Like it or loathe it, the mighty fintech wagon continues to blaze a trail through financial services. You may like it because it’s disruptive, challenging the status quo as it rolls enthusiastically through the dusty plains of established financial services. You may loathe it because it’s disruptive and challenges the status quo (and you’re a member of the status quo). Whatever angle you take, 2021 looks like it’s going to be more of the same.
The global fintech market was worth $127.66 billion in 2018 and is expected to grow despite 2020 being a bit of a bug in the ointment (Covid-19 and Brexit still have their parts to play). Startups are popping up all over the place, with some enjoying the fruits of their labour, while others are snapped up by eager financial stalwarts in an attempt to plug gaps and convince themselves they are at the cutting edge (and sometimes they are).
And so to 2021. What’s in store?
Online banking and trust
For one thing, financial services was already changing long before Covid-19 showed up. But the pandemic has injected a surge of energy into the fintech effect. Online banking in the US, often seen as a region resistant to change, is increasing. During a period of great financial upheaval, online banking services offer a lifeline that should (and likely will) continue post pandemic. This includes older people as well as young, with mobile devices being the preferred device when it comes to managing our digital financial lives.
And because the customer-first ethos is a standard feature of many a fintech startup, managing our money through our digital devices has never been more enticing. The challenge for the fintech startups is to maintain this focus in 2021 and beyond, as trust in financial institutions is still a bellwether for success.
The Covid-19 effect has also influenced how we transfer money. The likes of TransferWise has changed the way the remittance space works, and there are more players in the market now. The demand for low-cost transfers is high and will come into its own while businesses and consumers adjust to remote life over the next couple of years.
The learning curve for banks and building societies remains. Digital transformation is no overnight online class (though fintech classes do exist!). Some big banks got their act together and began their own digital journey, and building societies and credit unions are getting onboard. (I recently talked about how building societies have the tools to do it even better, which you can read here.) Those who already had a mobile or online experience are obviously enjoying success sooner than their rivals.
But if you’re only just starting your digital transformation today, that’s better than starting it tomorrow. It seems that every category in the financial sector is undergoing change, so the advice from ieDigital is to be a part of it. From payments to banking, money transfer to mobile wallets, and from the challenges of being underbanked to the heights of wealth management, there’s something for every startup or traditional stalwart to get their teeth into.
My prediction for 2021 is simple: there’s going to be more innovation in financial services. It will either affect you or come from you, but it will be digital. So enjoy the nostalgia of Morecambe & Wise one last time and prepare for a year that may be Brexit-bumpy and Covid-curvy, yet mercilessly progressive. Get onboard!