Out of mayhem, comes opportunity, and as we look back at the 18 months of sustaining in a world with COVID-19, it has been the most chaotic and at the same time revolutionary phase for the banking and fintech industry. Open Banking, digital currencies, frequent upgrades in digital financial services large strategic acquisitions in banking technologies, and a massive change in payments towards a fully-fledged unified digital economy are all part of the contemporary landscape. The massive digitization of the global financial systems especially the payment sector has the capacity to even make the not-so-traditional card systems obsolete.
Trends That Shaped Fintech and Banking Industry of 2021
The industry is aggressively adapting to digital and driving out most analog systems. Fintech's rise and expansion are spurred by increasing demand for inclusive financial services, customer expectations, and the desire for businesses to minimize costs while providing faster, safer, and more reliable services.
Real-time payments, speedier loan disbursement, investment advising, peer-to-peer lending, and a slew of other services that necessitated human intervention are now rapidly becoming a part of the digital-native fintech ecosystem. Fintechs' sleek and efficient offerings throughout value chains have successfully disrupted the financial services industry's status quo.
As we close the year 2021 and look back, it is clear that the industry has seen a sheer scale of change in a very short period while the mammoths try to envisage the picture of the new payments world. Let’s look at the key advancements in the year 2021:
Buy Now Pay Later
As businesses resume while accepting the new normal, ‘Buy Now Pay Later’ products have seen a growing popularity in the year 2021 especially in shopping applications. BNPLs are short-term loan solutions that let customers purchase goods and services now and pay for them later in a certain number of payments. These credit products are frequently available with no interest. Even if they do imply some lending rates, they are usually low as long as the client fulfills the terms and conditions.
Smart Solutions with AI and ML
The constant lockdowns in 2020 paved the way for a future powered by Artificial Intelligence and Machine Learning. Customers now expect a deeper understanding of their needs and fast delivery of services. The use of Artificial Intelligence in the fintech industry alone expects a CAGR of 23.37% until 2025. The year 2021 has witnessed an upper trajectory in the demand for digital financial services and banks and fintech companies are striving to deliver fast and functional financial services that are enabled by artificial intelligence and machine learning and have personalized approaches among banks and SMEs lenders.
As the global population is dealing with waves of the COVID-19 and the resulting unprecedented lockdowns and unlocks of economies, hybrid banking is turning out to be on the top of customer demands in the banking industry. Hybrid banking combines digital and in-house services to create a customer-centric financial ecosystem that allows customers to receive services regardless of their preferred means of access. It brings together the benefits of both digital and traditional banking. Whether they visit an in-house branch or utilize online services, the client of today in the banking business demands flexibility, customer service, and personalization.
Businesses and consumers have long complained about a lack of access to funds and consumer-centric loan alternatives. Lack of formal financial data for credit evaluation, lengthy documentation process, and long disbursement turnaround time, all of which are followed by high interest rates.
The year 2021 will be remembered as the year when banks understood the power of digital lending. Financial accessibility has improved as a result of increased smartphone adoption, improved internet penetration, and connectivity hastened by the COVID-19 shutdown. This has resulted in increased demand by SMBs for consumer loans, credit cards, and business loans. App-based lending solutions are continuing to rise rapidly in response to market demand, supporting the total expansion of digital lending solutions.
With increased support from regulatory bodies of most countries in the last year, the global fintech and banking industry is witnessing a massive revolution in terms of customer experience. This is possible as the data that was earlier considered private and confidential is now available in the form of customers’ financial purchases, saving guidance, preferences, behavior and choice of discounts allowing personalization of services.
Hyper-personalization is all about a consumer-centric approach that employs real-time data to give services, goods, and pricing that suit their current and future demands and their underlying needs. Artificial intelligence is used to drive these insights, which are based on behavioral and data science. With technology breakthroughs and artificial intelligence, hyper-personalization is beneficial in attracting and maintaining clients of the digital age.
Emerging Out of the Pandemic- Where the Fintech Landscape Rules
As we emerge from the pandemic and look ahead to 2022, the industry feels more alive than in the past years. Despite mergers and acquisitions, competition has never been fiercer. The global fintech industry is dominantly focused on expanding on digital financial solutions beyond contactless payments and establishing a level of stickiness that hasn't previously been required. It is much easier for merchants to switch from one solution to the next, thanks to the evolving technologies that make it easier to swiftly incorporate other payment platforms. Demand is higher than it has ever been, and the top priority for Panamax is to keep developing the digital financial systems to meet the growing demands while servicing the financial sector in a centralized, scalable, and digitized manner.