This topic contains: 4 Disruptive innovations in payments
Disruptive innovation refers to the automation of new market terms and disturbing the old terms and their market values and terms. Disruptive innovation is the most innovative idea in the 21st century. When we move practically ahead to speak of the biggest form of disruptive innovation, it is FinTech.
FinTech is the combination of finance with the latest trends and technology to meet user experience. It is said to be the biggest disrupter in the Financial Industry. Apart from being disruptive, fintech has brought about massive changes in the traditional working styles. Technology keeps driving fintech to evolve more and new competitors keep entering the market almost every day.
Here, we are more concerned to discuss disruptive innovation in payments with the arrival of FinTech. What trends are bringing disruption? How will it shape the future? are also our points of concern.
1. Rise of FinTech
The rise of FinTech is dated back to the 1900s’ with ATMs coming into existence. FinTech has come a long way from enabling transfers in different parts of the world to p2p transactions.
Different online payment platforms like PayPal came into existence in the late 90s’ and changed the ways we process payments. Today most of the world’s economy is planning to go cashless with the rise of technology in payments. There have been several mobile-based payment applications that bought a complete shift of financial procedures to smartphones. This blockchain-based technology gave rise to fast and smart payments, insurance claims procedures, loan processing, and online payments.
Let us quickly look at the aspects that bought Disruptive innovations in Payments.
2. Emerging Technology
We can see that technology is the main reason behind Disruptive Innovations in payments. Technology has changed the ways we function our payments and transactions. Also, it has made everything hassle-free, quick, and easy to access. Artificial Intelligence and BlockChain brought massive changes in the system and even today dominate the entire structure. Peer to Peer payments and Blockchain have emerged to single-handedly disrupt the payments.
Several Peer-to-peer payment solutions are quickly taking over smartphone-based payment applications. All these innovations have made payments easier directing people to rely on them than any traditional bank. People who are not involved in these payment procedures will lag. Whenever it comes to finance, the question that arises is the security and cyber threats. Fintech has managed to overcome the problem and earned the trust of lots of millennials. The newly based payments structure is safe and transparent, thus reducing the risk of fraud.
3. Market Movement
With the increasing use of technology every moment, the expectations of people in general increased many folds. People want technology to deliver more than it actually can. People are so affected that even the most innovative idea does not leave a great impact on them. They behave like it was made to happen, and even the disruptive innovations are not considered effective. We can also conclude that the services that are not highly innovative are discarded.
Because of high customer expectations, brands are now focusing to improve themselves according to the customer needs. This does not come out to be easy because people expect so much from technology. Yet, fintech is working to the best to bring the best innovations and technology into existence. People are driving towards the change and are accepting it happily.
Data analytics is important to FinTech companies. It allows them to study customer behavior in detail, and innovate them according to market expectations.
4. Industry Trading
There are various changes in the industry that are making disruptive innovations. With the rise of smart payment activities, banks have lost their role in the financial sector. Several banks work on outdated traditions to date and are entirely losing hold of their customers. Other banks are innovating themselves and trying to meet customer expectations to attract them. Payment negotiators are vanishing, because of the smart ways of payments and digital lending process.
The lending and receiving processes have been transformed and are helping in maintaining secure cross-border transactions. The finance sector has high manual work and is now shifting to robotic process automation to ease their work. It helps them to be fast and accurate. The use of Machine learning and various APIs is also increasing to intensify the payment procedure.
Disruptive innovations focus on bringing more blockchain technologies into existence to make instant international payments. They are also working to enhance security to the maximum. There is still debate on how the data will be used. Who will earn the maximum benefits from it? We can see the Payments and financial sector expand more and more in the coming days.
As already discussed, FinTech and payments will continue to bring more changes and evolution in the economy. Governments are also formulating laws and regulations regarding FinTech infusions. In the coming days, payment will be about fast and safe transactions. Banks, if they do not evolve with time, will lose hold of their customers. Fintechs have to continuously work on enhancing their security, to reduce cyber threats. Bringing disruption is not enough and it is necessary to look at the market and industry needs.