10 FinTech trends to watch in 2021+ (Based on Deloitte Report)
2021 promises us to bring recent fintech trends and solutions as previous years skyrocket online sales and trust to e-banking. The fintech market is on its growing stage. Even though implementing new technology is a risk, a considerable wealth opportunity motivates proactive executives to embrace fintech innovations (as Deloitte said).
The challenges we faced during 2020 connected people with technologies, and shifted trust to online payments and banking to positive. Many consumers (especially millennials and gen Z) choose online banking and trust online payments like Amazon Go. Pandemic time also shifted to cashless payments, as it’s more hygienic. We use our bank cards and less cash. So, our will to be more aware of proper hygiene influences cashless payments. Consumers are open to the idea of on-demand finance because of mobile and cloud computing.
The recent report by Statista claims that the global growth in the use of financial apps during COVID-19 was the largest in Japan, at 55%. South Korea (35%), the USA (20%), China (20%), Germany and Italy (15%) followed. Before the pandemic, global investment in fintech was also on the rise. Despite a slight decrease in assets in 2019 by $ 137.5 billion compared to $ 141 billion in 2018, FinTech has shown positive growth in most of its sectors.
According to Deloitte, the financial technology sector is “red-hot, with traditional financial institutions increasing their fintech investments and competing with startups to offer financial services products faster and more efficiently.”
Financial services ready for transformative change; both mega-corporations and startups are investing in fintech investments.
Fintech trends for 2021 and beyond are the following:
1. Financial firms are more open to fintech
“A large number of our clients are taking aggressive action to determine how they can use these technologies within their ecosystems,” a managing director and head of innovation for Deloitte & Touche LLP’s financial services businesses Krishna said.
As consumers are more open to online banking or online payments, financial firms and institutions embrace technological advances and digital transformation in the financial sector.
Financial institutions too often deal with fintech in a very inefficient, fragmented and tactical manner. The companies that succeed have undertaken carefully architecting their transformation strategy, including integrating fintech within their organization. Murray Raisbeck Global Co-Leader of Fintech, KPMG International and Partner, Insurance KPMG in the UK.
2. Blockchain is a big fintech trend
According to Deloitte, blockchain eliminates the need for a central intermediary to transfer assets, so the transfer of assets is not limited to money. Blockchain also increases efficiency. Payment transactions usually go through a central intermediary that uses several steps to authenticate and authorize the person who is allowed to send that amount, transfer the details of the transaction, and actually settle. Calculations can take two to three days.
Prakash Santhana, a managing director in Deloitte Transactions and Business Analytics LLP also stated that the third benefit of blockchain is an audit trail. Blockchain relies on a distributed database. All information is duplicated in each copy of the database, and all data is publicly available. You can enter the blockchain ledger and, since it is immutable, prove that the transaction took place and be sure that the record has not been changed or corrupted while it is in the distributed ledger. As a result, many sectors of the financial services industry can improve productivity by using this technology to improve transaction speed and transparency.
3. Regulators are interested in fintech
According to Krishna, regulators actively seek to create sandboxes to test scenarios and determine how the system can solve problems.”
According to KPMG, fintech is a priority for asset management firms, where technologies help win the competition. Fintech offers various opportunities and greater efficiency in transactions.
In recent months and years, we have seen regulatory bodies worldwide attempt a careful balancing act. On the one hand, regulators recognize the need for innovation. They are working to support and encourage fintech activity through actions such as framework changes and regulatory sandboxes’ creation. On the other hand, there are significant concerns that existing risks, especially surrounding cybersecurity and fraud, are becoming heightened by fintech’s growth.
In recent years, regulators around the world are trying to balance the situation carefully. The regulators recognize the need for innovation and are working to support and encourage fintech activities such as restructuring and creating regulatory sandboxes. There are serious concerns that existing risks, especially those related to cybersecurity and fraud, are amplifying as financial technology grows.
4. Implementation influence operational challenges
Krishna claims that fintech and other new disruptive technologies are causing a stir, but there are changes in the existing design and new implementation and deployment challenges along with them. Regardless of how transformative these technologies will be; reality leads to operational difficulties such as’ What problems are you solving first? How do you solve them without affecting other businesses? Financial instruments now have to figure out how to use the preliminary and long-term influence on new system processes. It’s always more complicated than you think, but the strategic risk can pay off big.
5. The industry understands that this is a marathon, not a sprint
“There was a lot of hype in this area, and there was a lot of venture capital,” says Krishna. And, adds: “There is both expectation and concern about what these technologies can do in the financial services industry. Many of the conversations we have with clients have an end-of-the-start atmosphere as there is some fatigue and frustration in keeping up with all the latest companies and technologies. “
There are several issues to consider, for example:
- Will these new services be replaced by the existing architecture or offered in parallel?
- Are the benefits promised by the latest technology improving existing products, or are they just adding features and complexity that no one is really looking for?
- What architectural or technological changes need to be included in strategic planning?
- In what areas of the business should fintech investments be directed?
These were fintech trends by Deloitte, and here are some insights on trends from our team at Rovetek.
6. Financial literacy solutions fintech trends
There is a significant demand for managing financers online, so this is an ample opportunity for fintech startups related to financial literacy.
The survey by EY claims that the consumer awareness of FinTech services in the five key categories is reported to be the following:
Source: EY – Global FinTech Adoption Index 2019
The trend on financial literacy is not new, but thanks to a huge increase in online payments and fintech growth, financial literacy apps’ need have become inevitable. Apps can easily integrate your data and financial expenses in your mobile, etc. So many options for fintech apps.
7. Digital-only banks
This is a big fintech trend that started to grow in recent years. Just some years ago, it was hard to believe that we will put money and make purchases in the banking app, which doesn’t even have a physical department.
The number of bank visits to banks will decrease by 36% from 2017 to 2022, while the number of mobile transactions will grow by 121% over the same period. Many banks have embraced digital transformations and offer their consumers top-notch web or mobile banking versions. But, there are those which don’t have any departments, just apps.
The main reason why people are moving from ‘conservative and bureaucratic’ banks is that consumers want banks to become more user-friendly, accessible, and convenient.
In other words, consumers want banks to be more fun. Another reason is the queues. Digital banks and online banking apps are more comfortable in use.
8. Cybersecurity in fintech
Another fintech trend in 2021 is the enhancement of cybersecurity. The activity in online payments is continually growing and hacker attacks are increasing. First, fintech companies or banks must deliver high-level transaction, data security, and general security service.
9. Biometric security systems
Following the cybersecurity trend, to secure our data and transactions, banks use biometric security systems. With a simple finger touch, clients can unlock their online banking applications or conduct payment transactions. This approach takes online security to another level. The popularity of biometric sensors that involve physical contact is predicted to decline. While the general increase in the use of biometric technology for identity verification, contactless solutions will take over the touch-based fingerprint reader market. Because of the COVID-19 pandemic, it is recommended to avoid cash, which increases the growth of the biometric payment card market.
Another fintech trend is related to financial management solutions. Especially during the lockdown, this trend has ‘flourished’. WealthTech funding reached $ 1.7 billion in the first quarter of 2020, according to Fintech Global. The shift to online business influences the appearance of more digital services for managing personal and corporate finances. AI and Big Data will give us even more effective financial solutions for financial management shortly.
An example of Wealthtech services is Robo Advisors – the automated platforms use algorithms and machine learning to help investors make critical financial decisions.
According to the KPMG report, The industry is developing rapidly. The financial products and services and the technological infrastructure underlying financial institutions will look significantly different in a decade compared to what they look like today. The last 5 years have presented a level of violation that has never been observed before. Opportunities for new financial technologies companies to quickly gain momentum global financial services market forcing financial institutions to stay competitive. They must accept customer-centric innovation and back-office solutions to help them provide a more personalized value-added approach to experience working with clients. New competitors (both in uniform fintech startups and technology giants reacting to opportunities add value) and new solutions catalysts for industry change have long been defined by tradition.
From AI, automation and augmented reality for cloud, internet of things and data analytics, fintech transforms financial services. Financial institutions that are in no rush define your fintech strategy and agree it will be better for their business purposes positioned to help create future Financial services.
We, at RoveTek, deliver top-notch solutions in web & mobile development to our clients in the FinTech domain. Let’s start a journey of digital transformation for your FinTech project with RoveTek!