FinTech is changing the world of finance by offering new technologies and new ways of interacting with money. As new products and services are made available, consumers increase their use of FinTech, with many incorporating new the convenient solutions into their everyday lives. Investments in FinTech increase each year, making room for startups and innovative expansions to existing businesses. Freedom Financial Network covers several FinTech trends to watch out for:
Gone are the days when a consumer has to walk into a bank branch, fill out several pages of paperwork, and wait to hear back on whether they’ve been approved for a loan. Digital lending allows consumers to apply for loans online. And with consumers making more transactions online, leaving behind a digital footprint, online lenders can use this non-traditional financial data to make underwriting decisions.
Whether the lenders take advantage of non-traditional data or use the traditional financial data, lending decisions can be made much faster and with less human interaction than ever before. Borrowers find out in less time whether they’ve been approved and funds are made available to them within 48 hours of an approved application.
Digital lending evens the playing field, making it easier for smaller banks to compete with larger corporations and giving consumers far more options than ever before. This year, Freedom Financial Asset Management (FFAM), an online lending subsidiary of Freedom Financial Network, surpassed $1 billion consumer loans issued. FFAM offers personal loans to help consumers consolidate their debts, reduce interest rates, and convert revolving debt into fixed-amortizing installment loans.
For years, we’ve created usernames and passwords to protect our information. As hackers have
become more sophisticated, we’ve had to create stronger and stronger passwords. Not only have we had to increase the number of characters in passwords, we’ve also had to include a variety of letter cases, numbers, and symbols just to keep hackers from guessing our accounts.
But, even the strongest passwords aren’t foolproof. Hackers can intercept passwords, secretly install spyware on computers and smartphones, or set up phishing websites to capture passwords. Many people keep the same password for several years and others make the mistake of using the same password on multiple websites. It’s safe to say that passwords aren’t really that safe.
Enter biometrics. Once upon a time, unlocking a device with a fingerprint or iris scan was stuff of sci-fi movies. Now, these methods of authentication have become a reality. We can also already use biometrics like fingerprint, iris, and face scanning to unlock our phones; the ability to tie these types of biological characters to our financial access isn’t far off.
These stronger levels of authentication will help protect financial data and make it more difficult for thieves and hackers to gain access to financial accounts. Consumers can feel more confident that their data is protecting knowing that businesses use more personal methods of authentication. And banks can continue to meet the necessary standards for securing customer data.
Increased mobile transactions
Smartphones have become a staple in our lives. In fact, there are more people with smartphones than there are with bank accounts. It stands to reason that consumers would begin using their smartphones for more financial transactions. Fintech gives financial access to people who, for one reason or another, don’t have access to a traditional bank or who find it inconvenient to visit a bank branch.
Already, smartphones are making it easier to complete person-to-person payments (P2P) through apps like Venmo and Square Cash. Funds reach the recipient’s bank accounts sometimes instantly, regardless of whether the two parties bank at the same financial institution or not. It’s a far cry from the two to three business days traditional banking requires. And some apps have a stored-value functionality that allows users to spend cash directly from within the app rather than transferring to a bank account.
In addition to P2P transactions, consumers are also increasingly using their smartphones for in-person transactions using their smartphone’s wallet app. With Apple Pay, Samsung Pay, and similar wallet apps, smartphone carriers can leave their credit or debit card at home and pay with just a wave of their device or smartwatch. It gives us one less thing to have to remember when we leave the house each day.
As more consumers shop from their mobile devices, the number of businesses launching mobile-first products has increased. According to Freedom Financial Network, a larger number of businesses are able to get off the ground by lowering their startup costs and focusing solely on mobile marketing. These customer-driven business provide a much better shopping experience for consumers, who, more than ever, are using mobile devices to get information before making a final purchase decision.
With traditional computing, devices have a specific response for a specific input. These pre-programmed options are sort of one-size-fits-all, not tailored to specific consumers. With artificial intelligence, devices can “learn on the go,” tailoring their response as more information is gathered. FinTech will take advantage of artificial technology to improved solutions that help consumers make better decisions.
For example, artificial intelligence could be particularly useful in helping consumers weigh their options for paying off debt, suggests Freedom Financial Network. Often, consumers struggle to figure out the best way to deal with their debt. Or, if once they’ve settled on a solution, they may have trouble sticking to a budget or maintaining the financial habits necessary to stay on track. As of 2017, Freedom Financial Network negotiated more than $7 billion in debt for its clients. AI could be prove to be useful in evaluating a consumer’s debt, income, and other factors, then coming up with the ideal plan.
While AI can be trained to complete routine tasks that humans normally perform – like transferring money to a bank account or gathering information from a document – it will likely be awhile before AI replaces humans, if that ever happens at all. AI can be trained to handle certain tasks and perhaps anticipate a customer’s needs based on their history, but it can’t develop common sense, at least not yet.