As the world is anxiously anticipating the arrival of long-awaited vaccines and people are hoping that the new 2021 will bring things back to normal, we are asking ourselves what the future of the global fintech industry might look like in the next twelve months.
When the majority of the world’s population was forced to stay at home and amend the usual way of doing things in order to abide by the newly introduced healthcare regulations, digital space had experienced a rise like never before. Since the majority of goods and services became available via the Internet, it is no surprise that the demand for fintech services and alternative payment solutions was increasing simultaneously. But will the fintech Renaissance carry on to 2021, or will the development of this industry stop as soon as we can get back to our normal way of living?
3 main fintech trends to look out for in 2021
It is hard to say whether fintech will actually be able to take over the world and change our understanding of financial services once and for all in 2021. What is clear though, is the fact that the industry will continue to evolve and shape-shift – and here is how:
1. Remote payments will continue to grow in popularity
As mentioned earlier, the outbreak of a global pandemic forced various goods and services to adapt their functioning to the new realities of the world in a healthcare crisis. However, as the companies change their operations, and customers are getting more and more comfortable with digital payments and no-contact deliveries, chances are – they will no longer want to go back to how things were before. When you have a chance to avoid long waiting in the queue and the coins rolling around in your pocket because that was the change you were given, you will probably do just that. Thus, it is likely that in 2021 alternative payment solutions will only increase in demand, and enhance to best serve the interests of ordinary customers and large corporations alike.
2. Alternative banks will charge subscription fees
Neo banks like Revolut and Menzos provide a good illustration of what future banking may look like. However, interesting as they are, they might not be earning enough to keep themselves afloat – based solely on the people’s fascination with the concept behind them. The reason why challenger banks might start to charge the subscription fees in 2020 is that most of their profit is generated via Client Incentive Agreement with the card networks. What this means is that they get paid per the card they issue, however, it seems like today people already have enough cards already, and might not subscribe to any new ones. Thus, many experts believe that in 2021, neo banks will both charge a subscription or a service fee, as well as introduce various new features that would keep the potential clients and investors interested in the services that they have to offer.
3. Fintech giants will continue to absorb their competition to maintain their hegemony
An unfortunate, yet common trend of the fintech giants buying out anything that challenges their position is likely to continue in 2021. Although it is true the government authorities are beginning to realize the potential damages caused by the unruly behavior of the large corporations, it is unlikely that a certain legislature will put a meaningful end to it in 2021.
Nevertheless, with Facebook facing legal repercussions for the acquisition of WhatsApp, as well as Visa, being sued for similar actions against Plaid, it is possible that the way in which giant fintech corporations get rid of their competition will not end, but rather change slightly. Instead of carrying out a full takeover, corporations might resort to major investments and creep acquisitions, in order to control, rather than buy out the competition completely.
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