While global fintech funding only reached $24.7 billion in 2016, compared to a record $46.7 billion in 2015, it continues to be a fast-growing and innovative industry whose partnership with eCommerce looks set to boom in coming years. With new payment options available, from credit to mobile, the eCommerce space has already begun to experience the benefits of modern financial technology, and there is only more to come.
With more customers able to reach online shopping on an annual basis due to more payment options, it is forecast that online global sales will reach $4 trillion in 2020 and fintech will be the driving force behind this rapid increase.
What started as offering merchants and customers a secure form of online selling and purchasing has now grown into offering more and more options. From mobile stores to a variety of alternative payments, fintech has advanced to the point where merchants can now open up their businesses to more customers around the world who may not have had access to their stores before. In recent years, fintech has brought more to the eCommerce industry with a number of developments, proving an even stronger partnership between the two industries. In collaboration with PayU, here are some of the biggest trends in fintech at the moment, proving that the connection with eCommerce is only getting stronger.
Point of sale credit
In many parts of the world, access to credit has always been a challenge for a large number of people. This lack of credit, including lack of access to a credit card, has been a challenge for eCommerce merchants. However, point of sale credit from innovative credit providers has started to open up the opportunity for online point of sale credit. Thanks to new technology, credit is offered as a payment method at checkout, and the consumer is able to select that option and get a quick credit approval to complete their purchase. This credit is usually in the form of installments or a buy now, pay later solution. Credit solutions help increase conversion rates as well as basket size for merchants, and allow consumers to increase their usage of online shopping.
With the rise of cryptocurrency, namely Bitcoin, blockchain technology has developed as on online public record of all transactions that take place online. As digital currencies become increasingly accepted and popular, the more need there will be to ensure the safety of transactions. The technology acts as proof of all transactions that take place in the form of a permanent database. This allows merchants and customers to transact using new currencies such as Bitcoin, and enables them to record them for future reference, without them being tampered with or deleted. This advancement in financial technology reduces the need for paper based transaction trails, and records an entire transaction from start to finish, speeding up the process.
Biometrics has recently taken off, with the creation and advancement of fingerprint authentication, facial recognition, retinal scanning and voice recognition. This type of technology uses the unique identity of each person to grant access to a device or profile, whereas traditional methods of typing in usernames and passwords are easier to manipulate for hackers. Merchants want to constantly increase security both for themselves and for their customers, and while this technology has yet to be used in terms of payments, the fingerprint identification has become a basic feature in iPhones today. Merchants are invested in making this type of technology available for customers to make online payments, acting as one of the biggest drivers in the fintech industry which is set to be worth $25.31 billion in 2020.
In order to increase delivery speed as customers grow increasingly impatient to receive their goods, alternative delivery mechanisms are being invested in to make faster delivery a reality. Drones have been used for several years as a recreational tool, and are essentially small aircrafts that are controlled remotely. Today, drones are being looked into as a possible delivery method to decrease delivery times as well as delivery costs. While the technology as a delivery method is still within its testing phase, it has proved to be time and cost effective.
In December 2016, Amazon made its first drone delivery in the UK, which took a mere 13 minutes and did not cost more than an ordinary delivery would. The technology is still limited by the fact that only parcels weighing 2.6 kilograms or less can be delivered, and customers must live within close proximity to the delivery warehouse. Amazon would like to officially offer drone delivery to customers by 2018.
Chatbots, computer programs designed to converse with humans asking questions or voicing concerns, have increasingly become a popular tool in the customer service industry. This technology not only provides customers online with an added channel of direct contact with a merchant, but also alleviates the amount of questions or queries physical call centres receive. The technology provides a quick and seamless approach to customer services. But the technology is being developed even further, with companies looking into how chatbots can become a personalised service for customers. Facebook wants to take chatbots further within their Messenger service by offering customers the ability to view images, videos and links, make restaurant reservations, and possibly one day make direct payments via a personal conversation with a chatbot.
With a number of fintech developments happening as we speak, the eCommerce industry is set to benefit greatly to bring bigger and better services to customers around the world. From new currencies and faster transactions, to biometric payment methods, drone deliveries and even personalized chatbot services, the next few years will be exciting for the fintech and eCommerce industries.