The FinTech industry is an ever-evolving landscape. With radical changes in experiences and the introduction of cutting-edge technologies, Fintech trends are impacting everything related to payments, money, and banking. Especially since the COVID-19 pandemic hit the world, there has been a massive surge in the industry as both businesses and the consumer sector started shifting their focus on contactless payments.
As per the new research studies from deVere Group, the pandemic lead to a rise of 72% in usage of FinTech apps in Europe; a similar pattern is observed in the United States. Based on another report, FinTech is a crucial aspect of the new normal, as believed by a majority of 73% of Americans. Interestingly, 67% of Americans plan to continue using FinTech solutions even after the situation normalizes.
Now that we’ve established the importance of Fintech in our ‘new normal world,’ let’s move on to our predictions and understanding of the Fintech trends revolutionizing the industry.
FinTech Trends in 2021
The trends that we mention here might not be necessarily new. However, their adoption rate is noticeably high since last year. We believe that their adoption will continue to rise rapidly in the year 2021!
Digital-only banks have gained immense popularity only in a short period, especially because people could not go to banks physically. These are banks that provide various virtual banking services like P2P transfers, international remittance, contactless MasterCard with free transaction fees, and the ability to buy multiple cryptocurrencies like Bitcoin, Ethereum, and many more. Some examples of the most popular Digibanks in the US are AmEx or American Express and Wells Fargo.
RPA at an all-time high
Robotic process automation is the process automation technology that utilizes software robots or digital workers to automate tasks. The financial service industry has already implemented RPA to cut costs and improve overall organizational efficiencies.
Along with that, various back-end processes like security checks, customer onboarding, account maintenance & closing, trial balancing, credit card, and mortgage processing are also increasingly being shifted to automation using RPA. One of the benefits of the technology is the speed and efficiency with which digital workers can complete these tasks, giving room for Fintech experts to focus on business challenges and customer support.
Rise of Blockchain
In a 2015 article, “The Trust Machine,” it’s argued that the most significant effects of blockchain are on trust. The article referred to public confidence in economic institutions, that is, that such organizations and intermediaries will act as expected. When they don’t, trust deteriorates.
Only a handful of nerds or subject matter experts knew about the technology in its initial phases.
However, it is now involved in hundreds of thousands of transactions daily through bitcoins. The value of bitcoin is gaining attention at an alarming rate (more than US$15,000 per coin at the end of 2017). For some, bitcoin is digital fool’s gold. For others, its underlying blockchain technology heralds the dawn of a new digital era.
What you should note is that the technology ensures your information stored is secured end-to-end along with the minimum risk. Thus, it provides secure cross-border payments.
Artificial Intelligence & Machine Learning
As per studies, AI can reduce 22% of the bank’s operational expenses by 2030. In other words, banks can save up to $1 trillion by employing AI.
AI can also be used to take care of rising cybercrimes by identifying financial frauds and potential threats. Using AI and ML, it can record customer interactions with utmost accuracy and be more customer-centric. AI has shown tremendous support and effort in managing customers via Chatbots.
The rise in financial inclusion
According to reports generated from the World Bank, around 1.7 billion people worldwide are unbanked with no access to banking facilities. Interestingly, the user penetration for mobile phones is relatively high amongst the unbanked population, which makes it the perfect destination for FinTech apps.
In 2021, this trend will rise as innovative technology of FinTech apps initiate offerings banking facilities to the unbanked and illiterate section of the society (mainly from developing countries). This trend will improve the inclusion rates by making access to financial services easy, fast, and convenient for the unbanked.
Biometric security systems
Yet another critical Fintech trend is the rise of biometric security systems, considering the rising rates of financial crimes—currently, the biometric industry in its native stage. According to studies, biometric sensors which involve physical touch are estimated to decline. In the following years, the contactless biometric solutions are all set to overtake contact-based biometric solutions.
Reg-Tech stands for Regulatory Technology, which manages the regulatory process in the financial industry with the help of advanced technology. The significant aspects of Reg-Tech involve reporting, monitoring, and compliance.
The rise in digital products has also created potential risks in fraudulent activities, cyber hacks, and data breaches. Reg-Tech can offer crucial data on money laundering activities- thus reducing the risk associated with the company’s compliance department. Furthermore, Reg-Tech can also reduce administrative overhead, ensure financial stability, and protect customers.
As we move into the year 2021, we will witness these Fintech trends and predictions making financial services better. The FinTech revolution is gaining tremendous traction with each passing day- all set to further disrupt the banking and payments industry. Are you looking to leverage FinTech trends for your organization? Schedule an informed consultation with our experts to get started.