Technological advancements, as we all know, are ever-changing and constantly evolving. The FinTech sector follows suit. 2020 has been a consequential year for everyone around the globe. With people being confined to their homes, they solely relied on technology to meet all their needs. The demand for FinTech solutions continues to increase and the industry is already booming more than ever in 2021.
Digital transformation caught a whole new level of attention in 2020 and by the end of the year, businesses, giant corporates, banks and the public had become100% receptive to emerging technologies. With the rise in the adoption of technologies in the fintech sector, 2021 will not just be about survival but also about sustainability and convenience.
The technological trends that will impact the FinTech sector are innovative and driven to meet the needs of the consumers.
Embedded Banking and Finance
In simple terms, embedded banking is connecting an entity that has finance & banking at its core to another entity that has a non-financial background.For instance, how Apple & Goldman Sachs joined hands to roll out the Apple Card, introducing finance into a tech-driven ecosystem. Banking as a service is enabling this quantum leap that’s changing the way companies function and interact with consumers.
It helps companies recognize varied innovative services that they can provide to their customers and that can also give them a competitive edge in the market. With the power of API integration, embedded banking can help non-financial companies become a part of the fintech ecosystem. Many fintech companies and other startups are waking up to the benefits of embedded banking and the fundamental role of APIs. The API-led connectivity approach has placed Banking API platforms like Decentro perfectly to partner with banks as a Banking-as-a-service (BaaS) Provider to enable companies to launch the desired banking & financial solutions in just a matter of weeks.
A hotly discussed topic in the fintech industry, neobank is making waves in terms of how people perceive banking. Neobank is a new-age bank providing financial services to customers but it operates online and has no physical existence anywhere. These services could vary anywhere from payments, money transfers to lending. A neobank has no bank license of its own to operate and relies on already accredited banking partners for licensed services. Neobanks work under considerable constraints in the Indian ecosystem. Globally, Singapore & UAE have started to roll out digital licenses for neobanks to function autonomously. Neobanks require traditional banks by their side to handle customers’ money, and for the banks, it becomes easier to acquire new customers.
2020 clearly changed online shopping inevitably. The market is transitioning to e-commerce which is clearly indicated through consumer insights during the lockdown and while recovering from it. The tremendous hike in online shopping has provided a new platform to businesses and marketers for harnessing success. Many countries are likely to experience exponential growth in e-commerce in the coming years. What’s more, 40 percent of online shoppers utilised e-commerce solutions precisely because of the limitations imposed by the pandemic, while 45 percent used online shopping even more frequently than they did prior to 2020. In India, we are now seeing a lot of interesting and new models catch up like group commerce, conversational commerce and many more.
Savings and Investment Tech
With the current ongoing scenario, there is an uptake of interest in understanding new channels of investment and ensuring safe and secured savings instruments are part of any investor’s portfolio. People are prioritizing their needs over wants. The focus is to build a contingency plan that provides them a monthly income for upto a year. There is also a sharp rise of interest in investing in a wholesome insurance policy that covers all medical and life-endangering scenarios.
There is a change in the rent everything mindset of the millennials and preference of home ownership is slowly increasing the investment of younger generation in real estate to add to their security and savings in India.
Cryptocurrency and Blockchain
A global frenzy of digital currency was created in 2020 after almost two years of minimal news coverage. Millennials especially showed keen interest in knowing more digital currencies and the idea of investing in them. Institutional investors are holding bitcoins and other digital currencies as long-term investments. Globally, cryptocurrency is constantly being validated and its legitimacy in terms of being an asset is only expected to grow in 2021.
These emerging FinTech trends stemmed in response to customers’ needs worldwide. Advancements in technology are inevitable but 2020 caused a paradigm shift in consumer behaviour and their reliance on FinTech solutions increased manifold. These trends are also subject to change but most likely for the good to maintain financial inclusion and provide a seamless customer experience.
Views expressed in the article are the personal opinion of Rohit Taneja, Founder & CEO of Decentro- API Banking Platform.