Last year was stressful in so many ways. Covid-19 changed the rules of social functioning and forced us to keep a distance from each other to stay safe and protect others. The only way that was safe enough for us to connect was digitally. In general, every crisis hides opportunities for growth, and in 2020, FinTechs recognised that the moment is ripe for making their services mainstream.
From my experience working in Dreamix, a bespoke software development company, experienced in the banking sector, I learned new technologies help businesses solve problems in a better way. Modern consumers expect a seamless user experience and low fees, so FinTechs create opportunities for this to happen. Let’s see the FinTech trends to watch out for in 2021.
- FinTechs Will have an Impact on Global Economy
The unprecedented modern history health crisis called Covid-19 shook the stability of the global economy. In February 2021 G20 Ministers of Finance and Bank executives gathered and addressed existing economic challenges, e.g. the lack of stable and coherent financial infrastructure.
G20 leaders agreed that digitisation and FinTech companies will play a crucial role for the global economic recovery. But instant payments, online loan applications and risk assessment were part of our lives in a pre-pandemic world. The difference now is that more people, who previously underestimated the value of FinTechs, now show interest in such products as they observe the accelerated rates of adoption.
- Cryptocurrencies Are More Relevant Than Ever
Generally, the capabilities of blockchain technology and cryptocurrencies, in particular, are bound to find new use cases in 2021. Leading FinTechs such as PayPal, Mastercard, Revolut etc. are expanding their crypto portfolios and creating more investment opportunities. Although many people still don’t know enough about the crypto world, opportunities increase for both B2B and B2C businesses.
But according to JPMorgan Bitcoin is merely an “economic side show” and the real power that perseveres throughout the pandemic is the innovation of FinTechs. As the surge for digital financial services continues to grow exponentially, such companies open up new credit and payment opportunities for the general public.
- Banks Show Strong Interest in FinTechs
Due to the Covid-19-provoked financial crisis, influential monetary authorities seek guidance from emerging technological trendsetters. The real question here is whether FinTechs and banks will stay competitors or become partners and create mutually beneficial products and services that also bring value to their customers.
Take for example the European Payments Initiative that is expected to become fully operational next year. Sixteen European banks combine forces to lay the foundations of a new flexible financial infrastructure to benefit clients, merchants and SMEs. By 2022 Europeans will be able to send and receive instant cashless P2P payments without having to open a bank account in a particular wallet.
- Artificial Intelligence (AI) and Machine Learning (ML)
AI and ML are already utilised by most FinTech companies but their significance is said to increase in 2021. Some popular use cases of AI and ML have successful applications in fraud detection, personal finance management, personalised advertising, precise credit scoring etc. With the ever-growing amounts of available data, the need for sophisticated data analytics powered by AI will surge.
Expectations towards AI and ML are that these technologies will become even smarter with customised app features, tailor-made offers or elaborate chatbots. The goals that remain relevant are process automation, accelerated financial service delivery and easily accessible financial support.
- ESG Integration Will Become a Must in 2021
ESG stands for Environmental, Social and Corporate Governance and tries to deliver principles for ethical and sustainable ways of investment. It is expected that institutions that invest in FinTechs will demand the strict standard following from them. On the other hand, FinTech companies can be under pressure to develop even more innovative software solutions that appeal to customers.
As the world can’t ignore the benefits and innovative potential of FinTechs anymore, the ESG criteria will be a must in 2021. Firstly, global commitments against climate change continue to rise, and investors will be looking for companies that make efforts towards sustainable product development. Secondly, the issuance of sustainable and resource-friendly debt and loans increases, and this has an impact on what investors are willing to put their money in. Thirdly, the social component of the ESG will be given well-deserved attention and products that support social movements and causes, e.g. Black Lives Matter.
Author Biography Aleksandrina Vasileva
Aleksandrina is a Content Creator at Dreamix, a custom software development company, and is keen оn innovative technological solutions with a positive impact on our world. Her teaching background, mixed with interests in psychology, drives her to share knowledge. She is an avid reader and an enthusiastic blogger, always looking for the next inspiration.
