Financial technology is a key driver for financial sector growth, equipping financial institutions with innovative new tools and solutions to meet the changing demands of digital-first customers. But fintech’s rise is only just beginning: the market for financial technology is projected to grow 6x from $245 billion to $1.5 trillion by 2030.
This rapid pace of innovation is reshaping customer expectations and spurring financial institutions to continue to invest in digital solutions. Today’s innovations are already shaping the future of finance, creating an opportunity to disrupt the status quo and create new market leaders.
For banks, investment advisors, insurance companies, and other finserv organizations, staying on top of financial technology trends is more than a competitive advantage. It’s a requirement for survival. Here are the top fintech trends reshaping financial services and the customer experience.
Digital-First Financial Services
With the vast majority of people preferring to manage their finances through a mobile app, the mobile banking experience is quickly eclipsing the in-branch experience. To stay ahead, expect financial institutions to double down on their mobile apps to ensure customers can manage their finances conveniently, quickly, and securely. Newer institutions like SoFi, Chime, and N26 are digital only, with no physical branches at all, demonstrating that mobile banking is seen in the industry as the dominant approach moving forward.
The future of digital-first financial services lies in hyper-personalization and predictive analytics. By leveraging AI and machine learning, financial institutions will deliver tailored financial advice that helps customers make smarter decisions and access new products, increasing customer loyalty and lifetime value.
Open Banking
Open banking creates a framework that allows banks to integrate third-party providers into their digital infrastructure. By creating a more collaborative, customer-focused ecosystem, open banking breaks down silos between multiple financial institutions to make it easier for a customer to manage their finances from a single location. Not only does this remove friction for users, but it improves security by enabling payments to be made via digital authentication instead of manual entry of account and routing numbers.
Securely sharing access to a customer’s various financial services allows fintech and banks to aggregate information, introduce new services, and help people better manage their money. Banks can add new services and functionality to their apps without extensive internal development, while fintech companies can quickly scale their services to reach millions of new customers.
Financial Services Cybersecurity
To protect customers, financial institutions are investing in AI-driven threat detection and behavioral analytics to prevent and detect unauthorized users. Banks and fintechs are also driving innovation in biometrical identification that enables users to authorize access and transactions using retinas, fingerprints, facial recognition, voice patterns, palm geometry, and keystroke patterns.
Advanced financial services security solutions also help identify and combat AI-driven identity fraud. As deep fake technology becomes more and more realistic, these solutions will play a critical role in ensuring that biometrics-based identity verification systems continue to protect customers instead of giving scammers an easy way into accounts.
Payment Innovations
Digital wallets like Apple Pay are swiftly catching up to credit and debit cards both for online and in-person sales, with experts predicting that digital wallets will outpace debit cards in transaction volume at physical points of sale by 2027.
Another key payment innovation is buy now, pay later (BNPL), which lets consumers split purchases into installments and make interest-free payments over time. By offering BNPL, financial institutions can provide a new form of financing that is fast and convenient. At the same time, financial institutions can leverage their customer data to more accurately predict risk, allowing them to offer more favorable terms than a pure-play BNPL solution.
Contactless payment methods also continue to see widespread adoption, with consumers now able to tap their cards, phones, and wearables at most retail locations. To facilitate contactless payments, financial institutions must ensure their apps provide seamless integration with these technologies to deliver the secure, user-friendly experience that customers expect.
Green Fintech
Financial institutions are leveraging a wide variety of green fintech solutions designed to meet customer demand for environmental sustainability, combat climate change, and create new opportunities for sustainable growth and investment. For example, financial institutions are now integrating green fintech platforms that help their customers track their carbon footprint based on their spending patterns, and then purchase carbon credits to offset that footprint.
By integrating AI and machine learning, financial institutions can use advanced analytics and fintech automation to offer green loans featuring preferential loan rates for sustainable initiatives. AI also helps green fintechs deliver smart ESG (Environmental, Social, Governance) portfolios that respond to real-time metrics instead of annual reports.
RegTech
Financial institutions must comply with an ever-changing body of global regulations designed to prevent money laundering, cyber threats, data exposure, terrorist financing, tax fraud, and more. Regulatory technology (RegTech) is designed to help automate financial services compliance processes and workflows so that financial institutions can stay compliant, protect customers, and avoid fraud.
RegTech platforms use AI, machine learning, and advanced analytics to analyze transactions for potential fraud, illicit activity, or cyberthreats. RegTech also helps financial institutions meet their compliance requirements by automatically generating and submitting compliance reports while monitoring operations for adherence to complex global regulations, especially as regulators change rules or provide additional clarification.
How Continuous Testing and Test Automation Powers FinTech Trends
As financial institutions continue to integrate increasingly complex fintech solutions into their websites, mobile apps, and back-office applications, the importance of continuous testing has grown exponentially.
By leveraging testing automation, financial institutions can take a continuous testing approach that helps ensure quality throughout the entire software development lifecycle. Automated testing enables teams to resolve bugs and simulate real-world scenarios such as high user load, mobile payments, and high transaction volumes, helping developers confirm their applications will perform flawlessly under stress. Testing automation also helps scale test coverage across more device/browser combinations so customers receive a quality digital experience regardless of device.
Continuous testing is essential to keeping pace with today’s top FinTech trends:
Digital-First Financial Services: Test automation ensures mobile banking apps will function seamlessly in real-world conditions across thousands of devices and environments.
Open Banking: With complex integrations between banks and third-party providers, testing confirms API performance to ensure a seamless user experience.
Payment Innovations: Testing enables financial institutions to ensure contactless payments, buy now/pay later (BNPL) services, and digital wallets like Apple Pay are properly integrated and usable across devices.
Cybersecurity: Automated testing helps secure applications by validating user authentication flows while providing a secure, compliant environment to help protect sensitive customer data when testing.
Green FinTech: Automated testing helps streamline the deployment of digital solutions like paperless transactions and carbon footprint tracking, ensuring their reliability and scalability.
RegTech: Test automation validates compliance workflows and ensures that applications adhere to evolving global regulations.
Start Automating Your Financial Services
Trends like digital-first financial services, open banking, payments, and green fintech are all pushing the boundaries of financial innovation, while fintech security and RegTech are crucial for protecting customers and maintaining compliance.
To integrate all these solutions together, financial institutions can leverage a continuous testing approach powered by testing automation to release high-quality, reliable, and secure applications faster, more efficiently, and with greater confidence. Learn how Sauce Labs helps financial institutions use test automation to keep pace with today’s fast-moving fintech trends.
