As a very vibrant sector, FinTech is an ever-changing industry. With established veterans and hundreds of new startups every year, the world of financial technology never sleeps. Companies are hungry for market share, paying customers and new revenue streams. That’s why new trends emerge every year. 2021 is no different – thanks to UK-centric Europe, the rise of African neobanks and the impact of COVID-19.
Mobile App Trends in FinTech
FinTech has always been customer-centric and today is no different. Companies fight over the best value proposition, features and additional partnerships, often reaching outside of their comfort zone. Going hand in hand with traditional banks and offering something extra is a sign of that. Cooperating with a seasoned financial app development company is another. Below is the list of the most interesting mobile app development trends in FinTech A.D 2021. At least a few of them have a real chance of making a vast impact across the industry.
Digital-only Banking Takes Over
From the perspective of an average customer, traditional banking is tiresome. People have to go downtown, enter the building, wait in line, fill out the paperwork, talk with clerks, and often face disapproval for a credit or a loan. With FinTech everything is simpler, faster, more affordable and available 24/7 on the go.
We are talking about global and contactless payments, currency conversions, accessibility to loans (including peer-to-peer options), available investment options (through cryptocurrencies, for example) and much more. With the traditional business model, high-street banks can’t compete with innovation and vibrant communities built around certain applications.
Customer visits to retail bank branches plunge since more and more individuals feel comfortable and safe to withdraw, borrow, pay and invest their money via smartphones, anywhere they are.
With highly demanded features like putting a temporary hold on a credit card or viewing the status of a transaction dispute, users feel comfortable using portable devices. In more challenging territories like Africa, sending or receiving the money to or from other countries or enrolling in mobile banking without having an online banking account, sounds very compelling. Comparing spending with family and friends is also a welcoming feature – consumers want to know what their living costs are and where there’s a potential to save money.
The Surge of Biometric Security
Another great demand from users comes from the feeling that a powerful device such as a smartphone could be turned into a powerful weapon against them. Biometric security measures such as fingerprint authorization or face-scanning for logging and payments make people uncomfortable sometimes but also let them sleep at night a little better.
When it comes to FinTech, security is always a concern. Years of strict regulations made the industry trustworthy in the eyes of millions of people worldwide but there’s still room for improvement. People want to know that their face images and fingerprints are as comfortable to use as they are safely stored.
Self-identification is especially popular among millennials and FinTech companies race to adopt biometric for remote know your customer (KYC) processes. There are, for example, the U.K.-based platforms for biometric customer onboarding and transaction monitoring. They have been pointed out as providing a smooth digital-first customer experience in compliance with financial regulations.
The issue of securing user’s data goes way beyond traditional storage on a server. Today, security is done through means like cloud technologies, machine learning and two-factor authentication (2FA). In the light of new regulatory changes, like the June 2021 adoption of the Investment Firms Regulation (IFR) and the Investment Firms Directive (IFD), technology has to be not only useful but also transparent and rock-solid.
Big Data and Artificial Intelligence (A.I.)
And since we are talking about security and data… The volume of information produced by today’s society is so overwhelming that no human mind can process it. FinTech is not an exception – the number of daily transactions goes in millions and with the estimated market size reaching $310 billion by 2022, means to gather, process and analyse data is worth serious money.
Data analysis is used to improve customer service and offer new functionalities and partnerships, optimize internal processes, reduce employee workload and more. The Holy Grail though is the FinTechs’ ability to detect patterns in user behaviour that could make a company more efficient and profitable. It’s also used for the purpose of minimizing losses due to bad judgment calls. If companies would offer a substantial number of customers a loan that can’t be repaid, we could face 2008 all over again. This time because of FinTech.
Security and fraud detection, increased personalization, improved risk management, brand new functionalities like enhanced home budget management – these are typical benefits of using Big Data in the FinTech industry. A trend that is already strong and will continue to impact the sector in the near future.
FinTech Partnerships for Enhanced Customer Experience
That is because hyper-personalization is everything. People love their apps. They tell them what they can do, how much money they have, what to invest in, what their spending limits and saving goals are. Thanks to external help, they can tell and offer them a lot more.
FinTech companies partner up with 3rd party applications, even classic banking entities, to offer unique options and for scaling business. Things like new acquisition channels, access to technology, more data and the chance of improving customer experience or serving new customer segments are a vital part of the topic.
Various companies, not to mention high street banks, have truckloads of money, infrastructure and market experience. Sometimes even the most popular FinTechs could use some help when it comes to these three business areas.
Blockchain Adoption
Blockchain is no longer a buzzword but a trend that impacts various markets, globally. The global FinTech market value is expected to reach $309.98 billion through 2022. And for a good reason – technology is changing the landscape rapidly and without taking prisoners.
The adoption of blockchain allows for instant cross-border money transfers, real-time settlements on stock exchange markets, automation of trading (with the use of smart contracts), regulated crowdfunding (with token purchases), data verification and even new form of accountancy services.
A large range of innovative services is possible or enhanced because blockchain becomes a synonym of advanced automation. With this technology, companies can even faster validate claims, scan transactions and process funds. The trend will only accelerate, partially thanks to the COVID-19 pandemic.
COVID-19 Changed the Landscape
The COVID-19 pandemic accelerated the digital transformation drive in many areas, trends in FinTech included. One could argue that FinTech is cutting edge and “digital transformation” does not apply here. Nothing could be further from the truth. The FinTech industry only accelerated the transition to distributed ledger technology (DLT).
Key features like tokenization or smart contracts, previously put on hold, are now introduced at a rapid pace. A growing number of decentralized financial (DEFI) services alternatives forced many FinTech owners and classic banks as well, to find a suitable partner for their digital transformation.
Options like pay-by-bank, which allows customers to pay merchants directly through their banking apps, change the dynamic FinTech landscape even more. Blockchain inspires and demands innovation. Especially when an increased number of millennial customers decided to join the digital revolution. Closed at home, they not only invested in electronics and other physical goods but also discovered that nearly all their needs can be satisfied with a range of smartphone applications.
The first stage of the COVID-19’s impact lasted until the late autumn of 2020. Investors saw revenue loss but then the market was brought back to life. Lost value of bonds and trades and increased demand for credits were suddenly replaced by new options. Investors saw that blockchain can act as a remedy for numerous purposes.
For example; the average B2B payment cycle takes 34 days to complete. With blockchain, it can be limited to seconds, maybe minutes.
Trends in FinTech Summary
The secret is software, both front-end and back-end. Mobile app development services that power it all, have to be transparent and guarantee high quality. Without it, any trend spotted in the wild will be profitable for the competition, not for you.
This was a guest article written by: Jarosław Ściślak
A content specialist at Code & Pepper. Branding, marketing, business scaling, content & company culture specialist. Created shared value (CSV) evangelist. More on: scislak.com
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