Fintech itself the next big thing in 2021
Why?
The no-human contact during the work from home period, the binge watching Netflix saga, the sudden dip in the business with no certain clarity, led to damaging the mental health and the financial health of the business; poor financial management is however the reason for the increased stress and depression is another story to discuss for another day
Anybody, who operated better in this lockdown claims the proper finance management with digital support to it is the sole reason for their effectiveness.
At present, looking towards 2021, correct budgeting backed with justified fail-proof strategy is the only ray of hope for much small businesses and enterprises.
And that is why fintech will ride the wave in 2021. Afterall, the year is about implementing the “2020 lessons”. Fintech innovators and their interoperability solutions will be more than ever in demand.
If you are here looking to understand how fintech solutions can improve your operations, save time, money and make better investment decisions, then make a note of the below fintech trends that will set the fire on
Digital Bank will be the only bank
In 2018 about 2 billion American populations resisted in on boarding a digital banking solution. But 2020 expedited the process and thanks to the lockdown lifestyle. Consumers are forced to adopt digital solutions, function without cash in hand, and rely more upon digital payment methods.
This means people want to be connected but disconnected. Even after the lift of lockdown, the user behavior doesn’t seem to be changed drastically.
Impact on Individuals
COVID turned everything customer centric and direct to satisfy the consumers. Digital banks will be able to provide better personal finance management for individuals. With a little bit of help from fintech innovators it can suggest even saving plans, retirement options based upon your lifestyle goals. Digital banks can lift many nations, households, communities from poverty. M-Pesa, a Kenyan mobile banking eradicated about 2% of the nations poverty.
Impact on Businesses
For the businesses, digital bank means reduction in operational costs. Traditional banking player’s charges commission fees, which mount to huge chunk at year end for many companies. But, digital banks will operate at 100% virtual space — eliminating the commission fees, lowering the interest rates in loans, mortgages, and no transactional fees for fund transfer.
To list in crisp on the functional beneficiary advantages of digital banks,
- Distributed ledger systems : Makes your businesses finance and accounts management effective.
- Robot Advisory: Although your assets manager does excellent job, assisting him with AI powered predictive data analysis will put your business ahead of time.
- Minimal to Zero Fees: Removing the commission fees in any transaction or fund transfer means, saving operational costs. Also this feature will be the key for the success of many digital banks.
Accounting Software Integration:
This will be the real deal. If you have walk into a firm that is operating for over 10 decades, you will notice a rack of shelves neatly organized with ledgers, files, paperwork of purchase orders, sale, receivable, expenses filed using lot of man-power at the risk of human errors.
Fintech is reinventing the accounting wheel to manage invoices, bills, credit notes by smooth integration of the accounting software in the cloud platform. I am not sure who will clap hands but for sure the operation managers will jump out of joy if they can import their accounting software data to unravel the complexity of accounting the business operation.
Increasing the automation in this specific everyday mundae jobs — invoicing, credit controls and foreseeing the cashflow will leave extra room for all of your accountants to engage in more value-added projects.
RELATED : The changing nature of fintech accounting tasks
Payment Ecosystem Is Raising
Did you notice the affinity of the people to use contactless payments even after the lockdown lift ?
Is it fear of infection transmission or the additional fees?
We aren’t sure on that, however the contactless payment confirmed the solid future for fintech innovators. On joining hands with IoT, AI and ML, payments will be more happening in air.
Real-Time Payment
RTP is already the norm. Instant payment solution is a crucial factor for any business in the market. From paying a tuition fee, shopping on the go, ordering a food, transferring money to your family, RTP has developed high user affinity by enabling QR feature.
Backend Data Structuring
The front end of the payment ecosystem is quite attractive, pleasing design, satisfying the user. The real treat is the data collected at the backend. When open banking is implemented with thorough regulators guidance, structuring data at the back office upon the user’s payment, transaction habits, a whole new customer relationship can be tailored by businesses.
Whole payment system will be built, triggered, driven upon a vault of data. This will invoke better business decisions; identify investment opportunities in technology, B2B collaborations for growth.
It is like a personal assistant analyzing your customer’s spending habits and providing them value-added services.
Example: Google pay partners with brands, e-commerce stores, flights, hotels, and many other vendors based on this carefully structured data. (Now do you understand why you need data for collobaration?)
Cyber Security and Compliance
Ditching the traditional banks brings risk, makes the user’s financial status insecure and lot more to worry upon. This is the reason you can see why the 2 billion populations is still not on-board to the mobile banking.
Fintech innovators and the cyber security tech will join hands in 2021 to enhance the current security to a different level. The payment systems are already enabled with, network tokenization, OTP, SCP and biometrics to pacify the customers skeptical questions on the security.
More than the offline activity, online monitoring is safe and quick, leaving your entire account in your control.
But in 2021, the compliance issues will be addressed even more explicit to keep all the account information under user’s control. This is why open banking is getting delayed because regulators don’t want to compromise on ethics that might make a way for fraudulent ways.
RELATED :10 predictions for the future of payments
How can we accelerate the fintech innovators to bring to the market quickly?
Innovation and technology are two different things and they need a connective tissue to embed into each other meaningfully. Most of the tech minds from Fintech lacks the knowledge of financial operation, financial regulatory law, theoretical finance managements.
Also the huge difference between what’s required and what’s desired is still vague to them, restricting the enablement of true potential.
Here are few ways through which the fintech innovators can be supported
Contests Enabled Networking
Most of the time, when a specification is developed we get carried away between the need and desire. Innovators need validated ideas to not waste their creative-tech muscle on something petty. This can be done through contests featuring ideas (more like solutions) for the problems in the banking industries. This gives the regulators, banking firms to validate or share their thoughts upon the urgent needs of each featured ideas.
This speeds up the overall process of bringing a fintech product to the market — allows the investors to picture clear — so when the fintech innovators pitch in for their funding, it is lot easier.
Flexibility
We have to address the big elephant in the room.
Most of the time technology innovators run when risks come into play. This is why we need that “connective tissue” .
Honestly, it takes less time for the entire operation transformation than the negotiation, validating the ideas. The political side, regulators and fintech innovators need to find middle ground to operate more flexible.
I think both the sides needs to have their own skin in the game and aim for mutual benefit .
Banks needs to be fast
Most of the banking firms are of huge customer bases but not fast enough in the adoption. When there is a room for innovation, banks needs to adopt quickly by taking a leap of faith on their Fintech vendors.
If a new technology is rolling out in the market and the user engagement is spiking the charts, it is no doubtful that there is a scope for it. It is essential for banks to buckle up and speeden their process. Only that way fintech can come into market soon with their products.
