“FinTech,” the technologies applied in the financial sector, is already making huge waves and disrupting the conventional financial process, including fundraising, money transfer, and asset management. It has become more than a buzzword and has entered all the spheres of business and commerce. One of the ground-breaking contributions which FinTech has provided to the e-commerce industry, is the drastic improvement in the online payment system. Customers are finding it convenient to execute financial transactions seamlessly. Some of the examples of FinTech technologies are PayPal, Google Wallet, and Apple Pay.
The demand for the FinTech services is estimated to grow at a CAGR of 25% to 30% in the period of 2019 to 2025.
North America is the leading contributor to the worldwide FinTech market, which is expected to reach USD 80.85 billion by 2023, while the growth in the Asia Pacific region is estimated to be at a CAGR of 43.34% during the period 2018-2023.
One can notice the impact of payment innovations and FinTech on e-commerce platforms, which have entirely changed simple websites to wonderful masterpieces of commerce. Most of the e-commerce sites like WriteMyX, Konga TakeALot, Jumia, BidorBuy, had a great quarter, by earning a 10 million round.
All these are from the developing countries just shows how FinTech has bought changes in these regions. Fintech and payment innovations can have a much greater effect on the ability to operate on a larger and global scale.
FinTech brought online payments, mobile payments, digital money, and online shopping, which revolutionized the e-commerce industry to a great extent, and will continue to so in the near future.
Check the below image for the worldwide market revenue through FinTech in different financial segments:
The transaction value from 2017 to 2023 in different financial segments through FinTech is projected in the graph.
As, you can see, the digital payments value in 2023 is projected to be the highest at around US$6,699,201 million, with personal finance around US$2,695,361 million.
Some of the FinTech trends that will help to evolve the e-commerce industry are:
Unlocking unified commerce:
Retailers will find it easy to manage online channels and their stores as a single and unified channel. Data encompassed from all the sales channels will help the retailers in acquiring the right and clear information of customers and building attractive loyalty programs. Through the unified payments data, retailers can find out that the customers have not shopped for a while from them, initiating them to entice the customers back.
Payment data will also help the retailers:
- In understanding the shopping frequency
- Customer’s channel preference
- Average transaction value for retargeting customer.
Strengthening of financial data:
Cybersecurity has become one of the major challenges in any industry. Majority of the organizations are vulnerable to data thefts, and cyber-attacks which can lead to substantial financial losses. For this reason, e-commerce companies are investing heavily in the FinTech industry. It will not only provide the data security, but also help in a convenient transaction process.
Growth in the M-commerce:
The recent growth of the payment via mobile apps and its widespread acceptance in e-commerce is proof that FinTech is revolutionizing the entire payment process in the e-commerce industry. The mobile commerce market is expected to grow at a CAGR of 27% by the year 2024, which includes tablets, smartphones, netbooks, and smartwatches.
Some of the examples of the m-commerce includes in-app purchasing, mobile banking and digital wallets such as the Android Pay, Google Pay, Samsung Pay, and Apple Pay. It has been found that one of the popular channels for e-commerce transactions in Q2 2018 among retailers in America, which actively promoted their shopping apps was mobile app.
A study conducted by the Harvard Business Review of 45000 shoppers, found that 7% of them were the only online shoppers, while 73% of them used various channels for shopping.
Penetration of the blockchain in different sectors:
Cryptocurrency, blockchain, are gaining popularity in the e-commerce sector. As per a study, the global blockchain market is expected to grow at a CAGR of 80.2% from the year 2018 to 2023.
So how is it helping and will evolve the e-commerce industry?
Protection of consumer data is essential in this industry. Organizations need to win the trust of the customer, by ensuring that their financial and personal details are entirely safe in the company’s database.
With the implementation of the GDPR (General Data Protection Regulations), the security of the data has become a major concern for these enterprises as the heart of this compliance is protecting people’s data, blockchain is helping in the following ways:
Protection of the identity:
Cryptocurrencies, which are based on blockchain technology, protects the identity of the transacting parties, and the personal information of users. The process is followed in the manner where, after the validation of the transaction, it is verified cryptographically by the nodes in the network. It is then made into the block at the blockchain. The block has the detailed information of the transaction, which is kept highly secured.
Freedom from the transactions:
Most of the regular methods of payment are imposed with many limits based on the geographical location and the amount, but the blockchain gives complete freedom to the user for performing transactions without any limit.
Accessibility, cost-saving, and efficiency help in a frictionless experience:
FinTech is helping the e-commerce companies to increase efficiency and accessibility, and paving the path for the long-term growth of the organization. The seamless experience which the customer gets during the process is the driving factor for the FinTech in e-commerce.
Delivery methods that are faster:
Amazon, the e-commerce giant, has aggressively invested in FinTech technology. The technology will make the payment and delivery faster, leading to better customer experience.
Evolution of Amazon Pay
Usage of fingerprint:
Biometrics usage for verifying the e-commerce payments will soon become a reality. Most of the merchants who want to provide a secure payment process would be using this feature in the future. The blockchain technology makes it nearly impossible for third parties to tamper with the data. Organizations across different industry verticals will start deploying this technology for reducing the verification costs and preventing fraud. It will also save time and facilitate international purchases.
This technology will also help the retailers in adjusting the prices and marking down the weekly specials efficiently. They can make adjustments based on supply and demand.
In the age of AI and IoT, smarter technologies are making the life of cashiers easier at the retail stores, and with this, customers are now looking for a better experience from the services provided by financial organizations. Customer engagement and retention are always challenging. However, the companies that are using mobile apps and tools for reaching out and connecting with the customer can easily increase their customer base with these mobile apps. Companies providing FinTech apps are engaging with customers much better.
As the behavior of the customer changes, Fintech experts say it is essential for financial technology companies to adapt to the change in behavior of the customer.
The future of FinTech is bright, as online shopping becomes popular than the regular brick and mortar one. The convenience to pay through the payment platforms is encouraging online shoppers, leading to the growth of the FinTech industry. The recent innovations by the FinTech companies are a boon for the consumers as now they have many options for completing their online purchases from any device and in real-time using different currencies, with a faster and secured way. This is even going to get much more evolved in the coming years.
Robert Jordan, a seasoned marketing professional with over 10 years of experience, currently working as Media Relations Manager at InfoClutch Inc, which offers most sought after technology database & technographic data with other services like data enrichment, data appending etc. Have expertise in setting up the lead flow for budding startups and takes it to the next level. Have a deep interest in CX, SEM & Social Media related discussions. Always open for new ideas & discussions.