Unlock the Top 14 Fintech Innovations, the future of finance. Explore groundbreaking technologies reshaping the financial industry, enhancing efficiency, and providing unprecedented opportunities.
The market for fintech services will reach $31.5 billion by 2026. It’s about four times what it was six years ago.
In 2024, many fintech companies and experienced professionals will still be coming up with new ideas in these and other areas. Because of this, financial services companies should keep a close eye on IT innovations in fintech.
I’m only going to talk about what our team thinks are the hottest fintech innovation ideas and the most important ideas you should know as we move into a new age of transaction handling.
The technology that makes economic goods and services possible affects the growth of new financial ideas. These are the eleven most important digital banking innovations that will have an impact on the fintech field this year. Let’s dive into the world of the newest fintech banking ideas!
Top 14 Fintech Innovations
1. IoT and Blockchain
I’m going to start the review with the Internet of Things (IoT) and blockchain-based databases that work on their own. These new ideas have changed the way investments are managed and how money is solved.
IoT systems for wealth management could make banks and financial apps much more useful. For instance, a connected security camera inside a bank could notice any strange customer behavior or possible safety holes and immediately send that information to the authorities.
These days, blockchain is the safest way to handle databases in all fields. As a general rule, it keeps track of every change, data move, and effort put into changing data as a different data entry. All partners’ actions are clear because of the technology, which makes it hard to delete or change any data.
Read more: Artificial Intelligence in Fintech
Here are some interesting ways this technology can be used:
- Settlement of transactions in real-time. Smart contracts let banks pay both security and cash at the same time. Cross-border sales like transaction handling, securities loans, and stock markets are more efficient and can grow with this approach.
- Services that help with digital assets. Cross-border sales like transaction handling, securities loans, and stock markets are more efficient and can grow with this approach.
- Services that help with digital assets. For their digital assets, institutional buyers are looking into what distributed ledger technology (DLT) can do. Tokenization for private equity funds and companies that aren’t on the stock market is one example of one of these services. On digital sites, they let people buy and sell traditional currencies and cryptocurrencies on the spot. They also offer safe storage services, such as encrypting keys while they are being held.
- Authentication methods are based on proof of no knowledge. Customers can now use info that has been shared from approved partner institutions. It helps to make sure they are who they say they are online, in person, or over the phone. This easier way speeds up the registration process and makes it simple to get to important services like government services and health info.
- Decentralized bank accounts (DeFi). DeFi is changing the way money works with predictable smart contracts. This gets rid of partner risks and makes it less necessary to use intermediaries, which saves money. Real-time openness is another benefit of DeFi that makes the market work better and boosts trust.
As an example:
For faster transfers, the future of banking apps will depend on how well mobile apps can connect to other devices. People can do many things straight through the mobile banking app instead of waiting in line for help. This includes meeting KYC (Know Your Customer) requirements.
Blockchain protects apps that use new banking technologies. For example, Visa and DBS, two of the world’s largest banks, use fintech to help handle their clients’ income. Blockchain not only offers unmatched benefits for data protection, but it also makes data more accessible, speeds up data transfers, and lowers the costs of transactions.
2. Methods of Payment
Leading cybersecurity technologies agree that strong fingerprint recognition is an effective way to stop hackers and other cybercriminals. Think about how to use a smart card and a phone to pay for something online. When talking about payment innovations like those offered by companies like Stripe, combining smartcard chip technology with multi-factor fingerprint identification works very well.
A user can put two unique numbers on the phone device and use them to keep his payment safe during a digital exchange. The fingerprint multi-factor rotation can be used on any laptop, tablet, or phone that runs iOS, Android, or Windows. But these things need to be able to recognize faces, use voices, recognize lock patterns, scan fingerprints, and change how buttons are pressed.
When a person shops online, they can use their approved smart card to pay by saying, taking a photo, or using their fingerprint on the phone’s sensors.
It is much safer for fintech innovations to use payment apps in the future, and hackers can’t use stolen passwords to make deals. The high level of security (biometrics) makes sure that all transactions are honest and safe, even new ones like paying with cell phones.
In addition, the background tracking system can handle thousands of events per second within the bank or card provider. This lets the CSO keep an eye on the quality and output of the system in terms of EER, FAR, and fingerprint limits. This kind of process lets us get good enough results.
As an example:
Voice-enabled fintech payment innovations are an option for companies that want to do proof-of-concept projects but need more money. The technology may be used to pay for things in stores that don’t have cashless readers. Aside from that, it lets people who can’t see join the cashless market.
3. Open Source and SaaS
Speed and adaptability are very important for new businesses and financial innovations, especially in the digital market, where competition is fierce and the winner usually gets everything. And traditional banks that are starting up new fintech businesses.
When you use open source in banking, you integrate or create software where the source code can be changed, shared, and used by anyone. When I spoke at the World Banking Forum in Greece in the summer of 2023, I was happy to share my thoughts on “Tech companies now need to have open-source software, cloud-based technology, and software as a service (SaaS)Open source in banking: opportunities and innovations for the financial sector.” The crowd really connected with what I had to say. You can watch the video here.
Software as a service (SaaS) lets companies use software when they need to without having to buy it or keep it up to date. A serverless design, on the other hand, means that financial services companies don’t have to run their computers. This gives them more time and energy to work with clients and direct staff.
The new serverless technology in banking also helps people save money. The costs are linked to maintaining software code instead of making new code all the time, no matter what the business needs. It also encourages flexible growth, which cuts down on wasted time and money while making financial software development more efficient.
As an example:
Businesses that want to grow should use open-source tools. For coders, it gives them a free code base that helps them build their apps. Case in point: In 2019, McKinsey’s analytics business released an open-source tool called Kedro. It lets engineers and data scientists build data streams.
4. Artificial intelligence (AI)
Artificial intelligence, machine learning, and computer process automation are all growing in popularity. These technologies have many benefits for people who work in banking. Some of these are a lower chance of loan failure, better risk management, faster processes thanks to collecting and analyzing data, and better experiences for customers.
Robo coaches are one of the most important uses of artificial intelligence in the field of financial breakthroughs. In the business world, they are becoming more and more popular. These companies offer an easy and cheap way for people who need to learn more about money to start spending.
These online platforms use complex formulas to make trading plans that are unique to you based on your risk level and financial goals. Cognitive computer technologies and big data trends help them figure out which investment plan is best for each person.
As an example:
Banks use chatbots to answer simple customer service questions, and IBM Watson is used for financial research. As these bots use AI more and more, they can learn from conversations with customers and change how they talk to customers in the future. Machine learning looks at past data and real-time information to figure out how customers will behave in the future, which can be helpful for fintech companies.
Read more: How to Start Business at Home: 20 Ideas
5. Making Games
Gamification is quickly spreading to new ideas in insurance, banking, stocks, and customer banking that use fintech. Some businesses might want to invest in gaming and blockchain technology together.
Financial companies are making their goods and services more like games. One of the best new banking ideas is gamification. This way of designing uses game features, like scorecards or prizes, to get people to do certain things. People can keep track of their spending with these games, and they reward players for making smart choices in the financial world.
As an example:
When you use a debit or credit card to buy something, the Acorns app will put the extra money in exchange-traded funds. Since its start in 2012, the company has gained more than 8.2 million customers who have put $2 billion into its website.
Flourish Savings is another gaming company that gives customers bonus cash that they can get later. As per the study by Apis Partners, “Gamification is about client centricity: it helps consumers reach their goals in an emotionally engaging way.”
6. Using the cloud
Banks should know that there are three kinds of cloud systems: public, mixed, and private. It is run by cloud computer service companies, who offer cloud services to many businesses and people in general. A hybrid cloud design has at least two different types of clouds, such as private and public clouds, that work separately but are connected by their technologies. The system is built to be used in a certain way. It can be used in business data centers or with other storage services.
Cloud computing is a new fintech idea in banking that frees banks from non-core tasks like IT infrastructure and data centers and lets them use cheaper, flexible storage and computing services. At the same time, the cloud is creating new types of banking, like open banking and banking-as-a-service. It changes the way clients and financial service companies have always worked together.
As an example:
Billte is a Swiss company that helps businesses organize their payment processes by giving them tools for managing invoices. They turn receipts that need to be organized into e-bills and ones with QR codes. Then, the technology sends bills through a number of different methods, such as email, text messages, automatic alerts, and real-time data. It also keeps track of partial payments in a lot of different currencies, which helps small and medium-sized businesses run better and have more cash on hand.
7. Banking models based on APIs
API-driven banking methods are a new way of doing things in the financial services industry. Banks and other financial institutions use Application Programming Interfaces (APIs) to link their services and data to other software and apps from outside the financial services industry.
In an API-driven approach, banks let outside coders, fintech companies, and even other banks use their tools. Through APIs, these outside groups can get to some banking services and customer info (with permission). This makes it possible to make new financial goods and services that work directly with the bank’s processes.
As an example:
Plaid’s partnerships with different banks show how APIs can be used in real life to drive banking. Plaid offers an API that lets users safely share their financial information between bank accounts and financial apps.
For example, when a user uses Plaid to connect their bank account to a planning app like Mint, that app can access their financial information through Plaid’s API. This lets the user keep track of their spending and handle their money well.
By using APIs to connect to third-party apps, this partnership shows how banks can improve the customer experience and provide more services.
8. Finances Built In
Embedded finance is when financial services are built into the platforms and communities of businesses that aren’t banks. Because of this trend, companies that have yet to work with money normally can now offer financial goods and services to their users as part of what they already do.
Customers have a better and more efficient experience because of this smooth merging, which blurs the lines between standard banking and daily activities. Companies in many fields, like retail, tech, and transportation, are following this trend to offer financial services. This changes the customer experience and creates new ways for businesses to make money.
As an example:
Amazon is mainly an online store, but it has added a number of banking services to its environment to make shopping easier for its customers.
You can use a safe and easy way to pay on Amazon’s site and on other websites that accept Amazon Pay. One of these services is “Amazon Pay.” Customers can make purchases using the payment methods that are already saved in their Amazon accounts. This means that they can enter their payment information once on different websites.
One more example is “Amazon Lending,” a service that helps small and medium-sized businesses that sell on Amazon get short-term loans. This service connects directly to the seller’s account and gives them payment choices that are best for them based on their past sales and success on Amazon. It makes it easier for these companies to get money, and processing times are often shorter and less stressful than with standard bank loans.
9. Finance Companies are Becoming More and More Automated
Robotic process automation, or RPA, lets companies use software tools like chatbots on a large scale. Technology is pushing its limits, but it’s becoming an important part of the digital change. RPA’s main job is to give robots control over process data handling and contacts with the company. High uniformity, clear reasoning, and strong steadiness are the main things that are needed to prove that RPA technology works. In the future, RPA and AI will work together more closely. It will make it better at dealing with business situations that are getting more difficult, speeding up services, and following fintech rules.
Basically, hyper-automation is when automation, robots, and AI are all used together to make industry processes more productive.
For hyper-automation to work, the following tools, methods, and systems must be used:
- AI: computer-based intelligence
- Learning by Machine
RPA stands for robotic process automation
- BPM and iBPMS: tools for business process management and intelligent business process management
- This is what iPaaS stands for: “integration platform as a service.”
- Platforms with low code
- Architecture based on events
- Besides that, different systems and tools
As an example:
Have you ever heard of internet services that help people? AI is used to make 3D models of chatbots in the virtual world. In the digital world, they can talk to and respond to users’ actions. Meta’s banks use them to help customers and do other business tasks 24 hours a day, seven days a week. They can help customers right away because of hyper-automation technologies that connect to the bank’s back-end systems.
10. Tech RegTech
RegtTech is another great fintech innovation. It uses technology to keep an eye on regulatory standards. Digital solutions for regulations use technologies that can handle very large amounts of unorganized or structured data so that information can be tracked and reported. These tools also help banks follow the new rules that are being put in place in many countries around the world.
As political systems change, states work harder to back stricter rules for protection. The rise of RegTech may help protect fintech’s security. To follow the rules, people came up with these methods to handle big data exchanges.
As an example:
With Drata, you can keep an eye on your company’s security and automatically make sure that your data meets SOC 2 and other standards. Fintech users can look for security threats, keep an eye on security policies, handle providers and staff training, and find security threats. People in many fields, such as business, healthcare, software, and more use data.
11. Loans Between Individuals
In P2P lending, people borrow money from other people, and in peer-to-business lending, businesses borrow money from people. Investors can make more money with these banking methods than with regular loan markets. To do this, investors are matched with loans that have already been accepted and have been thoroughly checked out.
Fintech industry giants can be joined by new, innovative companies that want to get a piece of the market and have an effect on new markets. By working together, each company or group can use the things that make it special to help the growth of financial services like peer-to-peer loans. Because of this, partnerships will become an important part of shaping the future of peer-to-peer loans.
As an example:
Fintech companies like Funding Circle have made tools that let consumers and lenders find each other. Most of the time, these sites charge a fee based on how much the loan pays back.
Platforms like Prosper Marketplace and Upstart have changed the way loans are given and received since peer-to-peer (P2P) banking came into the financial business. People and small businesses can use these sites to get loans directly from people who help them out with small payments.
12. Checking Your Digital Identity
As name identification becomes more common, biometric technology is becoming more and more important in banking. It gives useful ways to make sure online deals are real, make it easier to get into accounts, and even get rid of passwords.
It is also very important to keep banking operations safe and running smoothly. This helps stop scams and makes sure that only people who are supposed to be able to see sensitive financial data can.
In the future, palm readers, voice analysis, and face recognition software will be used to make sure people are who they say they are. Financial companies can use these steps instead of passwords, which are often broken, to protect their data.
Many mobile banking apps use biometric security to make sure a person is who they say they are before letting them into their account. This is good for customers because they don’t have to use passwords or security keys anymore. It lets them get into their accounts with just a face or DNA check.
As an example:
RapidID is an Australian company that makes sure digital customers are who they say they are by verifying their identities electronically. It helps standard financial institutions keep deals safe and cut down on money laundering and funding for terrorism.
Mobile phone systems also use fingerprints and ID cards to verify people’s names, which speeds up the process. Face recognition technology is also used by the business to make sure that only allowed employees are doing business. Because of this, RapidID’s answer cuts down on human mistakes and eliminates the chance of security leaks.
13. Inclusion Technologies in the Financial Sector
Financial inclusion technologies are new ways to use technology to help people who haven’t been able to use or get enough from the standard banking system get access to financial services. This includes low-income people, people who live in remote or rural places, and small companies that need to meet the normal requirements for using major banks.
As an example:
One real-life example of financial inclusion technology is M-Pesa, a service that lets people use their phones to send and receive money, borrow money, and do microfinance. It was created by Vodafone in 2007 for Safaricom and Vodacom, which are the biggest mobile network companies in Kenya and Tanzania.
With M-Pesa, users can use their phones to bank, receive, and send money, as well as pay for things and services and get credit and savings.
This service is especially useful in places where it takes effort to get to standard banking facilities. In many rural parts of Kenya, for example, there are few or no banks, which means that many people can’t use banking services. This hole is filled by M-Pesa, which lets people do basic banking tasks on their phones.
14. Not Coded
Developers and users can make programs with low code platforms (LCPs) by using graphical user interfaces (GUIs) and settings instead of normal computer code. The media can get rid of the need for expensive and limited software skills, even though they are still very new.
Companies often use NCDPs to speed up the development of cloud-based apps while keeping their overall strategy in line. One way to improve compliance is to use low-code tools to automate audit trails and document production. This is very helpful for investors and fintech startups that need to respond quickly to changes in the market.
As an example:
Google Cloud has put money into Unqork and AppSheet and bought them. You don’t have to write code to use Unqork. And AppSheet is a big player in the market for low-code and no-code apps. People who don’t know how to code professionally can use both sites to make apps.
Alex Schmelkin, Chief Marketing Officer of Unqork, says that financial companies can now finish jobs that used to take ten years just months after adopting “no-code.” Unqork has over 100 coders working for them, and most of them work in financial services.
FAQs
What are new steps in fintech, and why are they important?
When innovative tools and fresh thoughts are used in the money industry to enhance and simplify financial services, these are called fintech innovations. They are important because they make financial activities safer, faster, and better. They also make financial services easier for more people to get and often lead to cheaper solutions for both companies and customers.
How are new developments in fintech changing the way people handle their money?
New fintech developments are revolutionizing personal finance, offering convenient digital payment solutions, automated budgeting, and investment platforms. Mobile banking apps, cryptocurrencies, and decentralized finance (DeFi) are reshaping traditional banking, providing users with greater accessibility, transparency, and control over their financial activities, transforming how people manage and interact with their money.
What are the possible risks that come with new fintech products?
New fintech products bring risks such as cybersecurity threats, data privacy concerns, and regulatory challenges. Rapid technological advancements may outpace regulations, leading to potential misuse. Additionally, reliance on digital platforms poses the risk of system failures or glitches, impacting user trust and financial stability.
Turn it up!
These important technologies and new trends are becoming more and more connected, giving fintech a huge boost and pushing the industry to come up with new ideas. In some areas of banking right now, new technologies are being used to make new apps, create value, and change how competition works.
In the coming years, traditional banks will have to make the most of their huge resources. It will help them deal with a growing wave of problems and stay ahead of the constantly changing financial world.
