Fintech is one of the fast-evolving industries worldwide. With its digital solutions such as mobile payments, neobank applications, and P2P lending software, this industry shapes human lives by simplifying the processes of money transferring, data operation, etc. In this article, we are going to discuss 3 fintech software development trends, with the cases of success, and analyze their benefits for businesses.
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The fintech trends like AI & ML present optimized strategies for investment and budget allocation due to their predictive analytics.
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DeFi lowers the third parties' involvement, reducing the transaction time and providing transparency to financial operations.
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RPA automates routine, rule-based tasks by alleviating employees’ workload.
Fintech Market Overview
Fintech means using technologies for innovation, optimization, and automation in finance processes and services.
By intertwining finance and technologies, fintech offers better client-centric solutions as compared to traditional financial institutions.
According to Fortune Business Insights, the overall value of the fintech market is anticipated to be USD 340.10 billion in 2024, as compared to USD 294.74 billion in 2023 and hit USD 1,152.06 billion by 2032, exhibiting CAGR of 16.5% (during the analyzed period). North America dominates the fintech industry, having a share of 34.05% in 2023 (2024, para. 1).
Technologies play a central role in shaping its overall evolution:
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Faster Payment
Fast transaction time, cross-border blockchain payments, and 24/7 payment access through the digital bank facilitate sending money and enhancing the client experience as a whole.
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Enhanced Security
Technologies improve the overall security of fintech-relevant applications through the means of 2FA and multi-factor authentication.
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Personalization
AI integration has significantly increased the overall level of personalized recommendations about budgeting and resource allocation (we’ll discuss it below), proving the extreme dependence of fintech on the technologies.
Therefore, fintech shapes human financial experiences by saving time and increasing operational convenience. Now, it’s time to discuss the major trends in the fintech industry.
Latest Trends in Fintech Software Development
As for the previous statistics, the fintech space seems to be showing impressive growth results, given the effect it has on the entire business development and customer experience. Now, let’s talk about the latest trends in fintech development.
Artificial Intelligence & Machine Learning
Artificial Intelligence and machine learning are some of the current trends in fintech software development that are in everybody’s mouth. With the help of ML, AI promotes computer and machine simulation of human-like comprehension, showing decent results in data analysis, problem-solving, and decision-making. When speaking about business, we’d like to discuss the following benefits that AI & ML bring to businesses, proving their honored place in the list of the latest trends in fintech development.
1. AI-Driven Personalization
In our press release dedicated to Money 20/20 (2024), we touched on the moment that AI is integrated into the client’s payment-relevant processes, where it collects information about the consumer’s behavior based on their actions, spending activities, and payment methods they prefer to improve personalized recommendations.
AI provides business organizations with data enrichment as it supplies the raw information about the client with the evolving new data about their specific financial preferences, such as payment-relevant activities, to improve predictions about their behavior and improve personalized offers unique to each customer.
For instance, JP Morgan Chase (The US) currently focuses on utilizing AI to provide clients with hyper-personalized loan offers. The tool analyzes user spending behavior, detects the points of budget shortcomings, and offers bank-relevant products at the right time.
2. Improved Budgeting Decisions
Artificial Intelligence can benefit the effectiveness of neobank and digital banks’ operations by improving customer experience by giving personalized budgeting recommendations, expense categorization, and other elements discussed below:
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Personalized Budgeting Recommendations
AI analyzes users’ behavioral patterns, including income, spending habits, and financial goals, to give recommendations about the optimized resource distribution. Artificial Intelligence is one of the fintech solutions development trends, as it is flexible to changes. By integrating ML, Artificial Intelligence can assess real-time data, including income fluctuations, and adapt recommendations for improved budget distribution by delivering a decent level of personalized user experience.
Bank of America (The US) implements AI-driven virtual assistant Erica that provides clients with advanced personalized assistance in budgeting. Erica reminds users about upcoming payments, evaluates their spending behavior, and provides them with personalized recommendations on budget allocation.
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Categorizing Expenses
AI leverages ML to categorize the overall expenses, such as paying for bills, entertainment, groceries, etc. AI leverages ML to categorize the overall expenses, such as paying for bills, entertainment, groceries, etc. The clients get a clear overview of their spending behavior, which helps them make informed decisions about upcoming expenditures. AI-powered tools analyze spending patterns and give insights about the categories where the clients can reduce expenses.
BBVA (Spain) implements AI to classify their user’s financial transactions into categories like spending, income, investment, etc. The client can adjust these automatic categories manually to apply alterations for further transactions.
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Predictive Analytics
With the help of ML, AI-driven tools help users forecast potential future spending by analyzing the history of financial operations. This feature helps clients plan their expenses. Additionally, Artificial Intelligence is helpful for bank clients to optimize their expenses under unexpected circumstances. AI can simulate critical situations, like job loss, for further analysis of budget options, saving opportunities, and income allocation.
Wells Fargo (The US) provides their mobile deposit clients with access to a predictive banking feature. Besides analyzing the client’s Wells Fargo’s AI-drive predictive analytics shifts from only providing insights into the user’s income distribution to giving wholesome analysis of recommendations regarding the alterations in recurring bills.
3. AI-Driven Solution to Investment Strategies
AI and ML are the latest fintech software development trends as they revolutionize consumer investment decisions. Initially, the investment industry depended on data analysis and financial modeling, which were effective for decision-making. However, the main problem was that as new classes of assets like cryptocurrency were rising, the model of recommendations was not up to date. Without personalization baked into the framework, the generation of investment strategies proved difficult, as investment strategies merely based on heuristics failed to address the various investment goals and risk tolerance of the users.
IndexGPT is one of the AI-powered solutions for investment strategies. This JP Morgan Chase feature combines cutting-edge data analytics and machine learning to personalize recommendations based on clients’ changing financial objectives.
This tool integrates multiple data sources, economic indicators, and client preferences. It conducts real-time market analysis to develop personalized investment portfolios based on the user’s risk tolerance and financial goals. IndexGPT proves that AI & ML become one of the core fintech trends based on improving user investment decision-making with personalized and real-time strategies.
The Rise of Decentralized Finance (DeFi)
Decentralized finance is an ecosystem developed on blockchain that provides clients with traditional services such as lending borrowing, investment, and trading. DeFi shifts from centralized service provision to a democratic P2P variant that excludes third party integration, like brokers or banks.
1. Cross-Border Payment
By facilitating parties to transfer funds to each other across borders, DeFi eases business operations due to blockchain-based cross-border payments, proving it to be one of the key trends in financial technology development. They offer efficiency in time, cost-effectiveness, and heightened security, among many other advantages for businesses. Payments are expected to take seconds, and transaction fees will only be for the service of the operator of the blockchain network.
Source: Adams, A. et al. (2023). On-Chain Foreign Exchange and Cross-Border Payments. Uniswap. https://app.uniswap.org/OnchainFX.pdf
Airwallex (The UK) alleviates international business payment processes due to cross-border blockchain payments. This financial platform maintains business accounts as its critical feature and helps companies that need to withstand, keep, or exchange funds in different currencies by limiting the overall risk from fluctuations in currency values and so improving business cash transfer procedures.
2. Lending and Borrowing
By implementing a blockchain system, DeFi ensures decentralized and transparent money transactions, excluding the need for third-party integration. Why is DeFi one of the fintech software development trends? That’s because decentralized finances utilize smart contracts that function on the blockchain environment to automate the overall lending process by bringing businesses the benefits of accessibility, minimized fees, and canceling the need for centralized operations. One of the latest opportunities of P2P lending is the support of cryptocurrency, which can revolutionize borrowers’ access to credit.
SALT Lending (The US) is a DeFi blockchain-based P2P lending platform that allows customers to collateralize their loans with crypto assets. Combining the transparency of the blockchain with the flexibility of the P2P chain, this platform offers users the ability to leverage their crypto holdings as collateral, thereby increasing borrowers’ access to loans and providing better security for lenders.
Pss, wanna know more about how to create a P2P lending platform effectively? Just read our article.
3. Logistics Operations
DeFi can benefit the logistics sector by enhancing transparency and traceability, improving cooperation and real-time tracking via the blockchain technology (BCT).
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Enhancing Transparency and Traceability
The immutable ledger provides an improved visibility of product flows. BCT also keeps transparency for transaction history, which allows businesses to enhance accountability in logistics operations. Thus, in DeFi, the traceability and transparency offered by the blockchain help reduce supply chain disruption risks while also eliminating product counterfeiting and increasing user trust.
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Improving Real-Time Tracking
DeFi benefits logistics companies as they can track the movement of goods, as well as check and monitor environment conditions by using blockchain. If the transportation experiences any deviations from the predefined parameters the organization will receive a notification alert. BCT stimulates proactive problem-solving by minimizing the effects of disruptions on the overall supply chain.
Source: Mvubu, M., & Nabune, M. (2024). Blockchain in the Logistics Sector: A Systematic Literature Review of Benefits and Constraints. Journal of Transport and Supply Chain Management, 18, 1-10. 10.4102/jtscm.v18i0.1068.
Yojee (SGP) utilizes blockchain to operate transporting freight for large and medium enterprises. The platform provides users with opportunities to automate the operations like tracking and accounting. The additional elements include fleet capacity and driver performance, proving the blockchain improves cargo traceability and data transparency.
Robotic Process Automation (RPA) in Business Operations
RPA gains its popularity as one of the fintech development trends due to the automation of repetitive, rule-based tasks, enabling business workers to focus on more significant assignments. RPA cuts costs relevant to manual task processing and ensures that companies can maintain detailed audit trials to abide by the regulations.
Appian (The US) enables clients to deploy low-code design bots in a safe cloud environment. IT teams can centrally manage and analyze Appian third-party RPA bots to enhance performance and boost scalability. The management capabilities of Appian RPA assist clients in optimizing their complex business processes, as bots can handle exceptions and ad-hoc activities.
Meet Agilie, Your Reliable Partner in Fintech
Indisputably, fintech is evolving, and the discussed trends expand its overall growth, motivating business organizations to implement on-the-mouth features to improve user experience and optimize resource allocation. Business representatives might need to build software or buy ready-made ones to include or optimize the fintech trends discussed above.
But how to choose a reliable partner? Just read this article to find out.
Agilie is a European IT outsourcing company that has been crafting software from scratch and customizing clients' projects for over 14+ years. We craft digital solutions that benefit fintech, real estate, logistics, healthcare, and other industries.
Agilie provides secure, efficient, and deadline-compliant services in the following domains: fintech, mobile banking, payment solutions, and blockchain software.
Success Story: Level01
Agilie worked on Level01, a safe P2P decentralized Ethereum-blockchain-based financial platform. With Level01 users can craft their own digital wallet, as well as store coins there. The platform integrates Artificial Intelligence to predict the percentage of success per option. Level01 utilizes a few trading data exchange sources, so the core challenges were maintaining continuous integration with each and maintaining data relevance.
We implemented a distributed microservice approach, meaning that each of the trading sources had its microserver. The separate server was responsible for data aggregation and sharing via the overall platform. For more details about Level01 and its emphasis on AI insights within the platform, you can read the linked case.
Conclusion
We illustrated the top 3 financial software development trends by providing an in-depth analysis of their benefits for the business sector. AI and ML, DeFi, and RPA keep shaping the future of fintech with their cost and time-effective outcomes for optimizing routine actions, giving personalized budgeting recommendations, excluding third-party integrations in decentralized trading, etc. Hence, knowing fintech trends is a must to understand the potential directions of the industry’s further evolution.
