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Six fintech industry trends shaping the future of banking

Recent years have ignited new leaps in innovation in the fintech space, and the years ahead promise even more digital options for consumers to make purchases and control their finances.

Let’s explore six evolving fintech industry trends.

Digital currencies regain momentum

The ups and downs of digital currencies are always part of any discussion about fintech industry trends. Arguably the sexiest of all fintech trends, cryptocurrencies experienced a tumultuous 2020, with prices fluctuating. The latter half of 2020 saw a resurgence, however, with industry leader Bitcoin reaching an all-time high, and investors seeming more confident about crypto’s future. The sector will continue evolving going forward with stablecoins (usually pegged to a fiat currency or exchange-traded commodities) likely to make a mark as a new form of defense against potential decline.

Soon, we will also see more central banks continue to flirt with issuing digital currencies. Japan is the latest country to join a list that already includes Canada, the Eurozone, United Kingdom, the United States, and, most notably, China, which began work on the digital yuan in 2014. New centralized digital currencies will likely be issued to banks that would then move them on to consumers, But it remains to be seen whether this centralized form of fintech will be as popular as more personalized money management.

E-commerce continues to grow

The COVID-19 pandemic created chaos in most industries, but e-commerce experienced a boom. The industry grew by 30% as the unforeseen circumstances of a pandemic led to massive consumer demand for online shopping.

Experts are predicting more of the same in coming years, although there are new precedents from 2020 to build on. Consumer niches that previously made little noise online, such as home goods and sanitation, are suddenly new territory for digital companies. As the driving force behind the nuts and bolts of e-commerce, fintech will play a huge role in how e-commerce develops.

RegTech becomes more connected

Regulatory technology, digital tools, and software that help financial institutions comply with regulations has long been a key aspect of the fintech industry, but expect regtech to become more interconnected with fintech.

COVID-19 may have dampened concerns about the security and efficiency of the cloud, but a renewed focus on compliance will make its way to the digital sphere. This is already happening, and the increasing demand for more clarity about ambiguous regulations and security in the fintech industry will continue.

Artificial Intelligence becomes more intelligent

Artificial intelligence will continue creating a more personalized financial world as AI becomes more intricate, accurate, and faster.

What does that mean for the public? The future of the fintech industry is tied to AI’s impact on banking software. AI will be used more broadly across the financial sphere as more powerful analytics engines sift through larger mountains of data to create the most personalized banking experience possible.

Chatbots will take care of most quandaries and queries. Consumers may grow impatient with an AI-based chatbot’s restricted responses and inability to understand every unique situation. But AI gets more intelligent every day, and when it encounters an obstacle, AI usually finds a way around it.

Digital banking becomes the norm

Visits to brick-and-mortar banks had been declining for years, but the lockdowns and social distancing restrictions of 2020 may have replaced the writing on the wall with permanent ink. Throw in the advancements in cybersecurity, AI, and biometrics, and you have a perfect storm for the banking industry’s transition from physical to digital.

Digital banking is now a convenient form of financial management for an increasing majority of the population. A Boston Consulting Group study published in May 2020 revealed that 44% of 18 to 34-year-olds had enrolled in online banking for the first time during the COVID-19 crisis, and it’s safe to assume the age range will grow as paper-based banking becomes obsolete and people become more comfortable with digital banking.

Full steam ahead to a cashless society

Another digital banking trend spurred on by the pandemic is cashless payments. Cash payments significantly declined in 2020 due to the threat of a contagious virus. That number will only continue to plummet as people become more aware of the convenience of digital payments. The major global shift from cash to contactless, led by the proliferation of PayPal, Apple Pay, and others, will continue to rise.

Read about HTEC’s partnership with Telexis to provide cashless payments for public transportation

With an increasing number of banks offering contactless payment cards and fintech mobile apps, the dream of a cashless society is well within reach.

Want to learn more about how HTEC’s technology expertise can transform your business? Explore our Product Engineering and Financial Services & Insurance capabilities.