Will advances in financial technology assist the business in navigating risks while reducing costs? These cutting-edge fintech trends may change the way you do business, from the services you use to the ones you provide. Let’s discuss some fintech trends in 2021.
As digital-only banks become more common, regulatory requirements and consumer demands drive innovation. The need for speed, protection, and convenience is well understood, but it isn’t easy to enforce in the financial sector. This is evolving, however, as more businesses invest in innovations that offer them a competitive advantage. Furthermore, a surge in venture capital (VC) funding for fintech startups catalyzes a new wave of services.
The global investments in fintech have more than tripled since 2014 to over $12 billion and show no signs of slowing down. The funding, combined with market pressure, would accelerate technology adoption faster than in previous years.
While the financial industry has historically progressed at a slower pace. Business enterprises are moving more quickly toward agile workflows and systems. This is due to the need to adjust to changes in consumer behavior and legislation and the challenge of non-traditional competition. Delivering what consumers want necessitates an industry-wide digital transformation. Consumers would benefit from a better user experience in the future.
However, the rapid speed of Fintech innovation means that more institutions will reap benefits, such as cost savings, sooner rather than later. We bring to you the five biggest trends in fintech developments that will help your business save money while meeting consumer expectations.
1. New Benefits of Blockchain and Cryptocurrency Innovations
Blockchain and cryptocurrency innovations are a part of the latest fintech trends in 2021. The adoption of Blockchain in financial institutions has been gradual, but it remains a significant fintech trend. The financial services industry currently invests $1.7 billion in blockchain technology per year. Blockchain investments are not expected to slow. About 77% percent of officials in top management roles expect Blockchain to be used as part of a production system or process by 2021. We see more blockchain-based funding for startups in the financial industry and a rise in crypto technology usage throughout industries. With the transition to Blockchain as a Service (BaaS), both organizations and customers will have greater access to this technology.
- The Use of Blockchain in Security – Innovations assist businesses in predicting and detecting problems. The use of Blockchain in digital identity management, for example, provides additional protection for both organizations and customers. Furthermore, Blockchain can connect with more devices in the Internet of Things environment (IoT). More companies will shift to Blockchain in the future to reduce fraud and manage compliance and audit issues.
- Blockchain for Acceleration – Financial institutions use Blockchain to speed up asset and money transactions, payments, and investments. Furthermore, this technology prevents processing errors that might cause a delay in providing services.
2. Mobile devices as a payment device
Over the next two years, the global volume of mobile payments will increase by 60%. Mobile banking places power in the hands of the customer, thus removing barriers to entry. This Fintech movement, on the other hand, encompasses a wide variety of payment options, including virtual currency and blockchain. These systems are referred to as the “Internet of Payments,” and both of these options alter consumers’ perceptions of mobile banking and fund transfers. In the United States, customers are at ease with wallet-less alternatives and rally behind significant players such as Google and Apple. On a global scale, payment options allow many people to connect with businesses and complete daily transactions without the need for a traditional bank account.
To increase financial inclusion, payment options use blockchain technology to verify identities. Customers embrace mobile payments, but many in the financial services industry are concerned about how their technology stack can manage increased transactions. However, the upcoming 5G technology means that networks can accommodate more significant transactions while still providing a dependable experience. If more consumers abandon their credit and debit cards, traditional institutions that implement digital payment features will attract and retain customers. This makes it worthy enough to be on the list of fintech trends in 2021.
3. Non-traditional banking services getting more credibility
The failure of banks in 2008 created a level of mistrust that many customers have yet to overcome. This opens up many business opportunities, as openness is a crucial selling point for digital-only banks. However, the industry has been troubled by poor adoption rates.
Fewer than 10% of people in our community will consider using a digital bank. Instead, virtual institutions seek to increase revenues by providing ancillary services such as financial resources designed for emerging voice technologies. This increase in neobanks would put traditional financial institutions under pressure to develop their services and provide more value to customers.
Furthermore, as virtual banks adapt to new regulations and demonstrate versatility, customer confidence will expand. Although digital-only banks are unlikely to replace traditional financial institutions, they will pressure the industry to provide a more open customer experience.
4. Platform as a Service (PaaS) providers increase offerings
Customers are looking for comfort. Financial institutions, on the other hand, struggle to meet demand while protecting data. Customers will benefit from the opening of APIs to consumer data as banks comply with changing regulations. PaaS enables organizations to respond to evolving needs by providing tailored infrastructure to adopt cloud technologies fully. These services provide the infrastructure for a wide range of activities, such as:
- Collaboration inside a team
- Control of resources
- Production of payments
- Control of credit risk
The trends we see in PaaS represent and drive the trends in the continuous transformation of cloud computing and digital business. With Fintech as infrastructure, more companies will “sell services to financial institutions to help them digitize their technology stacks and enhance risk management and customer experience.” You can’t skip it if you are considering fintech trends in 2021.
5. Services provided by traditional institutions and fintech
Traditional institutions continue to invest in and acquire Fintech technologies in response to a need for agility and an increased focus on technology. The growth of RegTech and insurance tech (insurtech) and smart contracts provides traditional companies with a way to upgrade their infrastructure while reducing long-term costs. Furthermore, Fintech startups are capturing a larger share of the market through strategic alliances and acquisitions.
- Traditional mergers and acquisitions, as well as partnerships – About 82% of decision-makers, plan to increase Fintech collaborations in the next 3-5 years. Financial institutions will seek cutting-edge market solutions by collaborating with technology companies. More integrations are possible as banks implement policies to comply with Open Banking regulations. Each can strengthen and expand the interconnected relationships between financial institutions, technology companies, and other types of service providers. Furthermore, institutions concerned about the challenge posed by digital-first startups could use acquisitions to meet their customers’ needs without requiring a significant change in operations.
- Fintech collaboration and consolidation – Fintech teams, on the other hand, are combining to put themselves as direct challengers to traditional systems. It’s very likely to see Fintechs continuing to merge to build size and a more extensive and more prosperous range of capabilities.
The bottom line is that customers want to access all of their financial services in a single location. If consumers are dissatisfied with their banking services, newer companies using emerging technologies can transform the space.
Increase in consumer benefits
Each of these patterns gives customers an advantage. The drive for a more seamless customer experience results in new technology that improves convenience and security. Customers benefit from enhancements that include:
- Remote services provide access to bank representatives.
- Kiosks with user-friendly choices.
- It has improved security measures that provide greater peace of mind.
- Consumers now have more choices for accessing financial details thanks to voice biometrics.
- Transactions are sped up by faster payment and fund transfers.
- More applications that consolidate all of your financial information.
Furthermore, Fintech technology developments help small and medium-sized business owners gain greater access to financial resources and financing. However, as financial institutions begin to see returns on their Fintech investments, the balance may change.
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