Fintech firms should consider adopting these trends to enhance digital transformation in the coming years. 

Fintech is witnessing a shapeshift in the milieu of the Covid-19 pandemic. A joint study by World Bank, University of Cambridge, and Word Economic Forum found that the fintech market saw rapid growth amid Covid-19 and most fintech firms reported strong growth in the first half of 2020. 

The technological advancements in the sector have improved customer support and interaction, navigating risks, and automate operations. There was a visible increase in fintech startups that integrated technologies to provide better solutions. Fintech is the combination of ‘finance’ and ‘technology’ and the current firms have taken this terminology seriously. Disruptive technologies like AI, machine learning, data analytics, and blockchain is revolutionizing fintech in many ways. 

According to Market Data Forecast, the global fintech market is expected to reach a market value of approximately USD 305 billion by 2025, growing at a compound annual rate of 22.17% over the forecast period 2020-25. 

However, fintech firms should identify new opportunities and avenues in 2021 to deliver better services and empower the industry. Let us look at some of the trends and practices fintech firms should adopt to evolve in the year ahead. 

Thumbs Up for Digital-Only

The onset of the pandemic saw a huge digital shift wherein consumers demanded online services over on-premise. Contactless services were also in trend and this is sure to continue in the near future. According to The Financial Brand, a CACI research report revealed that consumer visits to retail bank branches are set to witness a drop by 36% between 2017 and 2022, with mobile transactions rising 121%. 

Digital-only-banks will be a catalyst in this dip since they offer a flexible working pattern by eliminating loads of paperwork and long queues. Digital banks or neobanks are the trends for the future and firms should make use of this opportunity to enable virtual cost-efficient financial services.  

These banks only have an online presence rather than an on-premise facility and can offer better customer-centered services and solutions. 

Embracing Personalized Services

You are wrong if you think that only e-commerce and other industries demand personalized services. Fintech is an important sector that should focus on personalized customer services and solutions. Big data, analytics, and AI play a pivotal role in understanding the customer history, their preferences, and needs, and provide financial insights accordingly. 

Digital banking demands customer-centric services to inculcate trust and customer satisfaction. It is important to establish a connection with the customers and build an omnichannel experience for them. Offering personalized financial advice can be a great asset for firms. Analyzing data on customer’s spending behavior, recurring payments, financial needs, debts, etc., can help in providing better financial solutions. 

The Blockchain Wave

Blockchain technology enables the development of a decentralized banking structure and brings transparency to financial transactions. According to Business Insider, an Insider Intelligence report says that 48% of banking executives believe technologies like blockchain and AI will have the greatest impact on banking through 2020 and banks are exploring blockchain to streamline processes and cut costs. 

Fintech firms are adopting blockchain technology to ensure transaction safety, peer-to-peer transactions, and reduce transaction time. Blockchain for cryptocurrency transactions is gaining popularity, and hence is an emerging trend in the world of fintech. 

Prioritize Security

With digital transformations comes the responsibility of safeguarding vulnerable data on online platforms. Fintech is going through consistent evolution and hence demands better cybersecurity strategies. We witnessed a surge in cyber fraud during the rapid digitization last year. Fintech firms should leverage technologies like AI and biometrics to authenticate digital identities. Biometrics security like fingerprints, facial recognition, voice recognition, etc., can ensure high-level security for financial firms.