Table of Contents:
- How Robotic Automation is Changing FinTech?
- A drive towards digital
- Automation in the financial market
- Customer experience
- The cryptocurrency ecosystem
- A drive towards digital
How Robotic Automation is Changing FinTech?
Automation is everywhere and we can already see its impact on different sectors. The financial sector is no exception. When FinTech (financial technology) entered the scene, it changed the financial landscape forever.
Today more than 95% of global consumers are affected by FinTech in one form or another.
While FinTech brought a revolution in its own right, automation has added fresh momentum to the growth. Automation is now widely used for a range of functions, including anti-money laundering, transaction management, and trading algorithms. Let’s find out what is going on in the FinTech space now that robotic automation has entered the equation.
A drive towards digital
Digitization is an ongoing process that continues to strengthen with every passing year. The genesis of FinTech brought the financial world to the digital space. For the first time in the history of humankind, humans were able to exchange wealth without paperwork.
The rise of smartphones is directly linked with the growth of FinTech. Smartphones have become the instrument to access our finances. Be it mobile payment apps or trading apps, a smartphone is all we need to manage our wealth.
With the growth of smartphone FinTech apps, automation has become a necessity. Today more than 45% of banked individuals use FinTech apps to manage their money. With millions of people accessing their money at the same time, manual processing is now a thing of the past.
Let’s take a look at a small example to understand this point. When KYC (Know your customer) became mandatory, the FinTech sector was quick to automate it. As a result, processes became significantly faster. What would previously have taken hours was now resolved in minutes. On top of that, the process became very convenient for customers.
As we can see from this example, automation greatly affects two factors: efficiency and security. Let’s consider why this is the case.
The role of automation is primarily to reduce time lags and delays. However, efficiency alone would not make the cut. For example, if the error margin is high, efficient systems would not make sense in a sector as sensitive as finance.
With automation, systems are not only becoming more efficient but also more accurate. This is achieved by removing human error from the equation. As a result, financial companies started to benefit from both sides. Tasks could be executed in a fraction of their previous times. The result is that they are now more accurate and precise than ever.
Compliance is a slippery slope for financial institutions. Every year, big financial firms have to face regulatory charges and pay hefty penalties. With the help of automated technologies, companies no longer need to worry about complex and changing regulatory requirements. Once all of the inputs are in place, the algorithm can figure out whether or not the transaction(s) breach regulatory requirements.
For customers, the experience becomes hassle-free and smooth. While previously they had to deal with various professionals to get charity about regulations, now one app or software is enough. It is one of the best use cases of automation in the financial space.
Money laundering is as old as money. Scams and frauds abound in the financial space. Automaton plays a huge role here and saves individuals and companies a lot of money.
With machine learning and AI, FinTech companies can now work with huge databases. By analyzing trends and patterns, FinTech software can now predict suspicious activities, terrorism financing, money laundering, and other financial crimes.
For customers, automation has opened up an avenue for getting credit. With advanced analytical tools, AI tools can provide a better understanding of credit risk. As a result, more people have become eligible for loans.
Automation in the financial market
Apart from banks, asset management companies and firms use automation technologies for the stock market as well. Previously, stock analysis and predictions were fraught with human errors and biases. By making the process data-driven, FinTech companies could come up with more accurate predictions.
Trading bots are a revolutionary concept that use automation. Automated trading bots work differently, but the core idea is to automate the buying and selling points. It does so based on a set of pre-fixed parameters. With trading bots, entering the stock or cryptocurrency market for newbie traders has become dramatically simpler and safer. Now a crypto trader can even create an algorithmic trading bot with, for example, the help of a drag-and-drop bot builder.
As developers work with more advanced trading bots, e.g., bots coded in Python, we can expect further improvement in this space. It has also sparked a debate about whether the job of financial analysts might become redundant in the future. However, that is not a cause of worry since automation would end up making humans more efficient at their jobs.
Customer experience lies at the core of any business. Since the FinTech sector is not purely concerned with technology, the innovations in this space prioritize the customer experience. Many of us already benefit from automation in FinTech without even realizing it.
While chatbots are not restricted to financial services, their use in FinTech has been very efficient. Chatbots simplify the customer’s experience, saving them both time and money. Companies also earn goodwill from better customer experience. Despite their relative simplicity, chatbots are a fine example of how automation is changing the FinTech industry.
The cryptocurrency ecosystem
Cryptocurrencies are a controversial subject, and not many believe in their legitimacy. Nonetheless, the impact of cryptocurrencies, especially Bitcoin, is undeniable. The crypto space is at the forefront of FinTech innovations, with automation occupying a central part of it.
Smart contracts are the best example of how the crypto industry is using automation. To put it simply, smart contracts execute an action when certain parameters are met. Through smart contracts, the Ethereum blockchain has been able to process transactions significantly faster than Bitcoin. Like stock market trading bots, crypto trading bots also use automation to make processes simpler and safer.
As you can see, automation is disrupting the FinTech space and will continue to do so. With more advanced AI (artificial intelligence), ML (machine learning), and NLP (natural language processing) systems, automation will only become even more accurate, efficient, and secure in the future.