Top Fintech Trends and Predictions 2021 According to Experts

May 7, 2021

If you haven't had your head around the thought of buying anything from food to your new gadget online, prepare yourself for more dramatic changes in the finance sector that are already in the works.

These fintech developments would have an effect on anything involving money, from payments to banking. Blockchain is poised to take center stage, bringing the capacities of crypto wallets to new heights. Nations would gladly embrace all of these incredible innovations if laws, defense, and national standards are in effect. Fintech is a worldwide disruptive force.

What is happening in Fintech?

There is a compelling explanation why the majority of traditional financial institutions, from digital-only banks to multinational payment solutions, are wary of fintech startups. People are sucking them in. Digital wallets are becoming increasingly common. With countries in a cyber race to establish national norms, a technology poised to threaten trillions of dollars in global financial markets will do that at any time.

Although, despite the fact that digital disruption is yet to completely take hold, conventional financial institutions are not without options. Indeed, many of them have already moved to either participate in or affiliate with these fintech startups. The findings have been mostly good, and we should expect more of the same in the future.

Fintech startups are fully transforming the face of global finance. No one is resistant to this development; hence, the best way is to confront these fintech developments head on.

Let us take them one at a time:

Rise of Buy Now, Pay Later (BNPL)

In the last year, BNPL has gained traction as an instalment payment system for online transactions. It has benefits over the conventional credit card model of deferred payment, which has led to an increase in the number of retailers accepting BNPL as a payment option.

With lockout steps still in place to prevent the dissemination of COVID-19 and the continued transition toward e - commerce, we should expect an improvement in the usage of BNPL. PayPal is one of the largest payment providers.

Read more about BNPL here

QR code payments

Having graduated early in Asia Pacific and Africa, QR Code Payments is expected to gain users in emerging markets, with the United States becoming one such region to gain traction quickly. QR codes has made it simpler for small retailers to welcome digital payments than ever before.

Much of this is due to the critical need for quick, contactless and cashless payments during the pandemic. PayPal has expanded QR code transfers to a number of countries and markets, with CVS as one of the largest partners in the United States.

Read more about QR Code Payments here

AI-powered UX for banking success

The pandemic fueled a major expansion of the transition to digital banking in 2020, resulting in a significant shift in the industry. As a result, 2021 will be the year when digital banking distinction becomes crucial, with consolidation increasing, implying that AI-powered UX will play an important role.

Because of the rise of digital finance, there is much more rivalry than ever before. AI will power analytics into expenditure and personalization of the customer interface, allowing utilities to be differentiated. Traditional banks and their modes of service have come under the strain as a result of digital banking. Customers today demand more from their bank, with differentiation on price difficult to achieve in a commoditized price.

Read: Why AI-Powered Contextual Banking CX Requires a Radical Paradigm Shift?

Digital only banking 

When a bank that only operates in the virtual universe provides global transfers, Digital Only Banking is looming. P2P payments, a contactless Mastercard with no processing costs, and the ability to purchase and sell Bitcoin, Ethereum, and other cryptocurrencies are all accessible.

The finance sector is quick to think and notice. Only digital banks have been having a good run for them. There is no need to visit every brick-and-mortar bank, no queues to try your stamina, and no excruciating documentation to deal with, because they are increasing in number and sales all over the world. They're also one of the main reasons why bank branch visits are expected to fall 36 percent from 2017 to 2022.

Read: Digital Banking As The New Normal In 2021: What To Expect From Banks

Digital onboarding

To meet the demands of remote working, digital onboarding has had to change quickly, pushing digital onboarding to mature. The rise of digital onboarding has been most evident in markets with good regulatory approval for digital methods.

With customers increasingly expecting digital-first connections, putting onboarding technologies in place now is critical for potential new enterprises. Smooth automated onboarding will distinguish companies who have it right and hold their customer traffic smooth. Businesses who are unable to have a seamless digital onboarding interface can slip behind and see consumers leave before full enrollment.

Read more about Digital Onboarding here

Blockchain and global finance makeover 

Blockchain, which is quick, genuinely global in scope, and has low processing costs, is on the verge of completely transforming the face of monetary operations worldwide. China and the United States lead the world in Blockchain coverage, ensuring its widespread acceptance. It is not lost to the multinational financial services industry. 88 of which are aiming to expand fintech relationships in order to integrate all of the technologies coming from any front.

Simple access to a bank account can be expensive or even impractical in certain parts of the world. This helps to understand the rapid growth and popularity of blockchain and cryptocurrencies, which allow users to send and receive digital money at little to no cost and with little to no regulatory oversight. 

Read: 4 Predictions for Blockchain in 2021 — From Cryptocurrencies to Art

Instant payments 

Instant payment is a way of transferring currency and processing transfers that allows for nearly instantaneous transfer of money between bank accounts rather than the more traditional one or three business days.

Owing to the increased need for quicker and more secure transfers, many countries have adopted instant payment systems, and many instant payment systems and platforms are currently under development worldwide.

To date, Instant Payments have had a considerable effect, presenting a major threat to traditional money transfer models. As instant payments networks gain momentum, established market models of money transactions can move and evolve. Instant Payments have had the most rapid growth in the recent times.

Read: A Look Ahead: Faster Payments in 2021

Artificial Intelligence

The significance of Artificial Intelligence, regardless of industry, cannot be overstated. In terms of financial institutions, we have seen widespread adoption of AI. Banks are now looking to integrate artificial intelligence into their activities. This is a global problem, not just an Indian one.

Banks' operating costs will be significantly reduced in the coming years as a result of AI. AI even plays a part in the form of virtual assistants. Addressing consumer inquiries, using fraud-prevention software to check the validity of KYC records, and other specialized functionalities are now simpler than ever. AI also paved the way for financial sector accuracy and personalization to improve.

Read: These five AI developments will shape 2021 and beyond

E-commerce

The amount of dependence on the e-commerce market that has occurred in the last year is ridiculous. In a summary, the pandemic has altered the idea of internet shopping in ways that no one could have predicted. Since we have depended far too much on e-commerce, it is entirely likely that the coming years will bring remarkable growth in e-commerce.

In terms of the pandemic, the condition has changed, at least to some degree. Considering this, the amount of people who perceive internet shopping to be a safer option is unsurprising. Buying online benefits banks and other financial institutions since more transactions take place online, creating revenue for the institutions. One thing is certain: in the coming years, more people will buy online and use the financial resources that are made accessible to them.

Read: Six e-commerce trends to watch out for in 2021

Crypto-assets are becoming mainstream

Crypto assets (cryptocurrency) are a form of digital currency (all electronic money). Cryptocurrencies are intangible e-money that is often supervised and sometimes not.

The advancement of digital ledger technology, in conjunction with stablecoins and growing competition in central bank digital currencies, will continue to open up enormous opportunities in the cross-border payments domain.

Read: 6 Cryptocurrencies That Have High-Potential To Explode In 2021

Where do we go from here?

In 2021, the FinTech domain will focus on implementing AI, digital voice technologies, digital only banking and AI-powered UX. Cryptocurrencies and blockchain will continue to dominate and evolve the sector. Instant Payments, QR code payments, mobile payments should stop being a luxury and become a regular thing every bank client can use. And don’t forget that in 2021, Buy Now, Pay Later will witness the growth like never before.

It's necessary for finance to shed the stigma of an industry that despises digitalization. You would either accept digitalization or risk losing customers.

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