Fintech landscape is evolving at a rapid pace. Each passing day brings a radical change in the financial technology (FinTech) industry. The advent of new technologies paves the way for a new world where all the financial operations will take place online. Numerous technology implementations that happened in 2020 and 2021 will continue to be seen. But, there are some new FinTech trends that we’re expecting to witness in 2021.
We have already started experiencing many of the FinTech transformations on a daily basis, like when we make payments via eWallets, buy equities via stock trading apps, apply for a mortgage, and so on. Moreover, with the implementation of disruptive technologies, the horizon of FinTech is expanding quicker than ever. FinTech after the Pandemic
Many businesses across the world faced a decline in revenues and customer retention due to the Covid-19 pandemic. Only a few industries have seen an upward trend, and banking and finance technology is one of them.
The fintech market saw a considerable upsurge during the pandemic. Both customers and businesses started realizing the importance of contactless payments. According to new research by deVere Group, FinTech apps in Europe have seen a massive rise of 72% due to the pandemic.
The situation is quite similar in the United States. According to a survey by Plaid, 69% of Americans found FinTech apps as a lifeline during the pandemic. Furthermore, 73% of the US population states that FinTech is the new normal, and they plan to keep using FinTech apps even after the pandemic ends.
FinTech apps and solutions have indeed received an overwhelming response during the pandemic. And considering the research and surveys, it will continue to increase in the future. Hence, we certainly will see a significant rise in the number of customers adopting FinTech solutions and apps to make their finances simpler, quicker, and most importantly, secure.2021 Will Only See The Upsurge Of FinTech
Yes, 2021 has the potential to be the milestone year where innovations will happen with the implementation of existing and new financial technologies. However, with more customers migrating towards using FinTech solutions, we probably will see stiff competition among FinTech startups and enterprises.
In this article, we’ll discuss the FinTech trends that will boost the growth of FinTech in 2021.6 FinTech trends 2021 to watch out for1. Digital-Only Banking
Many banking institutions in 2021 operate only digitally to offer a variety of banking services. The services include contactless MasterCards, international remittance, P2P transfers, and many others.
Digital-only banking minimizes the customers’ need to visit the bank to carry out transactions and make changes to account details or other banking activities. Also, the digital infrastructure ensures that the banking services are accessible 24*7.
With less human resource and infrastructure requirements, digital-only banks’ operational cost is meager compared to banks having physical facilities. Moreover, these banks can also offer innovative services at a much lower cost.
In a brief period, digital-only banks have gained popularity, and with this growth rate, we’re expecting to see an upsurge in 2021. Especially in developing countries like Myanmar and India, digital banking is banking the unbanked population.
Some examples of digital-only banks are Finn (United States), Chime (United States), Fidor (Germany), Digibank (India), Revolut (United Kingdom), and Mashreq New (United Arab Emirates).2. RegTech
RegTech or Regulatory Technology manages regulatory compliance and processes in the banking and finance sector by using technology services. Various financial technology solutions designed for reporting, compliance management, and monitoring come under the term RegTech.
RegTech solutions empower financial institutions to simplify compliance management such as FinTech AML compliance, even when the institutions are operating in different political and regulatory scenarios. To put this into perspective, the compliance norms for popular companies operating in various countries differ for each country branch. For instance, rules such as the FinTech Anti Money Laundering compliance will vary for every country.
The digitization of banking and financial services has increased the possibility of money laundering opportunities and several other fraudulent activities, including data breaches and cyber hacks. RegTech solution providers use machine learning and data analytics to help FinTech companies reduce the company’s risk.3. Blockchain
Since identity theft and fraudulent activities annually cost billions of dollars to the banking and finance industry, blockchain technology is the perfect solution. Marketwatch believes that blockchain technology investments will reach USD 5,600 million by 2023.
If you aren’t aware of blockchain, it is a computer program that assures decentralization of the information while keeping the data secure. Currently, blockchain applications in the finance industry are smart contracts, digital/mobile payments, international trade, and identity management.
Blockchain in the finance industry is used to store user and transaction data into the database safely. The banking and financial institutions use blockchain technology to allow users to track their transactional history. With blockchain, the user’s transactional information is compiled in ‘blocks,’ which cannot be altered.
Blockchain is the FinTech trend that is transforming the mode of operations in the FinTech industry. It has made sure that online transactions happen in a safe and secure environment. More and more banking and finance companies adopt blockchain technology, and integrate it with their existing IT infrastructure.
Research by Markets and Markets indicates that the market for FinTech blockchain will grow to 6,228.2 million by 2023 at a compound annual growth rate of 75.9%.
What makes blockchain the Fintech trend for 2021, is that it has the potential to decentralize banking and finance operations, while strengthening security at the same time. With blockchain, once a piece of transaction information has been recorded in the system, it is impossible to change or undo it. Hence the data remains protected. The technology also ensures that the information is encrypted and stored to minimize the risk of data breaches. This is why blockchain is used in cross-border transactions.
Till date, blockchain technology has inspired the advancement and development of many Peer to Peer financial solutions. These financial institutions facilitate monetary transactions between users in a decentralized manner.
It is the blockchain technology that made it possible for cryptocurrency to exist. A cryptocurrency is a form of virtual currency that can be transferred via online means. Cryptocurrency companies use encryption methods to gain control over the creation of money and fund transfer verification. The most popular cryptocurrency is Bitcoin. initial public offering services