To illustrate the point, a recent survey by the DeVere Group found that, since COVID-19 struck, the use of fintech apps has increased by an unprecedented 72%. This rise has been driven by things like contactless payment apps and other digital banking tools necessitated by the pandemic. But it’s more than a passing phase. In fact, another recent survey of US households found that up to 67% of people plan to stick with digital banking technologies long after the coronavirus crisis ends. Let’s review the top eight fintech trends of 2021.
Digital banking is a popular and preferred method of money management for many—and has been since before the pandemic struck. But digital-only fintech services that negate the need to stand in lengthy queues at physical banking locations have gained real ground since.
Digital banking encompasses services like P2P transfers, cryptocurrency sales, contactless payments with free transfers, and international remittances. And big innovations in this area will continue to make it easier for people to take care of all their banking needs; anytime, anywhere. It’s predicted that the number of people visiting physical banks will decline by up to 36% between 2017 and 2022.
Arguably the most important aspect of digital-only banking, however, is its potential to reach a wider demographic than has ever been possible before. According to a recent World Bank report, there are still up to 1.7 billion people without access to the global banking system. So the significance of opening up access to essential financial services cannot be underplayed.
Being one of the most pivotal technologies to emerge in recent years, Blockchain is listed among the fintech trends with the greatest potential. Its applications for the financial industry are huge. Blockchain solutions have effectively enabled a banking revolution; instigating a move away from traditional centralised procedures to safer, fairer, decentralised finance.
Blockchain offers a decentralised ledger of end-to-end transactions which, once automatically entered, cannot be manipulated in any way. The benefits of blockchain for the fintech industry are manyfold, including:
A report by the International Data Corporation (IDC) indicates that investment in public cloud infrastructure and services will have doubled between 2019 and 2023—with the banking sector accounting for roughly a third of spending.
Driving the move toward a cloud-based model is the growing prominence of open banking, which is gaining ground thanks to its ability to provide greater transparency. Agile fintech disruptors favour the cloud because it allows them to foster collaborative partnerships with developers. And large banks are now getting on board with the public cloud model because it supports a range of Platform-as-a-Service (PaaS) options.
Furthermore, operational challenges brought about by the pandemic mean that financial institutions and banks have little choice but to rely more heavily on cloud-based solutions from here on out.
RPA has been adopted by a variety of sectors and, as a fintech solution, has the ability to streamline operations, reduce the human burden of repetitive tasks and greatly improve banking efficiencies. This will speed up and reduce the cost of many of the time-consuming back-end processes involved in running a financial institution, such as account maintenance, new customer onboarding and credit processing. Organisations can then channel their human resources into developing key areas like customer service—thus boosting satisfaction.
If you would like to get more insights into the capabilities of RPA as well as its security vulnerabilities, check out this whitepaper: Top 10 Security Risks in Robotic Process Automation
Financial consumers are feeling increasingly time-pinched as they try to juggle home and work commitments with managing their personal finances. With AI and machine learning technologies, innovative fintech businesses can automate financial decision-making and save their customers valuable time.
AI and ML are also enabling fintech firms to harness Big Data, to find meaningful patterns in customer behaviour that can lead to smarter financial decision-making. With this new intelligence, they can effectively tailor their products and services to match consumer desire.
Just as personalisation is becoming the expected standard across many other industries, like retail and healthcare, so to will it become the norm within banking. Other fintech applications of AI and machine learning include chatbots, trading algorithms, policy-making, fraud prevention and compliance.
Tying in with data science services, AI and machine learning, customer intelligence tools can be used conjunctively to harvest valuable insights from widely dispersed and oftentimes raw customer data. Fintech companies can use customer intelligence platforms to gather and analyse customer information including basic details, brand interactions, and customer survey data.
Furthermore, powerful linguistic analysis, language identification and pattern matcher annotators can garner a wealth of voice-indicative data from telephone conversations between customers and customer service call centres—most of which is unstructured and untapped. This technology can help brands understand a customer’s intention when they call, their behaviour, and their perception of the brand/product/service they’re calling about. In doing so, it will enable companies to better adapt their services to meet customer expectations.
It’s predicted that cybercrime will cost $6 trillion US dollars, globally, by the end of this year (2021). The proliferation of IoT technologies across all industries, not least the financial sector, has created a wealth of new opportunities for cybercriminals to exploit.
Given the nature of the information held by financial institutions, it’s unsurprising that cybersecurity represents one of the biggest focuses for the sector moving forward. In fact, the financial industry is one of the top three targets for cybercrime, accounting for around 10% of all annual attacks.
According to a recent Deloitte report, up to 64% of banking businesses are expected to plough investment into combating cybercrime in 2021 and beyond.
With the aforementioned rise in cybercrime, financial innovators are having to think of new and infallible ways to protect their customers’ sensitive financial data. Passwords are coming under increased pressure from evermore advanced criminal technologies, and this is why biometric security measures are the next logical step in safeguarding financial security.
Many are already familiar with things like fingerprint ID, but an increasing number of banks, including HSBC and First Direct, are looking to fintech trends like face and voice recognition to keep their customers safe.
This not only has the benefit of being far more secure than a password but it’s also much easier for the customer. Instead of having to remember endless combinations of letters and digits, and answer multiple questions to access things like telephone banking, they can gain access to their accounts simply by using their biometrics. It also benefits the banks by making authentication quicker and more efficient, and enabling them to remove certain human touchpoints.
The technology can be applied at cashpoints too, removing the need for a traditional PIN.
Almost every industry has been forced to rethink traditional business models in the wake of the COVID pandemic. And many, including the finance sector, will never look the same again. If we’ve learnt anything from the events of 2020/21, it’s that agility and flexibility are the keys to business survival.
Financial institutions need to flex their models to support remote operations while adopting the latest fintech trends to innovate their offerings, enable tailored, on-demand banking services for the masses. For many organisations in the finance sector, a winning digitisation strategy will include partnering with a technology vendor to build up a smart development team skilled to drive the transformation forward.
Ready to join the fintech revolution? Contact ELEKS today.
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