Finance. Technology. These two industries had previously raging a storm in isolation. However, since the past few years, they have combined to deliver greater benefits to consumers. While they are at it, the industry is also experiencing immense growth.
In the US alone, the industry is expected to grow at the rate of 20.5% and reach an approximate value of $6,962,224 by 2021. This might be the reason why the US is considered to have one of the most attractive environments for the success of Fintech start-ups.
As the industry is experiencing growth, many people are considering to invest in it. Investment in Fintech industry has reached a staggering value of $27.4 billion.
Why Invest in Fintech?
Are you reluctant about investing in the industry? Well, here are a few reasons why investing in Fintech is a good idea.
1. It’s in the Early Stages of its Life Cycle
As an industry matures, the returns you get from investing in it get reduced. The good thing about the Fintech sector is that it is at the beginning of its lifecycle. Those who invest in its formative years are likely to realize huge profits.
You might wonder, isn’t it too risky to jump on the bandwagon this soon? Well, in a world where technology has become an integral part of our lives, it is safe to say that any sector that incorporates it will not suffer. And sometimes there is no way to earn profits without taking risks.
Look at Apple and how it has panned out. Apple used utterly new technology and delivered something we didn’t even know we needed. It succeeded in hitting the bullseye and is now one of the biggest companies in the world. Those who invested in it during its initial days are bound to be happy with their decisions.
2. A Competitive Financial Industry
Any sector which faces competition is bound to improve. Generally, those operating in the finance industry had not witnessed intense rivalry from their competitors. However, the introduction of technology in the industry is disrupting this sector. The access to technology has allowed small organizations to convert into potential competitors for large banks and organizations.
In some ways, everyone has a somewhat equal playing field. It doesn’t matter how small your startup is or how tight your budget, in the Fintech industry, you can still compete with the big fishes.
Why should you invest in such an industry? This is because you have a lot of alternative options about who to invest in. And in this case, the size of the business doesn’t signify the profitability of your investment.
Fintech App Development Fields to Invest in
Here are some of the most powerful Fintech fields that you can invest in.
1. Mobile Banking Applications
We live in a time when you can either go digital or go home. Many industries are incorporating digital platforms into their services. The banking sector is no different. Since no one likes physically going to a bank and standing in queues for their turn, the banking sector has been quick to roll-out mobile apps. And this field is a great investment opportunity because of its demand and success.
Even though more than 25% of the top 50 banks of the world have already incorporated the technology into their structures, various banks still need to migrate to delivering banking apps. This untapped potential of this niche is what makes it an excellent investment.
Let’s face it. Every bank, sooner or later, will need to use this technology. And when it does, it will grow and change for the better. Investing in this field today will allow you to realize the profits tomorrow.
2. P2P Payment Apps
There was a time when people usually transacted with known companies or with individuals via the traditional banking system. However, with the rise of P2P selling and lending, things are changing. A great app development field for you to invest in is the P2P Payment apps.
These apps deliver a digital solution to transferring money between two individuals. A digital wallet is used to link the two accounts, and as soon as the transaction is performed, money is exchanged. There are three types of p2p payment apps you will find in the market. This includes standalone services, bank-centric and social media-centric apps.
Standalone apps are which have their own platform and don’t rely on a financial organization to carry out the transaction. PayPal is an excellent example of a standalone p2p app.
Bank-centric apps are those which do include a financial intermediary in the transaction. For instance, many banks allow apps to transfer funds among individuals through their bank. This is delivered even though such banks are equipped with their own apps.
Lastly, social-media-centric apps are those who use social media to carry out transactions. For instance, you might have heard that you can pay people via Messenger on Facebook? You can do the same via Google Wallet and Samsung Pay.
3. Digital Banks
Rather than just developing an app which works with the traditional banking sector, you can also invest in a digital solution altogether. By the end of 2018, it has been predicted that over 60% of adults will bank digitally.
Having a standalone digital bank, which doesn’t have a physical premise, is a win-win situation. Firstly, you are able to avoid the costs associated with having a physical bank. Secondly, you do so while delivering convenience to customers, thereby ensuring that your business idea will thrive.
Do you think that such a solution is too idealistic and hence undoable? Well, you will be surprised to know that many have ventured into this field already. For instance, Atom bank is offering its financial services completely only. It doesn’t have any branches and instead delivers the experience via chatbots, biometrics, and AI, etc.
By investing in the app development field in digital banks, you know you are bound to succeed since this sector has both the low cost and differentiation advantage. Since it advocates branch-less solutions, it reduces costs significantly. However, it also offers a unique solution to customers, thereby differentiating themselves from other banks.
Insurance is one financial sector that has been and will probably grow for years to come. With the inclusion of Fintech apps, this sector has changed for the better.
How so? Well now that insurance Fintech applications can be developed, the solutions delivered are much better at delivering dynamic prices and personalized offers according to the data gathered. They can use analytics to create custom packages according to the pattern of each customer. For example, if you opt for car insurance, the app can change your payment after periodically evaluating your driving habits via the app.
Also, Fintech app development in this field has also eliminated the need for a third-party. Now, customers can avail the best insurance policies on their own. This reduces transaction cost and hence makes this field popular among the masses.
There are various success stories in the insurtech industry today. For instance, Metromile has proven to be successful in offering insurance solutions in a digital and mobile way.
5. P2P Lending
Now, you can invest in the development of an app which connects individual lenders to borrowers and secures the transaction. Many people now prefer this mode of lending than choosing the conventional method of getting loans. This is because traditional loans are harder to get and usually more expensive.
This is where p2p lending comes in. This is an excellent alternative to conventional banks. Here, both lenders and borrowers are individuals. Your job is to provide them with a platform where they can connect and safely conduct transactions.
Since p2p interest rates are assigned via reverse auction and are usually fixed, they tend to cost borrowers less than had they gone to a financial institution. This increases the attractiveness of such solutions.
Fintech apps have made p2p lending even more convenient by digitally connecting people, carrying out transactions online and delivering a safe platform for it all to take place on.
Tips to Remember
If you are thinking to invest in Fintech App development, remember the following tips:
- Find a great software developer to create your Fintech app or your investment will be wasted.
- Make security your priority. Security is one of the biggest concerns of users of digital platforms. You must ensure that your developed app is secure from data breaches as much as possible.
- The app must have a robust UX and UI.
- Functionality is key. Don’t just focus on how great your fintech app looks. Instead, make sure it is functional and delivers its purpose.
- Customer support is even more critical in Fintech solutions than it is in conventional businesses. Deliver 24/7 availability, technical expertise and quick resolution of queries.
It is the perfect time to invest in the Fintech app development industry. Do so before it matures, and you will realize huge returns. Create an app in one of the fields discussed and watch as customer demand for your app soars.