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Smarter, Faster, Cheaper: 3 Fintech Trends That are Affecting Consumers

New solutions and tools appear on the fintech market almost every day. We talk about long-running industry trends that directly affect the consumer experience.

Mobile banking boom

The audience for banking applications is no longer limited to young users and residents of large cities. According to Insider Intelligence, 89% of consumers in the United States use mobile banking. Moreover, for 70%, the smartphone app has become the primary way to access an account.

The trend is noticeable not only in the American market. During the pandemic, the popularity of financial apps rose 55% in Japan and South Korea. In the USA and China, the increase was 20%, in Germany and Italy - 15%. During the first lockdowns, the growth in registrations in mobile banking reached 200% point by point.

Experts note that the transition to mobile banking allows credit institutions to reduce the number of branches. At the same time, they no longer risk losing their customer base as they used to.

Buy Now Pay Later

More and more platforms and tools appear on the market that allows consumers to use the money for free. Last year, this segment of fintech was valued at $ 4 billion. It is expected to grow at an annual rate of 22.4% over the next few years.

The Buy now pay later (BNPL) concept assumes that customers make purchases without paying right away. Instead, interest-free installments are provided by both special platforms and operators, and banks, including in partnership with trading platforms.

Generally, BNPL does not require such a thorough credit check as regular loans. This expands the circle of possible users of the product. In addition, such solutions are eagerly used by millennials and Gen Z, who are looking for convenient tools to manage their budget.

Affirm, a major representative of this market, already had a successful IPO in 2021. However, on the day of the placement, the value of its shares doubled to the opening price.

Competing with new players, tech giants are launching their BNPL products. So, Apple Card allows you to use an interest-free loan for Apple devices without commissions and fees.

In turn, banks are picking up this trend and issuing credit cards with a long interest-free period. As a result, such products can be even more profitable than installment services in some cases.

AI Against Fraud

Artificial intelligence technologies are mature enough to be applied in the financial sector. Most banks (80%) are well aware of the potential benefits of AI and machine learning, according to OpenText's Survey of Financial Services Professionals. Moreover, two-thirds of organizations are already implementing strategies and are planning to roll out such solutions soon.

There are many uses for AI in finance, from chatbots to personalized recommendations. One of the most exciting and long-awaited scenarios is detecting and preventing payment fraud, the fight against money laundering, and other crimes.

Complex ML algorithms are already being used to manage fraud and detect abnormal activity in card transactions. At the same time, AI elements can be combined with voice solutions. For example, create smart answering machines that receive suspicious calls instead of subscribers.

Anti-fraud AI startups are attracting millions of dollars in investment. One of them, Resistant AI, was recently invested by GV (formerly Google Ventures), the investment arm of Alphabet.

Revenue from AI solutions in the field of countering fraud in 2020 was about $ 6.5 billion. Future Market Insights expects that by 2031 the figure will increase to $ 39.5 billion. Companies and users are worried about digital fraud's growth, fueling demand, note analysts.