6 predictions for global Fintech in 2021

Image of graph on electronic device - Dr Samuel Barbos da Cunha

6 predictions for global Fintech in 2021

This year has seen a total shift in attitude, consumer uptake and innovation across every business sector. And thanks to COVID-19, the global financial infrastructure has been pushed to the limit in 2020.

This means that transformative opportunities for Fintech companies have been brought to the forefront. From AI development to the resurgence of interest in cryptocurrencies, we’ve seen a lot of changes. As we finally approach the end of the most challenging year in recent history, it’s time to look ahead towards Fintech trends for 2021.

6 key trends for Fintech in 2021

  1. A fundamental change in consumer perception

While alternative forms of financial services have been around for a number of years, 2020 has been the year that the consumer masses began to accept them. One of the biggest and most importance Fintech trends this year and going forward is this change in perception.

Global lockdowns in response to the pandemic have been a major disruptor this year. And inevitably people began to look at other forms of finance. The longer the COVID-19 pandemic disrupts lives around the world, the more likely it is that people will adjust to new ways of managing their finances. This covers everything from borrowing to wealth management, digital assets, investment portfolios and much more.

There has been a sharp uptake in the adoption of alternative payment services that are not based on currency or cash. And the pandemic has undoubtedly sped this up enormously. People are now less trusting in the idea that the global financial system is stable and secure. This translates to being more open to entirely new ways of handling their money. It’s clear that innovation, digitisation and new technological advancements are better placed to deal with enormous economic shock.

  1. The increased growth in cryptocurrencies

A side effect of this perception shift away from the traditional financial infrastructure is the increased popularity of cryptocurrencies. It’s likely that there will be a continued increase in recognition of cryptocurrencies in 2021.

The CEO of Token Metrics, Ian Balina, believes that Bitcoin will hit record highs in 2021. His business is a cryptocurrency research company powered by AI, giving him a high-level understanding of crypto trends. He says: “We anticipate the price will go over $20,000 per Bitcoin.” If this does happen, cryptocurrency and Bitcoin specifically will be back in the mainstream media echoing the surge of interest seen back in 2017.

Major companies including Samsung, Facebook and PayPal have strongly endorsed cryptocurrency through investments. This makes cryptocurrency more accepted by the mainstream market. When the pandemic finally passes, digital assets will be far more accepted and integrated into the global monetary system. These assets are simple for people to buy and sell and have massive growth potential.

  1. Growth of peer-to-peer (P2P) financial services

Outside of cryptocurrency, P2P financial services are also becoming more popular. This is particularly the case within developing economies, as it gives a clear pathway to fully participate in capital markets.

From automated asset exchanges to P2P lending platforms, distributed ledger technology (DLT or blockchain) is the catalyst for endless new business models and innovative applications.

There is a global industry-wide move towards lean distributed systems that are cheap, easy to use and scalable. Within cryptocurrency, P2P systems include those for decentralised finance (DeFi) systems to provide all kinds of services including lending and asset trading.

  1. Investment apps becoming more popular among users

During the pandemic, there has been a huge lift in popularity for DeFi crypto assets. This has led to a massive increase in online investments as millions of people around the world actively look for new sources of wealth generation.

There has been a notable influx of new retail traders and investors in the Fintech sector due to the pandemic. Investment platforms are experiencing growth, with investors trading all kinds of new cryptos. For example, a platform called Robinhood attracted a raft of new investors trading Dogecoin. This is a meme cryptocurrency based on TikTok content. This is a whole new generation of online investors who will shape the future of investment.

  1. Fintech regulators will collaborate more

We will likely see a range of regulatory developments within Fintech in 2021. In the US, there will be more focus from both federal and state regulators on reviewing analogue regulations. Digital alternatives will be incorporated into these regulations.

Globally, Fintech regulations are sporadic and piecemeal. I think this will tighten over the next year regardless of when the pandemic ends. There will be a formal adoption of new regulations that incorporate the need for many financial services to take place online.

Currently, Fintech legislation is fragmented. This will be more unified to allow for easier navigation and use by consumers. The pandemic has forced financial services regulators to grasp the urgency in creating a new regulatory framework for alternative financial services.

  1. Continued adoption of Fintech solutions for just about everything

Over the last few years, even the most technologically disinterested have found themselves accessing all kinds of services online. From shopping online to storing pictures in the cloud, every one of these services is thanks to Fintech.

Financial services are ubiquitous. From the way we order a cab (Uber) to ordering take-out food (JustEat) to corporate membership accounts and pretty much everything else. This trend won’t stop as we move past the pandemic and will mean even more innovative solutions to the challenges we face in the 21st century.