The fintech sector saw an explosion of growth over the past few years. As we continue to see a closer tie between financial and technology companies, we want to explore the seven largest fintech software development sectors.
Why does it matter? If we understand the top sectors, we can follow the trends to see how the industry develops over the next few years and affects your company.
What are the Top 7 FinTech Software Development Sectors?
#1. Payment & billing software
Velvetech often helps financial firms use automation and workflow tools to improve their payments and billing.
A good example is tracking the age of missed payments. If a payment is a day or two late, then it is probably an honest mistake. The payee needs a simple reminder to pay their bill.
Conversely, those who are 90 plus days late will probably not pay. It is an entirely different scenario with different collection efforts. Routing this through a workflow can automate the customer-facing functions as well as what the back-office operations need to collect payments at specific points in the process.
Our experience with payment and billing can help you create a software tool that collects monies based on your requirements.
#2. Digital banking
Due to the growth of mobile technology, face & voice biometrics, and AI over the last few years, we might be able to do all our banking in the next few years in the comfort of our pajamas.
Some banks like Ally, Atom, GoBank, and even the military bank USAA have gone entirely digital. While this reduces your overhead, a digital bank faces challenges that a physical bank like Bank of America or Chase might not encounter.
For example, how do you know you are giving money or account access to the right person. To solve these problems fintech relies on features like face and voice biometrics.
The final challenge is how do you know what to do when you don’t have a human helping you with your banking. That is where the chatbots and AI features help.
Even if you are not ready to go 100% into digital banking, Velvetech has the team to help you transition many of your process to mobile and digital software.
#3. P2P lending
Ten years ago, the P2P lending space was in its nascency. Only one or two companies like Prosper and Lending Club existed. Now, the idea has taken hold. In fact, they estimate the P2P space will go from $64 Billion in revenue in 2015 to $1 Trillion by 2025.
As consumers and businesses look for alternative funding sources to banks, the best option is to work with these P2P alternatives.
However, these microloans require a lot of machine learning, intelligent algorithms, and AI technology to underwrite the loans.
Velvetech leverages the latest P2P technologies to work for your audience.
With over 1250 crowdfunding sites and $16 billion in transactions last year, the crowdfunding space is on the rise.
Crowdfunding is the cousin to P2P lending. There are three types of crowdfunding.
The first is for people who invest in a new product or idea because they want the product. Often sites like Kickstarter show you the latest gizmos and gadgets when they first launch.
Second, charities use crowdfunding to support their cause.
Third, some crowdfunding sites give investors a small piece of equity in a new startup looking to raise funds.
Because you have multiple people involved in every transaction, the technology needs to track all parties involved. Crowdfunding sites use machine learning databases and payment integration technologies.
It almost seems pre-historic now, but traditionally if you wanted to trade a stock, only a broker could order a stock certificate. The physical stock certificate exchanged hands on the trading floor where the broker bought your stock.
How the world has changed! Now, you can do quick and easy trades on your mobile device without any human assistance in less than a minute. The right technology can help you make the right investments.
The mobile technology is only part of the equation, as investors use AI and machine learning technologies to help them make profitable investments.
#6. Financial Management Platforms
Over the past few years, change struck the financial management industry.
First, many products commissions got eliminated. Previous prime earning scenarios went away.
Second, the government started enforcing a harsher version of the Investment Company Act of 1940 that requires Registered Investment Advisors (RIA) to put their client’s interest first irrespective of all other factors.
Third, the 1% fee most advisors now charge might become a thing of the past. For clients with more substantial amounts, it is not worth it to pay someone $10,000 on a $1 Million account every year for advice.
That is why fintech stepped in to fill the gap. Sites like Betterment use a series of algorithms to determine the best course of action for your investments at a fraction of the fees.
Just like AI and machine learning help investors, they help financial management platforms identify and verify top investments based on your criteria and goals.
The final Fintech sector we want to address is insurance. Insurtech combines mobile solutions, Big Data, IoT, AI software tools, and a mix of algorithms to help insurance companies manage risk, increase sales, and improve their returns.
Some Insurtech companies like BIMA provide health insurance services to consumers through their mobile devices. The data collected from users’ devices help them track information, and then the data gets used to create innovative products based on client needs.
As the fintech market explodes, we get to see some of the early innovators in the field. Companies will keep coming up with new ideas that make people’s lives better thanks to the combination of finance and technology.
Velvetech is ready to help you merge both sides into a better solution for your customers and employees. If you need help for your next fintech project, contact us today.