Fintech (financial technology) has emerged and developed as a game-changing field in the global market. It has influenced a lot of industries, including retail, finance, and financial advisory services. Fintech’s growing influence has created a new age of digital payments, completely changing how people do transactions. Various fintech technologies have proven beneficial in many industries, including stock trading, transportation, and smart city if we list a few.
The COVID-19 pandemic has created incredible opportunities for fintech as it has disrupted businesses across industries. As the pandemic demands social distancing or contactless transactions, the industry has seen a positive and significant change. Fintech is supposed to continue to transform the economy as the world has entered the year 2021.
Here are the top 7 fintech trends everyone should look at in 2021.
Top FinTech Industry Trends of 2021
The FinTech industry is one of the fascinating industries, with its steady growth revealing new portals into the future of the banking industry across the world each year. The top FinTech industry developments that banks and financial institutions should expect to lead the conversation well into 2021 and beyond are listed in this blog.
1. Paycheck Disruption
Some FinTech firms attempt to provide customers with affordable payday solutions, allowing them to get paid sooner than their usual payday without relying on payday loans or predatory loan businesses.
Consumers can use apps like Earnin to reach funds before their official payday; they do not have to wait for payroll to get their paycheck. Giving customers this kind of universal access to income contributes to their financial well-being by giving them more financial control. Employees should not have to wait for bill processing to get money from their paychecks, which lets employers attract talent.
2. A I& Machine Learning
Artificial intelligence (AI) and machine learning continue to be a top FinTech trend, serving as one of the driving factors behind the industry’s exponential growth and adoption of new technology. It helped at the beginning of the growth, and it shows no signs of slowing down.
FinTechs may use AI to create chatbots that function as personal digital assistants, assisting customers with simple tasks such as checking account balances, making deposits, and receiving personal savings or investment advice based on their transaction history.
AI chatbots get smarter with time; each customer’s queries they answer. Thanks to machine learning. AI chatbots will be able to complete highly complex commands for customers in the long run. FinTechs may use conversational AI to provide their clients with a digital assistant who is as accurate as a human operator, speaks in brand voice, and increases customer experience with a bank’s financial product offerings.
Artificial intelligence in banking will also help users develop their financial literacy. Many digital assistants may provide:
- Users customised financial insights.
- Allowing them to understand more about their finances.
- Saving and savings options.
- Banking industry terms they may not have been aware of earlier.
3. Digital Banking
Because of the rising popularity and acceptance of digital banking, banks can now provide a growing number of real-time and same-day banking services across various online channels at the same time. This trend away from brick-and-mortar banks and in-person exchanges to online banking shows the types of experiences people want while considering a bank.
Suppose a bank or financial provider does not have a digital banking option that allows customers to log in and complete transactions on the go. In that case, they are missing out on the most critical sign about how to implement a more customer-centric approach to banking services.
4. Open Banking and Big Data
Financial services may use Big Data on the open banking network to offer information and actionable feedback to their clients. Banks will work with financial data aggregators like Envestnet to use enriched data to help provide customers with personalised recommendations based on trends and spending habits while strictly adhering to security and enforcement protocols. Banks will also use segmentation to make more relevant product and service decisions to potential customers, ensuring only the most qualified leads are chosen.
To offer the most relevant services to their clients, some FinTech companies look past big data. They are looking at transaction histories from a variety of industries. None of these specialised insights, on the other hand, have the same impact as big data that has been deeply enriched.
5. Robotics Facilitating Operations & Customer Service
Robotics for internal workflow and customer care automation is another fintech technology innovation that we expect to see broadly embraced in 2021. Robotic Process Automation (RPA) uses machine learning and artificial intelligence to automate a wide range of operations, including:
- Identity verification
- Fraud detection
- Anti-money laundering (AML)
- Regulatory compliance
- Online loan processing
We see more Robo advisors being used to improve customer-facing teams’ user experience and productivity regarding client support. These assistants can be found both online and in person. For example, Stadtsparkasse Düsseldorf used a Robo-assistant to help customers invest in a suitable “green” investment. In contrast, Sparkasse KoelnBonn used a physical Robo advisor, Ivy Pepper, to direct visitors to its stall during the Fitnetz-Wochen live event.
6. Blockchain & Cryptocurrency
Simple access to a bank account can be expensive or even impractical in some areas of the world. This explains the meteoric rise in popularity of blockchain and cryptocurrencies, which enable users to send and receive digital money at low or no cost with little to no regulatory oversight. Many of the world’s top technologists have rigorously checked and embedded protocols to ensure that blockchain and cryptocurrencies are becoming highly reliable methods to accomplish digital transactions.
Facebook is set to launch the Libra project, its cryptocurrency and peer-to-peer (P2P) platform, in the coming years, allowing users to transfer digital “libra” coins to one another without the need for a bank account or credit card. More than 2 billion users are active on Facebook. The launch of Libra will be closely monitored, as it could represent a significant change in customer behaviour toward other types of digital currency in the future.
Financial firms need an effective cybersecurity policy in light of the increasing fintech revolution in financial services. The challenge faced by cybercriminals and fraudsters will result in shared risks that must be handled collaboratively through the financial system. This is the road that fintech companies should take to remain more cyber secure. They must deliver secured assets, form trusted commercial partnerships with well-established firms, and conform to the regulations in the jurisdictions where they operate.
Without a doubt, the financial sector had a turbulent and game-changing year in 2020. We have seen many emerging trends appear on the horizon due to the pandemic and its evoked global financial uproar. Fintech specialists stress the importance of operational efficiency in particular. This includes developing recession-proof business models, upgrading the pre-COVID-19 technology stack, and figuring out how to simplify repetitive tasks and save money.
Bank-fintech partnerships, open APIs, blockchain, and robotics adoption are essential things to watch in 2021 and beyond. These and other trends mentioned in this post, we believe, will dictate the rules of the fintech and banking game.