The Future of Financial Technology 6: The rise of the niche application

 In Fintech

Niche application

Submitted by Paul Sullivan via ModedaWeb.

Financial technology is not only improving the back office operations, and assisting with streamlined payment processing for disruptive start-ups, but it is also laying the groundwork for a new breed of niche applications – the ultimate goal of all customer facing FinTech developments.

Web 3.0

Where web 1.0 was about basic connectivity, and 2.0 social, web 3.0 is all about mobile. The reality is that we are already in the middle of a mobile revolution that is crushing traditional desktop web traffic; mobile app traffic surpassed desktops for the first time last year, and has continued to do so ever since.

As a result, start-ups are increasingly focused on mobile-first delivery of services, relying on the Cloud and hosted frameworks to provide functionality like payment processing. The ride sharing service Uber uses a smartphone app to link customers and drivers, apparently performing all the necessary functions in-app. The reality is that Uber relies on a number of web services to carry out the scheduling, billing and payment processing seamlessly in the background, showing users only what is strictly necessary in the app.

Even as mobile devices to increase in computational power, the FinTech industry will continue to develop solutions that offload processing to the Cloud in order to maintain levels of security, reliability and availability. New solutions will take advantage of advances in technology – like wearables – to offer even more innovative services to customers.

Specialised lending niche application

The lending industry is already undergoing transformation as start-ups have begun introducing workable peer-to-peer platforms that connect individuals directly. The services are relatively generic (private lenders lend, private borrowers borrow), and will themselves be challenged in the future as more specialised offerings become available.

Personalisation and customisation make the rise of special interest lending groups inevitable. Ethical lending, cause-based lending and even lending based around shared hobbies and groups will all become more common as more businesses seek to fill the many available niches.

It is also extremely likely that these niche offerings will use common frameworks and platforms to facilitate inter-user money transfers. These platforms will also help buyers and sellers discover each other more easily to create even more new opportunities.

Retail algorithmic trading niche application

Hedge funds and large investment banks have been using algorithmic trading for several years, trading currency and stocks automatically in real time based on pre-configured algorithms. FinTech is allowing banks to unlock their Big Data stores to refine and create automated algorithms on the fly, but as the market matures, these technologies will also become commoditised.

In the same way that FinTech empowers customers in the payment market, the emergence of retail algorithmic trading will allow them to better control their own investments. And instead of manually monitoring stock market tickers, the use of algorithms will allow private investors to exploit machine learning and AI technologies to allocate funds and manage portfolios according to their own preferences.

As automatic activities based on algorithms become more common place, FinTech providers may also be able to re-engineer the technology for use in other consumer-facing services. Because start-ups continue to disrupt established industry using technology, this development will be more “when”, than “if”.

Disruption is the new norm

Predicting the future is notoriously difficult; for every visionary statement that comes true, there are are hundreds that make the “prophet” look foolish. The near future of FinTech is fairly obvious, as we have pointed out in this series of articles, but further ahead it is harder to guess.

FinTech will undoubtedly change and change again, but the factors driving innovation will not. Businesses and individuals will still have the same demands:

 Greater control over their data/finances/affairs.

 More efficiency in every transaction.

 Automation of operations to simplify tasks.

Technology will continue to evolve, making it easier to deliver according to client needs, and to take advantage of new opportunities as they present themselves. And disruption will become the new norm as a result. 

Sergey Sanko
Sergey had started an IncomeClub after years of being an investment advisor for high affluent investors and managing fixed income securities. He is the lead investment advisor representative and holds a Series 65 license. Sergey earned his Executive MBA degree from Antwerp Management School.
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