Fintech (Financial Technology) has emerged as a revolutionary field in the global industry. It has transformed multiple business areas ranging from retail and banking to financial advisory services. The expanding role of fintech has significantly led to a new era of digital payments, transforming the way people do transactions. Multiple fintech applications have become instrumental in diverse industries, including stock trading, transportation, and smart city, among others.
As the COVID-19 pandemic has disrupted all businesses across industries, it has brought incredible opportunities for fintech. The industry has a considerable positive change as the pandemic calls for social distancing or contactless transactions. With the world approaching the new year 2021, it is expected that fintech will continue to transform the economy.
Here are the top 10 fintech trends everyone should look at in 2021.
Digital-only banking is increasingly revolutionizing banking processes focused on serving customers exclusively through online channels. Also known as neobanks, digital-only banks functions on real-time data analytics. This fintech-based banking model is extremely beneficial as it prevents people’s visiting a physical bank. It also eases the use of tedious paperwork and the queue time for banking processes.
With the surging popularity of mobile banking and other digital financial services, biometric security has become inevitable. A Biometric system takes security to a next level. It ensures that users’ information is protected. As the introduction of biometrics technologies like fingerprint identification and facial recognition came to smartphones, biometrics has become a day-to-day part of people’s lifestyles. It is also opening a whole new way to biometrics industries and consumers’ financial operating methods.
Age of Collaborations
Establishing partnerships are critical to staying ahead in today’s competitive market. Collaborating with the best companies specializing in a niche area significantly saves time and resources, augments product time to market, and stimulates a business’ learning curve. In the coming days, it is expected that financial institutions will forge alliances with fintech firms and license and leverage their technologies to benefit and expand their customer base.
Originally designed to focus on cryptocurrencies, blockchain is a core technology in FinTech. Reports suggest that a majority of financial institutes believe that this technology will have the biggest impact on banking in the coming years. Blockchain has stimulated the development of distinct online peer-to-peer financial platforms allowing monetary interactions for taking place more decentralized manner.
Open banking is associated with the Second Payment Services Directive (PSD2). It brings fintech and banks together, enabling data networking across institutions. It also forces financial services providers to release their data in a secure, standardized form for information to be shared more easily between authorized organizations online. Just as banks are seeking fintech solutions, fintech looks for community banks and credit unions. This emerging demand will enable open banking partnerships that provide customers with a truly consolidated view of their financial accounts so that they could be easier to manage.
RegTech (Regulatory Technology) refers to new technological solutions in the financial sector that improve and streamline regulatory processes. Regulatory changes in this sector around the world are continuously increasing at a staggering rate. Coping with the sheer volume of new regulatory changes imposes high complexity and stringent timelines upon financial institutions. RegTech has established a robust foundation within the FinTech ecosystem to conquer this and bring solutions targeted to new and complex regulations, litigation, and regulatory remediation.
With the advent of Alexa and Siri, voice technology has become an integral part of humans’ daily lives. Such voice search technology is not only helping people with their news reading and turning lights on and off, but also assisting in making payments. This is why more and more banking services providers are now turning to this technology. According to a report, over 3.25 billion voice assistants are in use today. As more and more consumers will leverage smartphones for money transactions, voice technology will become a new option in banking and will outshine the traditional payment system.
As more banking processes become automated and ramping up existing digital offerings, it will not only create new products at a particular cost, but also can generate significant savings. Banks must excerpt every efficiency out of their existing technology and labor force in order to handle escalating volumes of digital customers.
With the growing fintech revolution in financial services, financial institutes require an effective cybersecurity strategy. The threat posed by cybercriminals and fraudsters can create shared risks across the financial system that must be managed collaboratively. This is where fintech firms can take to make themselves cyber secure. They must deliver secured assets, create trusted commercial partnerships with established firms, and ensure compliance with germane regulations in the jurisdictions in which it operates.
Financial services is one of the sectors critical to real-time data for meaningful banking experience to customers. With the rapid adoption of modern, cutting-edge technologies, data infrastructure has become more imperative in financial services than any other discipline. Fintech firms can capture real-time data for underwriting. With the help of advanced big data analytics solutions, they can disrupt established financial institutions with a customer-orientated approach.