The COVID-19 pandemic affected every aspect of our lives in 2020. The way we live, the way we work, and the way we interact with the world were fundamentally altered during this year. One of the biggest impacts of the pandemic was the stress and strain it put on the global economy and financial markets.
As we enter 2021 and with hope that the pandemic is in its final stages, we can start to turn our attention from what to do about the pandemic to what we can do to get back on track when the pandemic is over. In the financial sector, as with many other areas, most of the answers will come from technology.
If 2020 was the year that forced us to adopt new technology quicker than we ever have in the past, 2021 will be the year that we start reaping the benefits of having all these new technologies in place. Nowhere will this be more apparent than in the world of financial technology (fintech).
Security is always a top priority in the financial world. In 2020 though, security concerns in the fintech world have grown to unprecedented levels. The global pandemic forced more people than ever to work remotely and, with lockdowns and stay-at-home orders dominating the year, more people spent more money than ever online. This led to an enormous spike in cyberattacks – and specifically COVID-19-related cyberattacks – in 2020.
To deal with the specifically COVID-related uptick in cybercrime as well as the general upward trend of these kinds of attacks, fintech must continue to provide more sophisticated, tech-based solutions to financial security issues. In 2021, this will be a big trend throughout the fintech sector.
As this Liventus guide to fintech solutions notes, advanced fintech security is essential as financial services become increasingly digital. Making people feel safe while using digital financial solutions is the foundation of fintech’s growth. In 2021, fintech will provide more biometric security solutions such as facial recognition to secure the most important financial assets.
In 2021, implementing Artificial intelligence (AI) and machine learning (ML) in new ways across various industries are incredibly hot technology trends right now. The fintech sector is one of the industries benefiting from these changes. The financial applications of AI and ML will only grow in 2021 because of all they can do for the industry.
Fintech is using AI and ML technology in many ways in 2021. In response to less face-to-face (or even voice-to-voice) interaction due to the pandemic, AI chatbots are giving financial customers a human-like experience while keeping financial employees safely at home.
AI is also being used to analyze consumer behavior in ways that offer several benefits. AI can recommend other financial products based on a consumer’s habits or detect unusual patterns in the name of fraud prevention.
This is only scratching the surface of what AI and ML can do for fintech, though. The coming year should see even more implantation of this incredible technology.
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In the past, banks were brick and mortar buildings with big vaults that physically held your money. Today, while most banks still have buildings, the need for them is shrinking. The pandemic showed many people what type of physical establishments they really need and which ones they don’t. For many people, physical banks are not essential.
Digital banking and banking apps have been on the rise for a few years now. With the pandemic shutting so many doors of traditional brick and mortar businesses, this fintech became more important in 2020. In July 2020, Forbes reported that more than 14 million Americans identified a digital-only bank – like Chime, Dave, or Ally – as their primary bank.
The pandemic has changed many habits for good. Banking in person may be one of them. In addition to mobile banking solutions, though, fintech also needs to combine these with upgraded security (see above) before digital-only banks reach their tipping point and are fully embraced. 2021 may be the year that happens.
Software as a Service (SaaS) has changed the way small and mid-size businesses are able to access powerful software for the benefit of their business.
SaaS takes large, powerful software platforms and gives companies access to it through cloud computing. These companies pay a subscription fee and can use the software without the costs associated with developing or housing this type of platform.
In 2021, we will see a rise in Fintech as a Service (FaaS) platforms. The entire financial world is embracing fintech as the way of the future but often, only the biggest companies in the financial sector can utilize fintech to its full potential.
As more FaaS platforms are developed, more small and mid-size banks, credit unions, investment houses, and other financial institutions will be able to reap the rewards fintech has to offer.
Fintech has the power to do tremendous good in the financial industry but, unfortunately, the potential for it to be used for ill-purposes is also great. As the influence of fintech grows, financial regulators are struggling to keep up. This is why we will see more regulatory technology (Regtech) in 2021.
In the coming year, one more trend in fintech is that the providers of these technologies will work closely with governments and other regulatory bodies to provide these agencies with tech-based solutions to help keep people’s money safe in the financial industry.
These collaborations, when done right, will give people more confidence in all this new technology and ultimately help grow fintech even further.
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The year 2021 will be the year the world gets back on track after the pandemic. Technology will be a big driver in this recovery and will in part shape new realities going forward.
In the world of finance, fintech will help define 2021. Fintech trends of better security, AI and ML, digital only-banking, FaaS, and Regtech all become growing trends in 2021 and define this incredibly important year.
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