Over the past 12 months, the world has seen a huge upheaval in outdated systems and processes, and made way for a new tech-driven future of innovation, accessibility and interactivity.
Many different industries have been shaken up by the effects of the global pandemic, and one of the major ones is fintech.
With people all over the world unable to access financial services in their regular bank or post office branches thanks to lockdown restrictions, the world of fintech was forced to up its game in response to lockdown restrictions and solve the very real problems that people were facing. No longer were fintech solutions simply the trendy way to manage your money. In 2020, fintech suddenly became the centre of the financial universe.
Many commentators have argued that the rise of fintech was inevitable, but the rapid digitalization of the world in the wake of the coronavirus pandemic simply sped things up. Whatever the factors responsible, fintech is now a bigger part of our everyday lives than ever before, and it is highly unlikely that it will ever loosen its grip.
But what is next for fintech in the new normal we find ourselves living in during the year 2021?
The major driving force that drives development in the ever-changing financial industry is the interaction that users have with financial products. It is their pains, needs, and demands that are the seeds for successful and disruptive fintech products and fintech continues to evolve every day.
Below you'll find six of the main ways that fintech will evolve over the coming 12 months, and if you're involved in the fintech industry, you'll need to make sure you're on top of them.
Solutions will need to prioritize financial education
In order for people to fully benefit from the wide array of financial products available to them, they need to have a solid education about how the world of money works, as well as being able to navigate through the technology seamlessly. By having substantial knowledge of how financial systems work and which products and solutions are available, consumers can have a better understanding of how best to manage their money, as well as spotting patterns, opportunities and red flags.
On top of this is the fact that once customers become aware of the possibilities, they must understand how to gain the maximum benefit from them. In order to achieve this, we're seeing more and more fintech solutions that support financial education for users. These are being designed to help customers who are poor with their money management by offering guidance and visibility through technological simplicity.
With fintech being catapulted into the spotlight in 2020, many more people have decided to take control of their own financial future with the help of the new wave of financial services. In 2021, fintech companies will need to help these people in doing this by educating them in their own financial management.
At the end of the day, people who are better at managing their money are more attractive to fintech service providers because they will make the most of their services and see tangible monetary benefits - whether this is in saving, spending or investing. Taking the time to develop their users' financial literacy will be a top priority in 2021, so that fintech companies can earn loyal customers for the long term.
Physical shops and banks becoming digital-only
Probably the most accelerated and visible change in the fintech industry in 2020 was the hypergrowth of e-commerce, with digital shopping becoming more necessary than ever with widespread lockdown restrictions around the world. The same can be said of financial services such as banks, insurance and lenders.
With people confined to their homes, businesses needed to adapt quickly to cater for a more digitally focused clientele buying goods and services from home rather than in physical stores or branches.
Although mobile banking apps are not new to the market, with most well-known, established banks around the world having them, the global coronavirus pandemic has accelerated the switch to digital, and banks have had to innovate accordingly. And although the world is slowly getting back to normal, it is unlikely that our consumer habits will revert back, given the ease with which we can now do our shopping or banking online, from the comfort of home.
In the fintech space, we can expect further advancements in e-commerce and digital banking during the coming year, as digital payment providers look to get ahead of their competition and satisfy the growing need for fast, secure and seamless customer experiences.
2020 was a fast-paced race for fintech companies to help businesses and consumers get online and transacting. 2021 will be slightly calmer, but customers will be demanding more quality throughout shopping and banking processes, and so providers in the fintech need to meet this demand with fresh innovation.
Security systems that use biometrics
Fintech has brought the world of finance to the tips of our fingers - quite literally, as now consumers can do nearly everything they want with their money through their smartphone.
Easy to use and responsive smartphone apps are the beating heartbeat of the fintech world, given the way that they are so intertwined with our everyday lives. One of the aspects of smartphones that makes them perfect for handling sensitive financial data is the use of biometrics for security.
Accessing a fintech platform using biometrics is preferable to passwords for many people because it's much quicker, and saves having to remember a password containing upper and lower case letters, numbers and special characters!
If you had told people twenty years ago that in 2021 we'd be using face identification and fingerprints to access our financial data on hugely powerful handheld devices, they'd think we were living in a totally futuristic world. The reality is that smartphones make fintech a much more secure field, as many apps require biometric identification for the user to access the services and sensitive information held within.
Fast forward another two years, and we may find that even passwords have become a rare thing to use in order to access our financial accounts, given the rapid advancements in biometrics and the wide scale adoption of them by fintech companies.
In 2021, fintech businesses that don't use biometric security will stand out because all of their competitors will already be benefiting from this technology, and they will be left behind.