Different trends continue to shape the future of industries globally, and how the key market players utilize these trends will influence the development of the economies in different countries. The power dynamics are changing as business enterprises gradually evolve from using cash and checks to the more comfortable way of digital payments, making such transactions more seamless and efficient. Generally, how the market players go about using these trends will influence the global digital economy. These key market players are currently adopting new product developments, partnerships, and strategies to continue boosting their profits and maintaining their market share. This article examines some of these future trends, including the ones at the forefront and others less known. It will also provide helpful business tips for adopting these trends and without the possible hindrances that could stand in the way of their development.
Future Trends
- Open Banking
Open Banking is also known as “open bank data.” It is a banking practice that gives third-party fintech providers open access to consumer banking through a secure Application Programming Interface (API) for new and innovative financial products. In a nutshell, it allows banks and other financial institutions to access the financial data and records of the consumers.
American top-rated fintech providers
What is truly beneficial about Open banking is that it provides customers liberty to select from multiple service providers and empowers them to take control of their finances. It aids them in making informed and enlightened decisions in the course of managing their accounts. It provides account holders with better transparency options. Security is a huge advantage of open banking as customers do not need to share their login details and passwords with anyone other than their banks or financial institutions.
- Distributed Ledger Tools
Distributed ledger technology, also known as blockchain technology, first gained traction as a platform for managing Bitcoin, a digital cryptocurrency (the most popular, to be exact). The famous anonymous innovator of this technology goes by the pseudonym, Satoshi Nakamoto. They invented a P-to-P version of direct online transactions between two parties, eliminating the requirement of a third-party facilitator. It is a digital platform for recording and synchronizing transactions of assets in electronic ledgers, as opposed to keeping data in the usual traditional log. Distributed ledgers use independent computers (known as nodes) in achieving this. Distributed ledger databases are spread across various sites and regions. They eradicate the need for a central authority to keep a check against manipulation. It uses cryptography to store data securely, cryptographic signatures, and keys to only grant access to verified users. The transparency which DLT provides enables a high level of trust among the users and virtually eliminates the possibility of fraudulent activities occurring in the ledger. Distributed ledger tools much more effectively track intellectual property rights and ownership for art, commodities, music, and amongst others. The popular Blockchain technology is one type of distributed ledger. Other popular distributed ledger tools include Ethereum, Tangle, and Corda.
- E-wallets Industry Development
In the simplest terms, it is an electronic payment method. It is a virtual wallet that stores payment card details on mobile devices and can make online money transactions. In 2020, Mobile Wallet Market size exceeded USD 100 billion and based on projections. It is expected to grow at over 20% from 2021-2027. The transaction value of mobile wallet markets in 2020 alone amounted to about USD 6 trillion. It is beyond massive. In addition, North America’s mobile wallet market size is predicted to generate more than USD 150 billion in revenue by 2027. The advantages of using an E-wallet are numerous. Using e-wallet platforms, consumers have the opportunity to access functions like loading money, ensuring timely payments, and the swift transfer of funds without delay. The big players in the industry continuously focus on acquiring greatly innovative and indigenous players to increase their E-wallet capabilities. These acquisitions are strategic and greatly boost the individual dividends of the players, which in turn leads to the continuous development of the industry.
- Mobile Payments
Mobile payments are regulated monetary transactions that take place digitally through mobile devices. Mobile payments have become an increasingly popular way to accept payments due to their reliability, security, and convenience.According to Fortune Business Insights, the global mobile market was valued at $1.18 trillion in 2019, and by 2027, it is projected to reach a laudable height of $8.94 trillion. High-speed mobile data networks have considerably triggered the adoption of mobile payments on a mass scale. Also, according to UK Finance, about 8.5 million people (16% of the adult population in the UK) had registered for mobile payments, with 79% of these registered users recording a fee. In 2011, Barclays teamed up with Orange and launched Europe’s first contactless mobile payment. The system enabled customers to pre-load their phones for up to GBP100 and pay up to £15 by using their phones. The same year, Google launched Google Wallet, allowing Android users to pay with their mobile phones at selected retailers in the US. Apple Pay was launched three years later.
- Future of Prepaid Cards
Many have considered the concept of prepaid cards to be the future. The prepaid industry is becoming a truly worldwide market. Recent projections state that the global market for prepaid cards will reach USD3.1 Trillion by 2022. It is influenced by the rising financial needs of the under-banked and unbanked customers, the growth is driven by innovations in online transactions and the general need to go cashless worldwide. Prepaid cards continue to gain massive popularity with consumers because they offer utility debit and credit cards without the commitment of setting up an account with a financial institution. Some of the major advantages of prepaid cards include:
- The prevention of overspending
- Avoiding overdraft fees
- Limiting losses and liability in case of fraud.
Other Trends
Money in Artificial Intelligence Startups and existing fintech companies have already begun to use Artificial Intelligence to solve real business problems across different sectors, such as sales, healthcare, energy, product and service development, transportation, and almost every other industry beyond the high-tech space. Artificial intelligence has brought us many innovations that we use daily (for example, Apple’s Siri). Today, mobile phone (and other AI integrated devices) users can access large amounts of information by merely speaking one word. Tech giants and top businesses have made investments worth billions in Artificial Intelligence innovations and startups across every sector globally. Collectively, Amazon, IBM, Google, and Microsoft invested over $10 billion in AI in 2020. AI has vast and unquantifiable amounts of potential, which will continue to reflect in the technological advancements made in different industries. Machine Learning It is a component of Artificial Intelligence. The critical distinction is that while Artificial Intelligence is a technology that allows a machine to simulate human behavior, Machine Learning is a type of Artificial Intelligence that enables a device to learn from past data automatically and without programming explicitly. The future of Machine Learning is inspiring. Its possibilities are endless. Digital marketing, search engines, and healthcare, to name a few, are major beneficiaries of the features of machine learning. Gamification As the name connotes, it is simply the process of inserting games or gamelike features into another type of activity. It is primarily done to encourage and ultimately increase user participation or engagement with a product. The goal is that by adding these fun elements to existing products or services, users would enjoy using such services a lot more. Augmented Reality Otherwise known as AR, it is a technology that improves how users visualize information, receive and follow instructions, and engage with products. It provides users with a rich and quality experience. An epitome of an AR would be the mobile application Pokemon Go, released in 2016 and has become a mainstay sensation ever since. AR is one of the hottest trends present in the technology space, and its influence is only bound to increase. Smartphones and other AR-enabled devices have become more accessible all over the world.
Business Tips for Using Trends
- Seamless Payments
Seamless payments are a priority. Regardless of the medium that consumers want to go through for transactions, they expect a smooth and secure experience. The key to merchants achieving this is providing a cohesive consumer experience across all channels and placing emphasis on consumer interactions. This is crucial to gaining and retaining customers. Companies also need to invest in sophisticated data analytics and big data tools that offer reliable customer behavior predictions to match custom solutions and recommendations. Investing in mobile capabilities is also really pertinent, as more customers use their smartphones to browse for items and available services while on the move. Merchants require a seamless mobile site and retail environment to accommodate the customers and make it convenient to run their transactions. Uber is an example of a company excelling at this.
- Payments in Strange Places
It cannot be disputed that people almost always tend to go for the easiest route in fulfilling their duties and tasks. It places the responsibility on companies to come up with innovations to make this achievable. For example, Facebook can now be utilized by users to send and receive money, provided such users have their accounts linked to a bank.
- Payments and 5G
Generally, 5G’s influence on mobile payments is expected to be positive. Unsurprisingly, many tech experts have stated that 5G will take mobile payments to incredible new heights not attained before. There is no doubt that Fintech companies will take full advantage of 5G. It will improve the speed of digital transformation, enhance the customer experience, explore new revenue streams, and achieve greater cost efficiency.
- Big Data; The New Oil
Clive Humby originally coined the phrase “Data is the New Oil.” Ever since the inception of this phrase, it has become the mantra of several respected, high-profile individuals and organizations. Data will drive the future of economic development and also empower the mobility, potential and technological capacity of several generations. Like oil, the mere collection of data is not enough, but its proper utilization. For data to be precious, it would have to be made reliable and accurate. Many companies rely on massive volumes of data in formulating and finalizing their strategic positions. The presence of data analytics as a field has made it possible to sift through large amounts of data and information to draw out patterns and achieve more accurate and precise results.
Possible Obstacles
While the digital economy continues to boom at an exponential rate, entrepreneurs face a few downsides as they attempt to tap into the potential of the industry. The most common challenge is that many entrepreneurs do not have the necessary funds needed to digitize their businesses fully. There are simply not enough venture capital parties in most countries to help enterprises fund their technological and innovative ideas and make them a reality.
Comparison tips for entrepreneurs choosing Credit Card Processors
Other problems faced by businesses in the digital sector include the following:
- Lack of regulations and policies by governments that support and protect digital and e-commerce entrepreneurs
- Cultural and ideological differences between the countries where the companies exist and some of their target audiences (who are sometimes in developing countries)
- In general, weak institutional structures as a result of corruption and poor governance.
