shopping to socializing and it is also giving the financial services industry a run for its money. Over the last few years, few fintech startups has emerged with the promise of simplifying finance, overturning traditional models of finance management, banking, investments, and money transfer. This new array of financial services organizations, with their digital-and often mobile-first approach, has changed consumer expectations of finance and won over customers with their ability to make finance accessible, transparent, convenient, flexible, and customer first.
|[Millennials] see financial services as a consumer product which is a much different way of looking at it |
– James Wester, research director at IDC
But it’s not only their innovative take on financial markets that is making this industry possible. With the invest of new technologies, companies are able to analyze information in new ways, whether it’s formulating new personalized investment plan or approving a loan. An example of this would be Bank of America and their virtual assistant, “Erica,” who uses predictive analytics and cognitive messaging to provide financial guidance to customers.
|A Blumberg Capital survey reports that 88% of all banking interactions will be mobile by 2022 — indicating the impact of fintech|
Globally, investment in financial technology has skyrocketed in recent years. Fintech now makes up a multi-billion dollar industry, offering technological solutions to financial services and products. Today, there are over 20 fintech startups with more than 1 million customer accounts, according to CB Insights.
In aggregate, these companies have added 200M+ accounts over the last 10 years, and have raised $7.68B in combined equity funding since launching. Fintechs’ staggering influence on the market is evidenced by record funding levels for the industry — by Q3 2018, overall funding was already up 82%, hitting $32.6 billion, from 2017’s total figure, according to CB Insights.
Few notable stats on the industry (this can be presented in an image)
- Coinbase – valued at $8B, is the most valuable fintech startup now
- With $2.54B in equity funding, SoFi is the most well-funded startup
- Top revenue generating: Credit Karma is reportedly on track to see $1B in revenue in 2019, up from close to $700M in 2017
- Dave, founded in October 2016, is one of the youngest companies to cross 1 million customer base with reported capital raise of $3M seed round in April 2017
- Propel’s app Fresh EBT reportedly has over 2M monthly active users (MAUs), but the mobile app has over 5M+ downloads according to Google Play data.
- Of the 20 fintech startups, 12 are unicorns and valued at $1B or more
|The total value of global Fintech investment is estimated to reach $46 billion in 2020 from $10 dollar in 2014|
Let’s look at some financial institutions how they are using Fintech Apps to achieve superior results:
- SNS Bank, in the Netherlands, created a network of advisory-focused, cashless banking shops that serve as a physical extension of the web. These shops have a “consultant style” mobile sales force specialized in selling complex products from both the bank itself and other providers
- Atlanta-based Kabbage has developed an underwriting process using multiple data sources to assess risk, that enables it to lend small businesses and consumers up to $100,000 in minutes
- With its new app, customers of Germany’s Fidor Bank can apply for a loan and find out in seconds if they are approved. The bank also enables buying currency online and making payments in varied currencies through Currency Cloud — a multicurrency, regulated e-wallet
Different types of Fintech Apps
Let’s talk about the different types of fintech apps that have emerged to make our lives easier –
- Mobile Banking Apps
With smart devices orchestrating our lives, most of the banks have started offering their personalized apps, where entire services can be availed at a single destination. Customers are no longer required to visit their bank branches to deposit or withdraw cash, availing bank loans, and so on.
|According to a Gartner report, 25% of the 50 global banks have native mobile banking facilities|
- P2P Lending Apps
Many people borrow money from relatives, friends, or moneylenders. This is where P2P or peer-to-peer lending apps can help. They can offer or receive the loan amount upfront without going to any bank and filling out a lot of paperwork. Here, the loan amount is usually not large and the borrower does not require any guarantor for issue of funds.
- Mobile Payment Apps
Apps like Paytm or PhonePe are mobile payment apps offering a plethora of services such as mobile and DTH recharging, payment for electricity or phone bills, booking railway, flight, or bus tickets, and many more. It also serves as a fastest medium of P2P payments where one individual can send money to another just by adding his mobile number or scanning the QR code.
- Loan Apps
There are a few loan apps specifically developed to simplify the process of availing personal loans. LendUp, a web and mobile-based application, allows customers to apply for short-term loans all round the clock. The app can make spontaneous decisions and users can earn extra points through LendUp Ladder program. The more points one earns, more are the chances to avail loans. Another example of loan app is Sofi that offers personal, mortgage, or educational loans besides financial aid online.
- InsurTech Apps
The coming together of insurance and fintech app are showing positive outcomes in Europe where the insurance sector rose to about 100 billion EUR in 2016. In addition to this, technologies such as Internet of Things, Artificial Intelligence, and Machine Learning are helping insurance companies gather data to offer personalized services. BIMA and Metromile are good examples in this regard. It has successfully eliminated the risk factors and the need to get in touch with the insurance agents.
- Wealth Management Apps
Apps are also feeding into the needs of people wanting to invest and manage their money online. Wealthfrontas, a wealth management app, acts as a digital financial adviser and helps in managing the finances and preparing an investment strategy. Betterment is another app offering solutions on retirement plans, IRAs, and tax consultation etc. apart from common services.
- Stock Trading and Investment Apps
The conventional way of investing in the share market has been through stock brokers. But now apps are simplifying the process of stock trading. RobinHood is a good example. There is no minimum investment, no maintenance cost, no commissions and one has access to their deposits. The stock trading apps are proving to be a boon for the fintech solutions sector.
- Money Transfer Apps
Sending money abroad is now just a matter of few seconds, thanks to apps like Ripple and Transferwise. Armed with advanced features such as the Blockchain technology, the NFC, face, and voice biometrics etc., these apps enable transfer of money in the most secure manner.
- The Blockchain-based Apps
Blockchain technology is based on the decentralized ledger distribution that records the transactions between two parties. Witnessing the influence it had on healthcare, insurance, real estate, capital markets industries, few banks have now started to deal in cryptocurrencies with the help of blockchain-based apps. Santander is an example of this.
|It is estimated that the Blockchain market will grow at a CAGR of 55.59% in between 2017 to 2021.|
- Regtech Apps
The Regtech apps help companies address concerns related to future technologies. Its focus area is regulatory compliance, optimising efficiency and improving the user experience. These apps minimize the risks in data security, speeds up the analysis process and generate reports that helps companies take key decisions. Trunomi is an example of such apps.
How low-code platforms power Fintech app development
Fintech apps have penetrated deep into different sectors of finance. Organizations developing these apps are taking the leverage in creating technologically upgraded apps, taking the business and investment to another level. But even then, banks, lenders, and investors are not coming up with apps fast enough to meet the customers’ needs for anytime, anywhere access to financial services.
One way to speed-up the development of modern applications is to use a cloud-based platform, based on open technologies, to facilitate communication between legacy systems and new apps and services. These features are characteristics of low-code platform. A platform-based approach makes it possible to innovate and meet security requirements while retaining legacy as long as needed.
Financial experts predict that by the end of 2019, 25 percent of retail banks will employ startups to replace legacy and mobile systems
Earlier, if a bank wanted to evolve their technology in some way, it used to take months with unsuccessful result at times. But now, using a low-code platform with a standard set of pre-built and fully integrated APIs, developers can dramatically optimize the software development environment, allowing apps to be developed in just a few days.
Choosing the right low-code platform, developers can create UX and business logic in a few clicks and test them in real time. Financial institutions can purchase them and run them in the cloud through automated delivery, supported by CI/CD pipelines. There is no need to provision any additional hardware as the apps run in the cloud, and support hybrid setup as well, where the core system remains on-premises.
Using low-code platforms, companies can easily develop apps that can work across a wide range of web and mobile-based devices. Low-code platforms enable companies and organisations to increase their digital footprint and improve their customer service without having to hire a large IT team. It is also around 20 times faster than conventional methods of developing apps.
Where lies the future
As young consumers continue to gain more purchasing power, the demand for new and better services will keep growing. It is time to leverage this demand and build an ecosystem of fintech apps that are beneficial for customers as well as businesses. A platform-led approach to build these apps is the smart thing to do as platform ecosystem is the future of how apps will be developed, deployed and consumed.