The fintech industry was experiencing slow but steady growth before the pandemic hit. But it was during the COVID-19 lockdowns when the sector saw more innovation and growth than it had ever experienced before.
So, what do the next few years post-pandemic have in store for the industry?
Here are four fintech development trends and predictions you should keep an eye on!
1. A Boom In Digital-Only Banking
The rise of digital-only banks or “neobanks” is a hot development in the fintech industry and is something that can completely transform the way the world banks.
In contrast to traditional banks, neobanks don’t have physical branches and are operated completely online or via smartphone-based apps.
This is why many digital banks collaborate with a fintech design agency to produce apps and websites with user and mobile-friendly design principles.
It’s no secret that digital banks are on a growth trajectory and are likely to become much more common in the next few years due to the recent pandemic and changing consumer habits.
According to recent data, 64.6% of people with a bank account used online banking in 2021, and this number is predicted to grow exponentially in the coming years.
This rise in popularity of digital banking is primarily because it offers underbanked populations a convenient way to bank. It also eliminates the need to visit brick and mortar branches, saves you from long queues, and removes the hassle of filling tedious paper-based forms.
If you’re planning to take advantage of this boom and launch a mobile banking app, be sure to check out our posts on the benefits of good UX design in fintech and why design is key to building trust in this industry.
2. Growing Acceptance Of Blockchain Technology
Anyone who has paid attention to the fintech space in the last few years knows the potential that blockchain technology has to revolutionize the way the industry operates.
It is one of the biggest innovations for digital transactions because of its philosophy of decentralized finance, which means its management is distributed and isn’t under the control of a specific company, individual, bank, or government.
Although some people are concerned about the legality of blockchain-powered transactions, the growing acceptance and popularity of blockchain as a means to create a secure digital ledger is something that can’t be ignored.
As of now, the global spending on blockchain solutions is around $6.6 billion and forecasts suggest it will reach almost $19 billion by 2024.
3. A Rise In Embedded Finance
Embedded finance is a term used to describe the integration of financial services into non-financial platforms. A good example is a cab booking app that includes built-in payment solutions.
Embedded finance has been gaining popularity over the last few years. And it is now poised to grow at an even higher rate as several banks are set on becoming service providers to non-financial and non-bank institutions, seeking to deliver a better customer experience or value proposition involving financial services as a part of a bigger offering.
A vital part of embedded finance is the buy-now-pay-later service, which is on track to becoming mainstream in the next few years. Smart solutions like Klarna and PayPal are already offering consumers exactly what they desire when shopping online — seamless and easy-to-execute transactions.
4. Incorporation Of Robotic Process Automation (RPA)
As the name suggests, RPA uses digital programs, software, and robots to automate repetitive and routine activities that were previously performed by humans.
RPA technology is different from artificial intelligence (AI) in that it doesn’t require human-like processing power and is commonly used for simple back-office tasks like information processing and data entry.
Many businesses in the fintech industry have already started to adopt RPA technology to lower costs, free up resources, and boost overall business efficiency.
Perhaps the biggest benefit of RPA is that it increases productivity at a relatively small investment and without sacrificing quality. This allows businesses to focus on major areas like customer service and other value-adding and innovative activities.
Currently, this technological innovation is valued at $3.17 billion and is predicted to grow to more than $13 billion by the year 2030.