Demand for Fintech and digital financial products, already rising steeply before the COVID-19 pandemic, was given even greater impetus during 2020 and is likely to have gained years of ground in what has been an extraordinary year. Moreover, it is expected that virtual payment and digital wallet solutions will take the lead in the financial services industry in 2021.
Here are the 5 trends that are likely to dominate in the Fintech world this year.
1. Digital banking will be a new norm
It’s undisputed that 2020 delivered unexpected changes and challenges for all financial institutions, as many people were forced to become part of the digital banking ecosystem—whether or not that had been a goal in the past.
While an increased emphasis on digital was already underway, the coronavirus pandemic expedited the process in ways that will continue to change the way you interact with your financial institutions this coming year.
Mobile wallets and peer-to-peer payment apps have also seen a significant increase in users and engagement since the start of the pandemic.
The movement to online banking is now our reality and—while preceded by a slower ramp-up of changes to bank branches and moves toward a cashless society—it appears there is no turning back.
Consumers will be able to execute every important task while accessing a huge range of financial information.
2. Biometric security systems
Mobile financial services have become widely available – they are literally at the tip of one’s fingers. This, in itself, being an unbelievable achievement, at the same time, raises lots of security-related questions. Meanwhile, cybercrime increases day by day.
Therefore, it is essential for organizations operating in the FinTech industry to take all the available security measures. And biometrics is the best way to bring security to the next level, providing users with the confidence that their data is protected. Currently, however, the biometrics market is witnessing major shifts under the pressure of the circumstances. Biometric sensors that involve physical contact are forecast to drop in popularity. Despite the overall growth in the usage of biometric technology for identity verification, contactless solutions are going to take over the touch-based fingerprint reader market.
Reportedly, as it is highly recommended now to avoid using cash, the COVID-19 pandemic keeps fueling the growth of the biometric payment cards market. Public health concerns have created more interest in contactless biometric identification solutions. Contactless financial cards had become commonplace before the crisis, but even more changes towards contactless smart access systems are to come.
3. Blockchain technology will make transactions safer
With the cutting-edge technology, blockchain, one can safely do all the transactions. As per an authentic report, 48% of bank representatives think that blockchain technology can make bank transactions safe.
As blockchain works on decentralized networks, there won’t be any government entity or third-party involved. Thus, the data will remain protected.
4. Open Banking
Open banking is a revolutionizing technology that brings FinTech and banks together, enabling data networking across institutions. Directly related to PSD2 (Second Payment Services Directive), it forces banks to release their data in a secure, standardized form for information to be shared more easily between authorized organizations online. It allows controlling consumers’ banking and other financial information by third-party applications through data sharing with the help of APIs and AI.
5. Artificial Intelligence and Machine Learning
From Robo-advisers to regulatory technology (Regtech), AI/ML-driven systems are enabling companies to put big data to effective use in monitoring customer behaviour and detecting anomalies and opportunities they can factor into their services and product offerings. Machine learning and AI are being used to identify financial frauds and mitigate cybercrime.
Opportunities in fintech are endless as the innovation thrives on the ever-evolving technology. Consumers want to do more in their finances and fintech solutions are rising to the occasion. With a track record of offering useful financial information, payment security, speedy and transparent transactions among others, fintech trends are fast becoming the standard in financial markets.