As remote operations become normalized and consumers continue to adapt to (and embrace) technologies that simplify financial transactions, there are certain FinTech trends that can be expected to continue in 2021 and beyond. Here’s a quick look at 9 of them:
- Enhanced digitization of operations – while many financial institutions were quick to digitize consumer and business-to-consumer operations, significant work still lies ahead in consolidating and automating mid- and back-office procedures.
- Robotic process automation (RPA) – RPA can help save money on human capital, reduce fraud and processing errors and lead to payment discounts. We can expect this to be a trending strategy in most financial institutions.
- Increased number of mobile payment options – a seeming plethora of mobile payment options are becoming widely available. Businesses need to be prepared to accept as many payment options as possible, and investors should carefully look into those that are most requested by consumers.
- Financial institution partnerships – FinTechs have traditionally been seen as disruptors that upend financial systems and offer innovative, technology-forward approaches and products. With FinTechs now more established and technology more sophisticated, financial institutions are seeking to establish partnerships with them instead of competing with them. Expect this to continue.
- Focus on cost savings – financial institutions need to extract every efficiency out of their existing technology systems and labor force to handle increasing digital consumer volumes and the pressures of low yields and low loan demand. This focus on cost savings will drive a new wave of business-to-business FinTech experiences.
- Rise in embedded finance – social networks like Facebook and aggregators like Uber will soon offer most of the services that people use financial institutions for today. It remains to be seen how this will impact traditional banking.
- Focus on cybersecurity – organizations and individuals need to have a heightened sense of awareness around the cyber threat landscape. There will likely be an increased focus on cyber hygiene and not becoming a victim of targeted phishing attacks.
- Use of real-time data in underwriting – the use of real-time financial data (e.g. daily cashflow, rent payments) to make lending decisions will help FinTechs provide consumers and small businesses access to the capital they need to rebuild after the pandemic.
- Increased reliance on behavioral science tech – the use of artificial intelligence (AI) and other smart technologies helps leverage behavioral science and better predict consumer goals and behaviors.