A portmanteau of the terms ‘finance’ and ‘technology’, FinTech has been empowering businesses and people across the globe for the last few years. The revolutionary field has managed to transform multiple businesses in varying segments, from retail to banking to financial advisory services and more. The powerful impact of FinTech has also trickled down the industries of stock trading, transportation, smart cities infrastructure, and more.
The ongoing coronavirus pandemic, despite proving disastrous to multiple segments, has brought implausible opportunities to the table for FinTech. More and more tech and business giants are showing an inclination towards FinTech in the face of AI, blockchain, and cryptocurrency gaining importance worldwide. At the same time, the increased focus on data opportunities and clearer regulatory jurisdictions have contributed to the massive acceptance of FinTech across verticals.
The Red-Hot Trends in FinTech
The idea of on-demand finance, with just a few taps on their smartphones, has seen wide appeal and embrace among customers. FinTech is providing them with the opportunity of hassle-free management of money and business online – a place they have already grown comfortable with for entertainment, work, networking and shopping experiences.
Take the Nordic region for instance – the Scandinavian countries are recognised as global leaders in terms of growth and distribution of financial services. The Nordics were the first in the world to start drifting away from cash and implementing digital finance. The region has, in the recent past, worked on multiple collaborative models bringing together governments, corporations and entrepreneurs for the same purpose. Today, the Nordic region is home to around 1000 successful FinTechs, despite housing only 2% of the total population of Europe.
As the pandemic continues to disrupt businesses and industries, especially in terms of financial management, FinTech is emerging as a transformative discourse. Here are the top FinTech trends to look out for in 2021.
Collaborations and Partnerships
One of the most significant trends in FinTech these days is the jumping of large financial firms onto its bandwagon. More and more corporations are taking a keen interest in determining how these new-age technologies can support their ecosystems and help them stay ahead of competitors. At the same time, such partnerships help traditional firms expand into new geographies, even new segments.
From acting as venture capitalists to investing in select projects and exploring the potential of FinTech, these traditional finance firms and corporations are partnering with others in the industry to benefit and expand their customer base. After all, customers are seeking better services, digital access and brand empathy in financial offerings. As the FinTech industry is poised to grow unprecedentedly for the last few years, firms are getting increasingly aware of these changing needs of consumers. The Danish FinTech start-up Tradeshift, for instance, has emerged as a top choice for businesses seeking to connect with their suppliers digitally, handle remote paper and manual processes across procure-to-pay, and manage supplier risks.
The Age of Blockchain
Blockchain is one of the most disruptive transformations in the financial segment witnessed in the last decade. With its concepts of Smart Contracts and a decentralised ledger, the technology has brought about unthinkable transparency and trust, while enabling peer-to-peer transactions.
Therefore, it is not surprising to see blockchain emerge as a core technology in FinTech today. According to surveys, an increasingly greater proportion of financial corporations believe that blockchain technology is all set to become the most significant disruption for the banking segment shortly.
Blockchain eliminates the role of the intermediary – governments, regulatory authorities, financial institutes – when it comes to asset transfers, which could include money, titles, properties such as land, home and vehicles. All that exists is a distributed database that records a copy of your transactions, and all the data is public. The ledger is immutable and cannot be corrupted. Therefore, more and more financial services sectors are showing an interest in the blockchain FinTech due to its potential for speedy, transparent and high-performance transactions.
Advancements in RegTech
One of the most important issues the financial services industry has been languishing over for decades is that of regulations and supervision. Banks and corporations have for long been struggling with administrative overhead, customer protection, financial stability and regulatory operations. FinTech innovations have been transforming the landscape for them steadily, and have emerged as saviours for the highly regulated financial industry.
Regulators in countries like Singapore, Australia, the USA and the UK have been actively setting up collaborative models with FinTech startups to explore how the technology could solve their long-term problems. The FinTech ecosystem has enabled innovative solutions to tackle complex regulations and remediation without hampering administrative requirements. FinTech is gradually bridging the gap between robust, path-breaking technological revolutions and customer-friendly, analytical regulations by financial institutions.
Digital-Only Banking Services
As the customer base for the banking industry becomes more tech-savvy by the day, digital channels have become a must. The market needs to constantly evolve with new products and contactless services, especially during and after the pandemic. Digital-only banks, with hassle-free services, better interactive experiences and lesser fees are seeing wider acceptance among customer pools.
Some FinTech companies have devoted their services to easier digital banking services for customers, such as Axo Finans. Besides adding value to daily operations, companies like Axo Finans are helping customers save time, money and the hassles of dealing with multiple complex applications. It wouldn’t be an exaggeration to say that disruptive companies like Axo Finans are the reason behind the Nordic region’s stupendous growth in the FinTech segment.
Big Data and Analytics
Digitisation in 2021 is going to be led by the transformative forces of Advanced Analytics, Machine Learning, Artificial Intelligence, Big Data and the Cloud. These technological disruptions are also going to determine where financial institutions are going to stand in the market. With the growing importance of data and analytics for enterprises, these technologies have the potential to build more personalised and targeted experiences for financial services customers.
Companies all over the world are already using big data and analytics for streamlining their services with the demand of audience pools, including FinTechs. From enhanced operational productivity to revenue optimisation, predicting customer needs to rendering targeted offerings and forecasting demand, FinTechs are in for a data-driven transformation of financial services – something customers have been seeking for a long time.
Take Sweden-based Klarna for instance: the online banking solution is offering flexibility and ease-of-use for more than 90 million active consumers across 250,000+ merchants and 17+ countries. At its core are the principles of personalisation, flexibility and data-driven optimisation.
Biometric Security Systems
As customers rely more on their screens for financial services, biometric security has become an inevitable need of the hour. Besides ensuring greater security, a biometric security system for financial transactions also helps keep information behind a veil.
Our smartphones are already carrying fingerprint and facial recognition technology, which means biometric security has penetrated daily lifestyles to some extent now. This has caught the eye of several innovators in the FinTech segment, who are now working on ways to integrate biometric systems with traditional financial operations for customers. Reliable, intermediary-less and contactless, biometric security systems have the potential to help prevent cybercrime to a large extent.
Limitless Opportunities: The FinTech Industry
FinTech has the potential to provide your business as well as customers the much-needed relief from the glacial pace and bureaucracy of traditional financial services. No wonder, even leading traditional financial institutions are now heightening their FinTech investments to compete with new players. The idea is to stay upbeat with what businesses and customers want, and FinTech is all set to help achieve just that.