Jan. 29, 2021
The year 2020 was not the greatest for many industries due to COVID-19. But interestingly, the likes of fintech reported rapid growth during the pandemic. In the absence of physical contacts, consumers relied on virtual financial services to access and disburse funds and fintech solutions came through.
The popularity of fintech has spiked in recent times with 96% of global consumers admitting to being aware of at least one fintech service.
Let us take a look at some fintech trends that are projected to influence financial services in 2021.
1. Autonomous finance
Autonomous finance is on the top of the list of outstanding fintech innovations. Juggling work with utility bill payments, insurance, cable subscription, etc., can be overwhelming. Autonomous finance takes the burden off consumers’ shoulders and automates the financial decision-making process with Artificial Intelligence (AI) and Machine Learning. As more people try to create more time for themselves, they will be delegating recurring tasks to fintech solutions.
2. Open banking
Traditional banks are most notable for safeguarding people’s money. With growing awareness of financial education, more people want to invest their money rather than keep it in the bank. Third-party financial institutions are giving traditional banks a run for their money in offering flexible high-income-generating investments and consumers are keying into it via open banking . Open banking gives third-party financial service providers access to consumer banking data via Application Programming Interfaces (APIs) for investment purposes consented by the consumers.
Although there are security concerns over the exposure of consumers' data in open banking, damages can be prevented with the collaborative efforts of the parties involved.
3. Digital-only banks
Long queues at the bank are a pain in the neck for most consumers. Despite the provision of online banking, there are still queues at the bank due to the limitations of the online services.
The total eradication of physical contacts for banking transactions seemed far-fetched until the pandemic hit. Accessing funds virtually became a survival need that conventional banking could not meet completely. A McKinsey study showed that digital payment is one of the biggest fintech products. New generation financial institutions rose to the occasion by leveraging fintech solutions to offer convenient digital-only banking services that required no physical contact. The growing competition among financial institutions in offering digital-only banking services is good news to consumers as they have an array of enticing offers to choose from.
4. Financial literacy
The consumer's financial literacy level influences their finances either positively or negatively. According to a Bankrate report , an average American household has $8,863 in bank or credit union savings. Younger people and singles have lesser savings. In the same vein, 55% of respondents in a recent study revealed that they lack sufficient funds for their needs. The situation would most likely be different if consumers were better informed about their finances.
Fintech solutions are effective tools for financial literacy. With the collection of big data, consumers with bad finances can learn from those that have their finances sorted. There are fintech tools to guide customers with basic financial education in making prudent financial decisions.
5. Voice technologies
Convenience is a watchword in fintech and creators in the sector are keen on giving consumers the best there is. Gen Zs are on the frontlines of technology trends. Products that they find appealing become instant successes and fintech is tapping into that trend to make its solutions more attractive with the introduction of voice technology. The youngsters who have a penchant for chatting are gravitating toward voice-based tools in their online interactions. AI-powered fintech voice assistants offer convenience and simplicity in handling finance-related tasks. Voice technology also advances secure payments with the use of biometric data for payment authorization.
Opportunities in fintech are endless as the innovation thrives on the ever-evolving technology. Consumers want to do more in their finances and fintech solutions are rising to the occasion. With a track record of offering useful financial information, payment security, speedy and transparent transactions among others, fintech trends are fast becoming the standard in financial markets.
Enjoy Entrepreneur Magazine on your terms. For just $10.99, get 1-year of the print edition delivered straight to your mailbox and 1-year instant access to the digital edition on your mobile device. Subscribe Now!