Digital Banking to RegTech: Top Trends Reshaping the Fintech Sector

COVID-19 has accelerated digital adoption in nearly every aspect of life. The year 2020 saw a significant rise in digital and financial literacy. This enabled banks and financial services companies to reach areas that were, until recently, non-penetrable to the industry. Now, with more and more people gaining access to their services, leveraging technological solutions is becoming a necessity for the financial services and banking industry.

A 2019 EY fintech report showed that the global adoption of fintech services has reached 64% in 2019. This was 16% in 2015. With growing interest in fintech offerings, the year 2021 is expected to see a rapid rise of fintech startups. That said, let’s take a look at some of the key trends that will shape fintech startups in 2021.

Digital Banking

In 2021, further growth of digital banking services and the emergence of digital-only banks are going to a prominent trend. In the wake of the pandemic, people, wary of contracting the virus, avoided bank branches or premises. They became more acquainted with digital banking services and tools. Now, a growing number of people want to manage their finances through their smartphones and PCs instead of standing in long queues or filling out excruciating paperwork; thus, making digital banking a go-to solution.

Biometric Security Systems

As banking and other financial services become widely available and accessible and the number of transactions rises, service providers and users are going to be at greater risk of falling prey to cyberattacks. Banks and financial services companies must tighten security measures and protocol. However, they must do it without affecting customer convenience. And this is where biometric technology enters the picture.

By using biometric security systems, companies can ensure a quick and smooth user authentication flow while protecting user data. The coming year is expected to see a surge in the usage of biometric security systems to ensure safe authentication methods.

Autonomous Finance

Autonomous finance consists of algorithm-driven services. They aiming to deliver personalized and optimized experiences by understanding customer’s goals, spending habits, and also risk appetite. The fintech apps are building the blocks of autonomous finance, helping people manage their financial resources and reach their financial goals. With growing digital and financial literacy, autonomous finance comprising of fintech apps will grow considerably in 2021.

RegTech in the Financial Service Sector

RegTech is the management of regulatory processes, including monitoring, reporting, and compliance through technology. It automates the process using advanced technologies such as big data, artificial intelligence, machine learning, and cloud technology, minimizing the risk of human error. In the financial industry, the importance of regulatory oversight is immense and with time, it will grow.

With Regulatory technology, banks, and financial services companies can be more effective in protecting the integrity of the system, as well as their clients, while reducing administrative overhead. So, the number of fintech solutions for transaction monitoring, regulatory reporting, identity management, risk management, and control compliance will rise substantially.

Both financial service providers and their customers are becoming increasingly familiar with financial technology. In the 2019 fintech report, 96% of 27,000 consumers surveyed, showed awareness of a fintech transfer or payments offering. Three-fourth of them said that they've used one before. With growing awareness, the need for faster, cheaper, and more secure services will grow. For banks and other financial institutions, these trends are going to be an essential part of the equation in the upcoming years.