With so many people relying on online transactions for the last couple of years, it’s no wonder that fintechs around the world are continuing to receive funding.
In Q2 of 2020, fintech mega-rounds – fintechs that have raised at least $100 million – hit a new quarterly high of 28, despite the ongoing COVID-19 pandemic. Although investments are bound to decrease in the following months, the fintech will undoubtedly continue to grow after the world goes back to normal.
Want to stay ahead of the fintech industry? Then you need to know about the trends that will be affecting fintech in 2021. But before we start, let’s discuss…
What is Fintech Exactly?
Fintech – or Financial Technology – refers to the integration of the two sectors, with an aim of producing solutions for problems modern businesses and customers come across daily. As simple as that. The solutions come from the use of technology such as biometrics, Blockchain, machine learning, and many, many more.
Some of the fields affected by fintech include:
- Banking
- Insurance
- Personal finance
- E-payments
- Venture capital
- Wealth management
Lots of industries are expected to get a digital facelift in the next few years. The tides are turning. Companies that want to stay afloat need to adapt to the changes. If not, they risk losing the attention of modern customers, and subsequently, sinking to the bottom.
The State of the Fintech Market in 2020
Even if you don’t know much about fintech, you probably encounter it multiple times a day without noticing. Have you ever used an app to pay your bills? Did you ever send money to someone through PayPal? Do you sponsor your favorite YouTuber on Patreon?
If the answer to any of these questions is “yes” then you’re more than familiar with fintech.
Now, we keep on talking about the size of the fintech market. So how big is it? It’s pretty big. And if it fulfills its full potential, it will only get bigger in the following decade. Don’t believe us? Then just check out the numbers:
- The global fintech sector is expected to reach $26.5 trillion in just 2 years
- The market share across 48 fintech unicorns is worth over $187 billion
- In Europe, fintechs control 50% of the consumer financial market
This is because fintechs provide opportunities to consumers to borrow money, make payments quicker, and get new credit options. On the other side of the spectrum, fintech enables businesses to sell their products online, receive payments, and have a global customer network.
All of this is possible because of fintech…
8 Fintech Trends for 2021
From banking and retail to advisory apps, it seems like fintech will continue to have a major impact on the global economy in the foreseeable future. Do you want to know how much of an impact it will have? You need to stay on top of the current and future market trends.
Here are 10 fintech trends you can expect in 2021…
1. Robotic Process Automation
Remote working has become a must in 2020. Next year, automation will increase. Robotic process automation can help save companies money on human capital, reduce fraud, and processing errors significantly. Automation will be a huge part of the fintech sector in 2021.
2. More Mobile Payment Options
Due to the current health climate, people are using mobile apps more than ever to pay for their bills, groceries, and goods. In the following year, we can expect to see more payment options to enter the market. Businesses will have to start accepting as many payment options as possible.
3. The Emergence of Embedded Finance
Embedded finance is considered by many to be one of the biggest threats to traditional banking institutions. Next year, we can expect major social networks like Facebook to start offering most services banks do. If this catches on, no one knows what will happen to traditional banks.
4. Increased Cybersecurity
Data breaches are nothing new. But considering how many people are using fintech apps to make money transactions, the risk of breaches has increased significantly. In 2021, we can expect to see a bigger emphasis on cybersecurity from major and small companies alike.
5. Behavioral Science Technology
Companies want to know their customers as much as possible. The use of artificial intelligence and other smart technologies to leverage behavioral science is something many companies are looking into. This is all done in an effort to learn more about their customers.
6. Digital-Only Banking
Until the pandemic is over, most people are trying to stay indoors as much as they can, so physical banks are not of use. Digital-only banking is extremely beneficial because even if the situation gets over sooner than we think, people will still be cautious about physical transactions.
7. Neobanking 2.0
From apps that provide financial recommendations to clients to niche-focused platforms, the next generation of banks is offering more than debit and credit cards. This trend will continue into the next year, with non-fintech organizations joining the party.
8. Growth of Reg-Tech
When new technology enters the picture, officials need to start working on new regulations. To make the process of regulating the fintech sector easier, companies are now coming up with new solutions that will be able to regulate the market without the need for human interference.
The Bottom Line
Fintech has altered many industries forever. In the following years, it will continue to do so. That’s why 8 out of 10 traditional financial organizations already have a pla∂ of collaborating with fintech organizations in the next 3 to 5 years. The companies that don’t have a plan are losing out.
Almost 90% of financial organizations believe a part of their business will be lost to fintech firms in the next five years if they don’t adapt to the changes. Small and large companies alike need to wake up and smell the roses. Fintech is running the world and there’s no stopping it.
