As a major part of 2020 was all about Covid-19 and how to tackle its growing menace, almost all industrial sectors felt the pandemic’s impact. 2021 is here, but we are far from being safe from the clutches of the virus. Thankfully, many industries were swift to react to the changing dynamics and put effective measures to bounce back with enhanced resilience and fortitude. Fintech is one of these sectors that led the way, in the adoption of pioneering technology to handle the challenge.
The Learnings
One good that came out of the pandemic, especially in the financial sector, was that it realized digital technology’s essence. Finance and technology have never been as synchronised as they are today. Be it the banking, cards or payments industry, all mannor of financial institutions are acknowledging and embracing digital approaches to stay afloat and adapt. A recent study in the US showed that while only 1% of the US population had a digital-only account in 2019, a year later, in 2020, almost 25% of the population opted for a digital-only account.
2021 and Beyond
In such a digitally active environment, the Fintech sector can look forward to many new ways and norms to rule the roost in 2021 and beyond. Here are a few of the top-slated ones expected to define the Fintech sector in the coming years.
- Contactless payment is the new payment model
Taking a cue from the Covid-19 situation where social distancing was one way to avoid the virus, the banking and the payment sectors have geared up for Contactless Payments. The focus is on cashless payment. The industry is all set to integrate high-tech payments apps and systems to enable instant online payments vis-a-vis cash. Many companies are actively hiring dedicated web developers to integrate the digital payment system in their businesses.
As a result, one change that customers will notice in 2021 and beyond is how their banks and other financial institutions ease self-checkout facilities, ensuring smooth and instant payment. Many e-commerce stores, food integrators online, etc., stopped accepting cash payments and instead encouraged their customers to pay online during the Covid-19 situation last year. One great example of this is Amazon that came up with the ‘Go’ store that acted as the platform for online customers to pay for goods and services when the pandemic was at its peak.
Take the UK’s instance, where about 12% of the population, 6 million people, downloaded online banking apps for the first time in their lives during the lockdown. July 2020 saw as many as 1.5 billion transactions using debit cards which were 20.8% higher than the transaction value in June 2020.
Hence, one definite future of Fintech is cash payments becoming obsolete and digital payments becoming the new face of payments.
- Embedded Finance will find many takers
Take the example of the biggies like Amazon and Uber. These are trendsetters in their core areas of operation and the way they have used embedded finance approaches to offer their customers delightful experiences are worth watching. From payments to loans, insurance to mortgages, companies today are offering embedded services, as if they can read the mind of their customers and offer them exactly what they need.
The embedded finance sector backed by the BaaS (Bank as a Service) system is set to cross $2 trillion in the next one decade – this is as per a report by 11:FS. The industry is growing phenomenally because of the impeccable customer experiences it offers. With many brands embracing the BaaS model, more and more brands are expected to leverage the model’s huge potential this year. Even traditional banks are now adopting the embedded finance cum BaaS model, setting expectations higher from the Fintech industry.
- Financial inclusion as a necessary part of the industry
The pandemic affected most parts of society, but the most affected were the people from poor economic backgrounds. In 2020, some great innovations led the way for financial inclusion to help the oppressed and the poor. For example, in Brazil, there was an app in the Marica neighborhood that ensured that basic income was distributed to the residents there using Mumbuca digital currency.
All of these people had lost their jobs during the pandemic. Similarly, Singapore and Malaysia saw the issue of digital banking licenses. For example, the Razer Card issued by Razer Fintech was started to address the banking requirements of the Gen-Z and millennial generation as part of the Razer Youth Bank.
It is expected that in 2021, the concept of financial inclusion is going to gain greater mileage and practical applicability. The model is important too to ensure that there is an all-around development of the community.
- Newer partnerships
2021 and the future will see a rise in collaborative efforts to ensure a healthy competitive landscape while emphasizing innovation. The Fintech sector is going to expand as new players enter the landscape through robust partnerships. Banks, insurance companies, and asset management companies are all looking at partnering with fintech companies so that digitization becomes easier and faster for them.
- Cryptocurrency acceptance
Another major trend expected to catch up this year is the global acceptance of cryptocurrency. For example, the European Bank has taken a step closer towards the designing of a digital Euro. Public opinion regarding the same is being planned, and very soon, we are all going to see how open Europe is to accepting crypto coins.
- After Fintech, watch out for Regtech and Wealthtech
Going a step forward, Fintech that stands for financial technology, will see the evolution of Regtech or Regulatory technology and Wealthtech or wealth management technology. It necessarily means that legislators or regulators, financial and technology companies will come together to facilitate innovations. Expect these three industry players to work as three pillars to bring about a progressive change in the sector collaboratively.
Conclusion
2020 was indeed extraordinary in many ways. The pandemic was a test for all global businesses to understand their readiness for such a large-scale disruptive phenomenon. It is good to note that the fintech industry has woken up and realized the importance of digitization and technology. The sector needs to be agile and futuristic, keeping the experience from the past year in mind while never losing focus on changing customer demands for inclusive experiences.
Author Name:- Harikrishna Kundariya
Biography:- Harikrishna Kundariya, a marketer, developer, IoT, ChatBot & Blockchain savvy, designer, co-founder, Director of eSparkBiz Technologies. His 8+ experience enables him to provide digital solutions to new start-ups based on IoT and ChatBot