Top 5 fintech trends for 2021

Posted by Tilt Recruitment on July 15th, 2021

Top 5 fintech trends for 2021

Posted by Tilt Recruitment on July 15, 2021

Technology is transforming financial services. COVID has dramatically accelerated the sector’s focus on digital technologies, and customer demand for digital financial services shows no signs of slowing post-pandemic.

According to a recent ISMG/OneSpan study, financial institutions see a top-notch customer experience as their main priority. This means that even the most traditional institutions are now looking to AI, blockchain, and other cutting-edge technologies to meet customer expectations, stay competitive, and grow their businesses.

Fintech in statistics

● The global financial sector is set to be worth over £19 trillion by 2022, with a CAGR of 6%.
● In the US, 60% of credit unions and 49% of banks believe fintech partnerships are worth it.
● Digital payment is a top fintech product that accounts for around 25% of the fintech market.

Five fintech trends to watch in 2021

1. Artificial Intelligence

The main impact of AI in finance is both mundane and fantastic: enormous cost savings. AI is likely to save the industry £322 billion by 2023.

AI is a game-changer for finance; it can crunch vast amounts of data, extract patterns that humans would miss, and even predict trends. It enables companies to automate processes, generate personalised financial reports, and much more. IBM’s Watson can understand complex regulations, like reporting of markets’ requirements in the Home Mortgage Disclosure Act and the Financial Instruments Directive.

Banks are using AI chatbots to save money by automating simple tasks like opening a new account or making a transfer between accounts. And as well as saving money, AI is also proving useful to boost security and prevent fraud in financial institutions.

2. Blockchain

Blockchain is the technology behind cryptocurrencies, but its applications don’t stop there. It can also be used to improve systems and processes and to create online financing platforms for decentralised, peer-to-peer monetary interactions.

Some of blockchain’s typical applications are:

● Faster, cheaper, more accurate cross-border transactions
● Smart contracts to boost transparency and efficiency in banking
● Clearing and settlement procedures
● Credit-reporting
● Faster verification and better fraud protection

3. RegTech

For financial companies, complying with government regulations in the places where they’re operating is critical. RegTech is a cloud-based software subscription that allows them to audit and update regulatory measures as efficiently as possible.

RegTech can analyse data to make decisions about the best way to keep a given operation compliant and implement new rules automatically. It uses a single dashboard, meaning it’s easy to use across a company and keeps everybody updated with alerts and data insights.

4. Machine Learning

Machine learning helps companies automate the hard parts of marketing. Algorithms are designed to sift through huge amounts of data like website page views, clicks, and mentions on social media to understand and explain overall trends in consumer behaviour and feeling.

The use of machine learning in sentiment analysis – to predict trends in market sentiment – looks set to transform the financial markets of the future.

5. Big Data

Big Data is what machine learning is used to describe and narrow down. Every credit card transaction, ATM withdrawal, credit score request, etc, generates a data point; companies need to corral that data to use it.

Banking is currently one of the world’s top investors in big data, according to the IDC Semiannual Big Data and Analytics Spending Guide. Extracting actionable insights from big data is key to financial institutions’ competitiveness and future success.

The future of fintech

With 88% of traditional financial institutions worried they’ll lose out to standalone fintech companies if they fail to adopt new technologies themselves, it’s no wonder that 82% say they plan to collaborate with fintech companies in the next five years.

To remain competitive, financial companies of all sizes need to consider investing in fintech and working towards creating a seamless digital customer experience.

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