The year 2020 has brought many breakthroughs. The massive shift towards remote work has proven things can be done, even if people don’t work face-to-face. The prolonged lockdown has probably changed customer spending habits forever and has impacted many industries, not only e-commerce. Meanwhile, the FinTech stage has grown exponentially, bringing comfort and convenience to everyone, even the unbanked. What will the industry look like next year? Here is our list of the most interesting FinTech trends in 2021.
FinTech industry trends in 2021 will focus on people
Customer Experience in FinTech is a driving factor for user acquisition. By responding to people’s needs you can grow the business more dynamically, without extra advertising costs or fighting the competition. You can focus solely on what the customer wants and needs and succeed through features delivery.
But first, it’s a good idea to clearly state the perks. The way to do that is a smooth user experience (UX) and a slick user interface (UI). Companies like Nimbla design their products around transparency and ease-of-use. It’s an InsurTech app, so a feeling of security and information privacy is crucial. By using a toned-down colour palette, the team behind the app has shifted the focus from the product itself to the value it brings to the users.
And there’s Emma—a personal finance management app. With a clever use of white space and emojis, Emma makes the app’s design more human and encouraging. It gives people easier access to their money and lets them enjoy finance control. Money doesn’t have to be a serious topic with even more serious consequences. Instead, managing cash flow can be centered around all the things people can do with money. It can also involve building a community and boosting brand awareness.
This brings us to the most important conclusion: the FinTech industry in 2021 will shorten the distance between people and technology. Even more than before. Yesterday companies introduced genderless graphics to help people see themselves as potential users and build trust in technology. Today, it’s all about connectivity, engagement, and fun.
Big business opportunity: inclusion
Again, it starts with people. One of the biggest FinTech industry trends for 2021 and beyond is serving the unbanked. There’s money to be made and a large group of people to be served. The issue is well recognized by global organizations like the World Economic Forum, pushing towards equal accessibility to money management. The rise of the African neobanks and the Asian social lending culture create business models directly addressing local pain points.
Let’s talk about money
The term “conversational banking” is taking the world of FinTech by storm. Chatbots and virtual assistants help brands with consumer education. People can ask a question by email, using a chatbot, or by posting an issue ticket. This is a direct result of the previous phase: shortening the distance between technology and its users. Now, consumers want to use digital products and be certain their money is safe.
The trend is on the rise. Customers of financial institutions have come to rely on the 24/7 service that conversational interfaces provide. Instant response and quick complaint resolution improve the experience of personal banking. Themes like natural language processing and application programming interfaces (API) development define the modern approach to customer acquisition.
Traditional banking reenters the stage
The cooperation between incumbent banks and FinTech companies is intensifying. Traditional financial institutions need agility and technology, while tech-driven financial services could sometimes use additional money transfers. The two worlds collide and this FinTech outlook for 2021 is one of the most significant ones.
The technology is now maturing and becoming more sophisticated than ever. Banks are seeking to establish partnerships, licensing technology and leveraging it. The goal is not only to benefit but also to expand the customer base.
The floor is dominated by big players. In 2018, VISA announced fast-track access and a $100 million investment fund for European FinTechs. The same year, the company launched a FinTech partnership program to help eliminate paper checks. In 2019, Goldman Sachs invested in Elinvar. This German startup (founded by Deutsche Bank) allows traditional lenders to offer their services online. That’s an example of digital transformation and quick market adaptation.
It’s clearly a buildup. FinTech companies have a market share of around 1%, but they are rapidly growing and even a small company can now trade assets worth billions of euros or dollars. In that sense, new financial technologies are not competing with banks. At least, not in a traditional sense. They are, however, pointing towards a serious change of wind. People want to make payments, manage finances and connect with other people: quickly, easily, and effortlessly.
Smart contracts for smart money
That’s where smart contracts come in. Simple, intuitive and easy to edit—they are an agile response to a complicated problem. I want to prepare a legally binding contract but I don’t have a law degree. What do I do? Normally, I’d have to hire a lawyer and wait for the other party to sign in on a transaction. However, with smart contracts, both parties use cryptographic keys acting as digital signatures. All available on-the-go via a personal know-it-all device: smartphone, tablet or laptop.
Smart contracts bring advantages for the entire FinTech sector: from payments, through InsurTech, to social lending and everything between. It’s a win-win for all, especially the customers. They don’t necessarily appreciate immutable code or stored procedures, but they definitely notice convenience and ease-of-use.
Smart contracts are sometimes called “the way to reduce the cost of trust”. It’s a fancy way of saying: “let’s make it effortless for everybody”. Imagine not waiting weeks or even months to collect money from a claim. To have a contract delivered straight to your lap—clear and easy to understand in seconds. The role of smart contracts is growing and it’s one of the biggest FinTech industry trends in 2021.
FinTech in 2021? Look out for the outlook!
Financial technology can mean different things for different people. It can be valued for convenience, quick access to banking and a highly personalized experience. The list can go on and on but it all boils down to one thing—trust.
FinTech industry trends for 2021 show that customers’ needs are above everything. Sure, there are things like the growing role of cloud computing or InsurTech software development. We can also observe a mass adoption of artificial intelligence (AI) and a data-driven approach. But the main thing is that people need to trust the financial services providers. Technology brings breakthroughs but the real message is customer care.