Fintech after the COVID-19
The banking sector is perhaps one of the main beneficiaries of modern advances in software technology. Today, money transfers, bills and other finances can be easily processed using banking software, mobile banking applications and other banking solutions.
The CIOs of the leading banks in Europe believe that the banking solutions based on AI / ML are already the most demanded technology area that is being developed in the banking sector and after the pandemic, the popularity of its implementation will only grow.
What will the new trends be after the COVID-19 pandemic in banking software in the future?
1. Open Banking Will Definitely Grow in Popularity
Open Banking is a trend dictated by the increasing competition and the changing needs of customers who expect the simplicity and convenience of technological solutions from banks.
Open Banking is based on Open Data and Open API. Open Data is the principle of open access to data. Such data, be it exchange rates and ATM lists or depersonalized transactional data, is accessed by external developers. API (application programming interface) is a programming interface that allows one computer program to "communicate" with another. Open API, in turn, is a publicly available set of software tools that provides interoperability between applications.
2. The Emergence of Online Banks Without Physical Branches
The popularity of banks without branches is growing rapidly. Among such, there are Atom Bank, Monzo Bank and Starling bank (Great Britain), Monobank (Ukraine) and others. A real breakthrough in the field of neo-banks is now taking place in Asia, which decided to follow a new trend and introduced the issuance of specialized licenses to virtual banks. Hong Kong has already approved 8 licenses, and in March 2020, the first virtual bank ZA Bank began its work. At the moment, only residents of Hong Kong over the age of 18, who must have a local operator’s mobile number, can open an account with ZA Bank.
Those banks that don't resort to full digitalization will do this step by step, introducing solutions that will allow you to instantly change the credit rates of consumer loans.
After the crisis, not all banks will be able to avoid bankruptcy and as new players will enter the arena, they will be forced to compete and meet the modern needs of the now changing Fintech world.
3. Improvement of the Approaches to Detecting Fraud
This trend is associated with a worsening economic situation in many countries of the world, as a result of which as forecasted, there will be a growth of crime, cybercrime, as well as phishing.
Machine learning algorithms will be added to the pipeline of the fraud detection process. Here, again, we’ll need help from Open banking and the PSD2 directive which gives a certain data set for the analysis of the classification of the user committing the transaction.
Behavioural analytics is becoming more and more popular and its algorithms are being enhanced.
A behavioural analytics approach captures behavioural patterns from each source and evaluates this information each time a transaction takes place.
High-performance fraud solutions have been gaining popularity too.
4. The Growth of Regulatory Technology (RegTech)
RegTech uses AI to automate risk assessment by providing big data information. As data collection grows, the number of regulations increases.
IT companies that offer RegTech IT solutions work on the following tasks:
If we talk about new startups and their financing, Mastercard notes that a large number of transactions with AI are aimed at launching new regulatory technologies. New small startups have some advantage in the market due to the lack of complex processes and outdated red tape systems.
On the other hand, some large enterprises also try to keep up with new trends and integrate AI and blockchain technologies to manage regulations and data.