While 2020 was a year of unprecedented disruption, 2021 is set to be a year of remarkable adaptation and transformation. As opportunities open up in the fintech industry, some trends are continuing into 2021 and may drive the financial services industry forward.
In 2020 online brokerages gained momentum with UPI payments skyrocketing and many people switching to online banking to stay socially distanced and safe. With more people migrating towards FinTech digital solutions for their finances, 2021 will see great opportunities open up in the FinTech industry.
The financial industry will have to focus on delivering a high-quality customer experience to be at par with the competition. With customers interacting more and more across different channels, the fintech industry has to develop powerful solutions.
Manual processes can be eliminated and all processes digitized and automated so that customers do not have to repeatedly fill up lengthy forms or go through the process of scanning, downloading, printing, signing, and scanning documents. Fintech applications will have document viewing, file conversion, and data capture capabilities to provide a unified digital solution to clients.
All recent studies indicate that about 40% of employees are still working remotely on a semi-permanent basis. Which requires organizations to have digital tools in place to provide secure access to files and facilitate collaboration. While converting physical documents into various digital formats, there must be high levels of accuracy. And while making them available to remote users, there must be no compromise on data integrity or confusion over version history. These features when integrated into fintech applications can help to keep all documents and files safe within a secure infrastructure, while making them available through easy-to-use web-based API tools.
Financial organizations collect huge amounts of data, some of which are unstructured. To be useful for identifying important trends and potential risks that help to make better decisions, the data must be processed using powerful analytics tools. Organizations gather a huge amount of structured data as well, usually from loan application forms, tax documents, and bank statements.
An important goal for 2021 is managing all information efficiently as good data insights are essential for identifying opportunities and optimizing products and services. Hence, fintech developers will be building applications to extract information quickly and accurately and help to speed up data processing.
The pandemic has removed many of the obstacles to digital transformation and banks and other traditional financial institutions are partnering with fintech start-ups to reach new customers and engage with existing clients over new channels. But as banks engage with innovative startups, they will need to find ways to integrate operations and data quickly to remain competitive and roll out new services successfully. So, whether it is incorporating this functionality into new applications or building features into existing legacy systems, fintech developers will play a key role in helping financial organizations benefit quickly.
Robotic process automation is used to automate backend office processes like customer onboarding, security checks, credit card and mortgage processing, among other processes. RPA will be increasingly used by the financial services industry to finish tasks more efficiently, cut costs, improve organizational efficiencies while allowing the staff to focus on major areas like customer service.
Blockchain technology has managed to transform the fintech industry completely by allowing transactions to be done safely and securely. Business Insider Intelligence reports that about 48% of banking representatives think that Blockchain technology will have the biggest impact on banking in 2021 and beyond.
One important aspect of Blockchain is, it is a new philosophy of decentralized finance that focuses on minimizing centralized procedure. It ensures that stored information is secured end to end with minimum risk and the data remains protected.
Artificial intelligence (AI) is perhaps the most significant single technology class of all. Banks globally are now looking to incorporate AI in their operations, as according to the Autonomous research, AI will reduce 22% of the bank’s operational expenses by the year 2030. That means banks can save up to 1 trillion dollars by employing AI.
In 2021, fintech apps may continue to utilize AI with more sophisticated chatbots to address customer queries, fraud prevalent tools to verify the authenticity of KYC documents, and other advanced functionalities to improve the accuracy and personalization of financial services.
AI can also be used to manage rising cybercrimes by identifying financial frauds and threats.
World Bank reports that almost 1.7 billion people globally, mostly from developing nations, are unbanked as they have no access to banking facilities. Interestingly these regions have a high usage of mobile phones making them perfect destinations for FinTech apps and branchless banking. Different FinTech solutions have been working on improving financial inclusion in these regions.
2021 is going to see this trend rise as innovation in FinTech apps will offer banking facilities to the unbanked, thus improving financial inclusion making financial services easier, faster, and more convenient for the unbanked.
Digital banking made it convenient for people to access a wide range of personal financial information and execute important tasks without physically visiting the banks. A huge percentage of the population turned to digital banking for the first time and discovered the convenience it offered over paper-based banking. This has been boosted by the advancements made in artificial intelligence (AI), biometrics, open banking, and cybersecurity. Customers are increasingly getting comfortable with online banking which is set for an even greater role in 2021.
COVID-19 changed the concept of online shopping forever. Most countries are set to experience phenomenal growth in e-commerce over the coming years as online retail becomes the new normal. Online purchases increased significantly all over the world. The limitations set by the pandemic got 40% of online shoppers to utilize e-commerce solutions while 45% of additional users turned to online shopping compared to numbers before the pandemic.