Over the last decade, fintech companies have transformed the economic environment by using technology, creative cultures, and access to data and sophisticated analytics. While the performance of individual fintech companies varies greatly, the solutions have affected transactions, infrastructures, marketing, availability of services, and sustainability aspects.
As the COVID-19 epidemic wreaked havoc on many sectors, including banking, in 2020, more individuals than ever before resorted to apps and non-traditional financial management methods. For example, in the United States, 59 percent of Americans now use more financial applications than they did before the epidemic. And many companies that are keen on leveraging this development have invested more in their tech arsenals. These include new digital technologies, services, and tools such as efficient loan servicing systems.
The Need for Innovation in the Industry
As the need for innovation grows and consumers become more familiar with fintech applications, the sector will rapidly evolve in 2021. We can anticipate straightforward new solutions from innovative companies poised to change how people manage their finances. The marketplace’s tens of thousands of fintech companies serve as an excellent springboard for researching and debating possible future development routes. Legacy banks and credit unions must prioritize where there is the most possibility for success in the future by examining key industry developments and either developing new competitive alternatives or protecting existing territory.
A company can develop solutions domestically in certain instances, while others can collaborate with fintech companies or solution providers to fulfill client requirements. Whatever route is selected, the speed with which it is implemented is critical.
What fintech developments will influence the banking industry in 2021 with all of these changes? Let us investigate.
Banking Goes Exclusively Digital
When banks virtually offer worldwide transactions, peer-to-peer remittances, contactless MasterCard with no operational costs, and the possibility of trading and buying bitcoin, ethereum, and a variety of other cryptocurrencies, major financial institutions can benefit quickly.
Consumers can save time by not waiting in lengthy lines at banks or filling out paperwork when using online banking.
Actual trips to banks have decreased considerably due to the prevalence of digital-only banking. Because of the many advantages, many institutions have embraced the digital mode, allowing clients to bank from the comfort of their own homes. Furthermore, digital banking offers additional benefits, such as fast bill payments, manageable costs, accurate analytics, change passwords from home, and speedy balance checks.
Advanced Security Measures
People’s use of smartphones has increased due to widespread internet use, fueling the appeal of online payments services such as mobile banking.
Although mobile banking is a handy habit, it has also unlocked the way to an increase in fraud and cybercrime. As a result, digital banking has given rise to a slew of security concerns. As a result, banks should implement appropriate security measures, and installing biometric systems is among the most excellent methods to protect consumers from security risks.
Customers may be confident that their details are secure with biometric security solutions. Furthermore, since biometric technologies such as face recognition and fingerprints identification are already included in contemporary smartphones, banks can rapidly deploy biometric security systems.
However, there is more to come. Contactless biometric technologies will be available in the future, displacing the use of touch-based systems.
Blockchain
The easiest way to think of Blockchain is a database—a data storage system—that is both encrypted and decentralized. With multiple copies distributed over many places, all maintained up to date simultaneously, modifications to the data can only be made when there is agreement that it is right to do so.
This comparatively recent (created in 2008 by the Bitcoin protocol) method of storing and protecting data can be utilized wherever there is a requirement for a typical central database and used by various groups or individuals. One way of looking at it is that data’s integrity is guaranteed by mathematics (cryptography) instead of having to depend on the integrity of whoever happens to have the data at any particular moment.
The banking sector has seen significant changes as a result of Blockchain. However, the fact of the matter remains that it was built to deal with cryptocurrency. Each payment is safe and secure because of the technology. Blockchain improves security levels by democratizing the transaction verification system.
Because of the high level of security, several institutions have begun to adopt Blockchain, guaranteeing end-to-end security and reducing risks. Banks can use Blockchain for cross-border transactions as well.
Fintech has brought about a tremendous transformation in the financial industry. You can enjoy many advantages by becoming a part of the fintech movement, gaining traction as new technologies emerge. So if you haven’t yet explored the fintech sector, don’t put it off any longer.
