The concept of applying new and emerging technologies to financial products, popularly known as fintech, is older than you might think. Technology has always played a role in the finance sector, while the term first came to prominence in the 1990s. But as our lives have become increasingly tech-centric, fintech has evolved into a category in its own right.
In fact, the global fintech sector is now worth more than US$340 billion and is set to be worth more than US$1.1 trillion by 2030. As we look forward to 2025, it’s worth considering what trends will drive that growth and what impact those trends might have on ordinary consumers.
- Embedded financeÂ
Embedded finance refers to integrating financial services like payments, lending and insurance into non-financial platforms, making transactions seamless within everyday apps and websites. Examples of embedded finance that people are probably most familiar with can be found on online retail sites and apps. Buy now, pay later (BNPL) services such as Mobicred and Payflex, which allow customers to purchase items and pay them off in instalments (often interest-free), are one example.
Other examples include the integration of loans and insurance into e-commerce platforms and the growing phenomenon of telecommunications companies offering a range of financial services, including mobile money transfers, micro-loans, and insurance products, directly through their apps or platforms.
- AI and machine learning in the finance sectorÂ
Artificial intelligence (AI) and machine learning are changing almost every industry, and fintech is no exception. Among other things, these advanced technologies enable personalised customer experiences, fraud detection and predictive analytics to optimise financial decision-making.
AI is also being used to automate stock trading through algorithms that use predefined strategies to take advantage of market opportunities. Those algorithms analyse historical market data to predict future trends and make informed trading decisions.
- Biometric security and cybersecurity innovationÂ
Enhanced security measures like fingerprint scanning and facial recognition, coupled with blockchain and AI protect against cyber threats and ensure data privacy. That’s critical because while fintech products represent exciting steps forward for new and existing forms of financial transaction, they also represent rich new targets for cybercriminals.
In addition to implementing biometric security measures, fintechs are embracing advanced forms of encryption and leveraging AI and machine learning to ensure that their customers are as secure as possible. Given the IMF’s stark warnings about the effect cybercrime could have on the financial sector, all of those measures and more will be critical for consumer confidence and the sector’s ongoing growth.
- Cross-border payment innovationÂ
Historically, making international money transfers hasn’t been a pleasant exercise. In fact, for most people, it still isn’t. Whether using a bank or a traditional currency exchange provider,the process is often slow, complex, and opaque- especially when it comes to fees. On top of that, poor customer service is a common frustration for both individuals and businesses.
Fortunately, those experiences don’t have to be the norm. Technologies like swiftpay and real-time payment systems, for example, enable faster, more affordable, and transparent international money transfers. A growing pool of fintechs is also addressing many of the issues associated with traditional international money transfers through automation, transparency, and expert-led customer service.
Locally, Future Forex, which has evolved from a pure investment play, is among the players disrupting international money transfers by combining technological advancements with full transparency on every transaction and the kind of customer service that traditional providers can’t offer.
The future of fintech
Fintech companies have completely changed many of our day-to-day financial transactions. Whether it’s making payments, investing in a growing variety of assets, or making international money transfers, all are significantly easier and faster than they once were. The sector will continue evolving, bringing new benefits to customers, with the companies that remember to provide the best possible customer experience coming out on top.
