The finance industry has experienced sweeping changes in the last few years, especially in 2020. PR Newswire notifies that COVID-19 significantly advanced the already rapid growth of fintech applications in 2020 compared to 2019.
The data shows that from January to June 2020 activity in investment apps has massively increased, displaying an 88% growth in average sessions per day. Moreover, investment apps took second place worldwide among the fastest-growing verticals monitored of 2020, even defeating hyper-casual and casual games.
The survey by Adjust and Apptopia also demonstrates that across all studied countries there was a 49% boost of the number of sessions in payment applications on average. Here are the countries that showed the most rapid growth:
- Japan with 75%
- Germany with 45%
- Turkey with 39%
- The U.S. with 33%
- And the UK with 29%.
Payment apps and banking sessions together had a 26% increase on average across the surveyed countries, with Japan, Germany, Turkey, and the U.S. again being at the top.
The pandemic pushed the finance services online and users started using mobile for transactions more and more, creating many opportunities for innovations. As consumers had to embrace digital for entertainment, communication, and work, businesses started feeling the urge to digitize and evolve.
Fintech software development companies have observed an uptick in the number of companies desiring to bring their services or products online and coming to agencies to hire fintech software developers. There’s really no better time than now to digitize and people are ready for it.
The banking sector has been turning more business-oriented, replacing cards with apps, and making transactions effortless and unnoticeable. However, these are only a small portion of the current tendencies. Let’s talk about the main fintech trends of 2021 and break down how they can help your business thrive!
Trend #1: Digital-only Banking
Digital banking isn’t new and is already very popular and widely used since before the COVID-19 pandemic. Digital-only banking and services, however, that completely get rid of waiting in long lines at physical locations, are rapidly gaining popularity. It’s now easier for consumers to take care of their finances at any place, any time, thanks to AI, biometric, and cybersecurity. And more innovations are coming.
The forecast is that between 2017 and 2022, there’s going to be a 36% decrease in the number of people visiting banks offline. There’s also going to be a significant decline in paper-based banking.
Digital-only banking also gives businesses opportunities to reach a much wider demographic than before. The World Bank report reveals that 1.7 billion people still don’t have access to the global banking system, showing the importance of giving access to basic banking services to these people.
Trend #2: Embedded Financial Services
Embedded finance is when a non-financial provider uses financial instruments and services like payment processing or lending. It’s done to make it easier for clients to access the services they need seamlessly. This trend is currently one of the most discussed topics in the fintech world.
With embedded finance, you can integrate loans, payments, investment, and insurance tools into practically any non-financial product or service. You are probably already familiar with embedded payments in apps like Uber. Another instance of embedded finance is when a customer can get a loan right in an online store instead of going to the bank.
Embedded finance works this way: a fintech software development company integrates an application programming interface (API) or software development kit (SDK) into your platform (mobile, web, or desktop application), and this makes various financial services (loans, insurance, etc.) available for users right there. This helps your platform to catch the moment when your users have an urgent need and instantly turns them into your customers.
The forecast is that in the coming years, using embedded financial services will boost the revenue of digital applications per user by 2-5 times, while helping traditional banks save resources on marketing.
Trend #3: Artificial Intelligence and Machine Learning
Machine learning and artificial intelligence are known to be used by banks globally to spot financial frauds and alleviate cybercrimes. However, there’s another crucial advantage to integrating AI into your operations.
ML and AI make use of big data to discover meaningful patterns in clients’ behavior that allow making smarter financial decisions and saving consumers’ time. These technologies can also effectively personalize products and services to customers’ needs. You can create a personalized experience for your customers by investing in a product matching system. This system will find similar products that your customers are in search of and compare them to your competitors on a large scale. Personalization is already widely used across many industries such as healthcare or retail, and now becoming a trend among banks.
Trend #4: Blockchain Technology
Blockchain is named one of the most promising technologies in recent years as it makes transactions safe. The data is protected because blockchain works on decentralized networks, hence, no third party is going to access or manipulate it in any way.
Blockchain integration services also offer an unchangeable transaction ledger with a transparent real-time audit trail which decreases errors and mitigates tampering. It also provides financial regulators with access to the ledger, ensuring transparency between the parties and guaranteeing that both sides will fulfill their financial obligations.
In addition, blockchain technology saves time on settlements carrying them out in seconds, which once were taking days or weeks to finalize.
Trend #5: Robotic Process Automation
Robotic process automation (RPA) uses robots to automate ordinary tasks for a variety of benefits. The fintech sector has started to take on this technology to streamline operations, boost productivity, and save on operational costs. RPA can improve employee satisfaction by getting rid of mundane tasks from their routines so that they concentrate on higher-value activities. For instance, receivables and payables before needed a lot of manual and repetitive labor by skilled workers.
Robotic process automation is a non-invasive technology and can be swiftly integrated to speed up digital transformation. It helps automate workflows involving legacy systems that
lack API, virtual desktop infrastructures, or database access.
Last Thoughts
The COVID-19 pandemic has influenced our thinking about traditional business models a ton. Numerous industries, including the financial sector, have transformed and were taught an important lesson that flexibility and agility are what make businesses survive.
Financial companies need to digitize and invest in innovative fintech solutions that enable personalized on-demand banking services for their customers. It’s crucial for those who want to see growth and not fall into the abyss of competition.
