Fintech is an essential part of modern finance. The traditional understanding of financial operations has changed. Fintech opportunities allow people to enjoy the convenience and speed of managing their financial operations. Furthermore, it has enormous potential to improve global economic life.
Fintech has paved the way for companies and individuals to overcome new financial problems caused by social distancing and other government restrictions during the coronavirus pandemic. Despite being a new tool, Fintech still encounters many obstacles. In this article, let’s analyze the main trends and challenges of the Fintech industry in 2021.
The development of financial technology has focused on some modifications in financial life. As a result, it became one of the most attractive courses in the modern world. According to Statista, Investments in financial technology increased globally from $ 50.8 billion in 2017 to $ 135.7 billion in 2019.
Fintech has already achieved extraordinary success in the business environment. In addition, its continuous development leads to new advanced technologies, improves business models and more independence in the management of financial operations.
Here are some Fintech trends, opportunities, and challenges that will dominate in 2021.
Artificial intelligence and machine learning
Artificial intelligence and machine learning will continue to increase as these technologies help manage vast amounts of information and help developers create more efficient Fintech software. Additionally, AI-powered voice technologies enhance voice assistants, help customers find solutions to everyday questions, and serve as biometric information for payment authorization.
Nowadays, it has become easy to make money transactions in just 1 minute. However, the task of Fintech developers became more to pay attention to cybercrime. Many Fintech experts believe that biometric security measures can take Fintech to a significantly new level.
Security in the banking sector is essential, and Fintech with Blockchain makes it a reality. No concessions are made in the development of Fintech.
In 2021, Fintech experts believe that transactional financial institutions will cooperate more with Fintech companies. Financial institutions look forward to an open banking opportunity that enables the creation of data networks between banks and financial technology startups.
The term Financial Education means that knowledge of Fintech tools can help improve the customer experience. The best people know how to use Fintech tools or services; It is easy for them to meet their demands, and those who want to start a Startup can hire Fintech developers for the development of Fintech applications.
Literacy of anything is useful no matter what, and when it comes to money, people always understand much faster. Fintech can revolutionize the entire banking system, and there will be many comprehensive guides that can help you at every stage. Fintech is related to traditional banking, with some suitable modifications.
Main challenges in Fintech
Let’s analyze the main challenges in Fintech application development services in 2021.
In May 2018, Europe introduced a new normative document called the General Data Protection Regulation (GDPR). This set of rules aims to improve the privacy and transparency of personal data for European residents. However, it becomes a major burden for financial institutions as they have to find a way to comply with all the GDPR demands so as not to pay a high penalty.
While large finance companies and Fintech software development companies have numerous experts working on that topic, small Fintech startups cannot afford it. Hence, GDPR compliance generally becomes the cause for small businesses to start operating in the shadows.
Cyberattacks remain a major concern for Fintech software companies. According to the Financial Conduct Authority (FCA) survey, financial data breaches increased from 25 in 2017 to 145 in 2018. Modern cyberattacks target theft and try to destroy the system or change it to lower trust.
Although cybersecurity measures are often expensive, fintech software companies should focus on the benefits they offer. Cyberattacks result in high costs in restoring the system and a loss of public trust that generally cannot be restored.
The main difference between Fintech services and traditional banking is the human touch. While Fintech tries to introduce improved services with the help of machine learning and artificial intelligence, the human component is disappearing.
Many people are uncomfortable knowing that they are only interacting with machines, but not humans. Therefore, it becomes a challenge for Fintech software development companies to convince people, particularly older people, to withdraw from traditional banking and switch to Fintech services.
The integration of blockchain in Fintech services can improve financial security and a solution to other common problems. Many Fintech software development companies already use Blockchain technology in such disruptive areas as fraud management, instant payments, digital currencies, etc.
Blockchain can help solve problems and also:
- Better contractual performance due to smart contracts
- Improved capital optimization
- Reduction of the cost of services.
- Reduced reconciliation and error handling
- Diverse and stable credit landscape
- Instant settlements
Lack of experience
Many countries still lack the expertise in Fintech application development services. Traditional banks generally try to follow their websites, offering customers unfriendly user interfaces. The hassle of mobile apps leads to low integration of Fintech services and poor customer experience.
Providing Fintech services in those countries can build trust in people, and then they can begin to understand the development of Fintech. Organizations can form a unique Fintech development team or hire Fintech developers to solve that problem.
Fintech is a growing trend in the banking sector, and it breaks the limits of traditional banking systems as it is faster and provides innovative and secure solutions, and is also very highly effective.
The future of Fintech technology depends on the combination of new technologies such as blockchain, Machine Learning, AI, etc., and the improvement of cybersecurity measures.
Having solved some current problems, Fintech software companies always face new challenges. Today, to stay at the top of the ladder, it becomes essential to meet customer technology needs by building easy-to-use Fintech applications and meeting a significant number of requirements imposed by global organizations.
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