Top FinTech Trends to Watch Out in 2021 & beyond

Digital Banks

A digital bank is one that exclusively works online. Everything is done through a mobile app or internet, from creating an account to making transactions. This is in stark contrast to traditional banks going digital, which have physical locations in addition to online choices. Aside from the lack of physical premises, the most distinguishing feature of a digital bank is innovation to address consumer demands that traditional banks cannot. The COVID-19 pandemic’s lockdowns and quarantines also prompted more individuals to use online services for their daily requirements, increasing the rise of digital banking in general. JP Morgan and Chase noticed a 6% and 10% gain in digital banking and mobile-active consumers, respectively, in 2020 alone. Experts predict that digital banking use will reach 2.5 billion by 2025.

Mobile Wallets for convenience

A mobile wallet stores payment information such as credit cards, gift cards, and coupons allowing customers then pay quickly online or at participating retail shops. A vital component of the digital payment revolution, mobile wallets grew in popularity drastically during the COVID-19 epidemic.

Biometrics

Biometrics is the process of authenticating users by physical traits like a person’s face or fingerprints, virtually hard to circumvent since it is based on data points that are unique to each person. A biometric authentication mechanism is already widely adopted, nearly 82% of of customers own a biometric-enabled smartphones. However, the COVID-19 epidemic has increased the usage of biometrics and contactless payments.

Decentralised Finance and Blockchain

Since, Bitcoin has introduced blockchain in the early 2010s, decentralised finance has been a widespread issue. Simply described, it is a system that allows anybody to obtain financial goods without the need of middlemen such as banks or brokers. While digital money is the most visible use of decentralised finance, it is still a small portion of the whole. Decentralised finance is a financial revolution that can affect every aspect of the industry, from stock trading to insurance. Decentralisation will have a huge influence on digital banking platforms. Currently, every financial system in the world has a centralised method. Banks operate as a trusted mediator between two parties for borrowing and lending, and they enforce contracts when necessary.

Open Banking

Open banking is a rising movement that allows banks to exchange data with FinTech companies and other financial institutions and new opportunities to their clients that would not be available with a centralised approach. This is accomplished through the use of an application programming interface (API), which connects a mobile app or website to the bank’s database.

Microservices

Microservice architecture is a method of developing software that divides an application into separate components. Each component, referred to as a microservice, is a self-contained entity that can be created, executed, and updated independently of the others. They then connect with other microservices via application programming interfaces (APIs), making them seem like a single, unified application to the end-user. Essential advantages of microservice architecture are agility and scalability. Traditional monolithic programmes are composed of discrete yet tightly connected pieces, making them difficult to upgrade and alter. This is precisely the issue that Amazon encountered early in its expansion. Using a microservice design, software development teams may add new features and adjust old ones without disrupting the rest of the programme. This shortens testing time, accelerates the deployment of new services, and decreases development costs.

FaaS and BaaS Platforms

Fintech-as-a-Service (FaaS) and Banking-as-a-Service (BaaS) are business models in which enterprises and banks make their services and products available to others. This is accomplished using application programming interfaces (APIs), smart contracts, and blockchain technology.

It’s an Exciting Time!

The financial world will never be the same again following the changes that are certain to occur in the next years. We’ve discussed many of the most significant and intriguing themes in the FinTech realm. And the amazing thing is that this is just the tip of the iceberg when it comes to what this sector has to offer.

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