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.
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