Guest post by Sophia Tondon, IT Analyst & Technical Writer at Value Coders.
Fintech is an essential part of modern finance. The traditional understanding of financial services has changed. Fintech has brought opportunities for people to enjoy the convenience and speed of managing their financial lives. In addition, it has enormous potential to improve global economic life.
Fintech has opened the way for businesses and individuals to overcome new financial problems caused by social distancing and other government restrictions during the coronavirus pandemic. In spite, there are still many obstacles. In this article, let’s analyse the main trends and challenges of the Fintech industry in 2021.
Fintech development has targeted some modifications in financial life. As a result, it converted into one of the most luring fields in the modern world. According to Statista, fintech investments globally increased from $50.8 billion in 2017 to $135.7 billion in 2019.
Fintech has already achieved extraordinary success in the business environment. Moreover, its continuous development leads to new advanced technologies, enhance business models, and more independence in handling financial operations.
Here are some fintech trends, opportunities, and challenges that will continue to dominate for the rest of 2021.
Artificial Intelligence & Machine Learning
Artificial Intelligence and Machine Learning will continue rising, as these technologies help manage large amounts of information and help developers create more efficient fintech software. What is more, voice technologies powered by AI improve voice assistants, help customers find solutions to everyday questions, and serve as biometric information for payment authorization.
Nowadays, It has become effortless to do 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 bring Fintech to a significantly new level.
Security in the banking sector is a must thing, and Fintech with Blockchain makes it real. No compromises are made in Fintech development.
In 2021, Fintech experts believe that transactional financial institutions will cooperate more with Fintech companies. Financial institutions are looking forward to an open banking opportunity that allows data networking across banks and Fintech startups.
The term Financial Literacy means that the awareness of the Fintech tools can help improve the client experience. The better people know how to use Fintech tools or services; it becomes easy for them to meet their demands, and those who want to start a Startup can hire Fintech developers for Fintech app development.
Literacy of anything is helpful no matter what, and when it comes to money, people always understand much quicker. Fintech can revolutionize the whole banking system, and there will be many thorough guides who can help you at every stage. Fintech is just related to Traditional banking, with some suitable modifications.
Main Challenges in Fintech
Let’s look into the main challenges in Fintech App Development Services in 2021.
In May 2018, Europe presented a new normative document called the General Data Protection Regulation (GDPR). This set of rules intends to improve the privacy and transparency of personal data for European residents. However, it becomes a significant burden for financial institutions as they have to find a way to comply with all GDPR demands in order not to pay a high penalty.
While large financial 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 why small businesses start operating in the shadows.
Cyber-attacks remain a severe 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 are aimed at theft and try to destroy the system or change it to diminish trust.
Although cybersecurity measures are usually expensive, Fintech software companies should concentrate on the advantages they provide. Cyberattacks lead to high costs on system reestablishment and the loss of public trust that usually can’t be restored.
The major difference between Fintech services and traditional banking is the human touch. While Fintech attempts to introduce improved services with the help of ML and AI, the human component is waning away.
Many people feel uneasy knowing that they are interacting only with machines but not humans. Thus, It becomes challenging for Fintech software development companies to convince people, particularly the elderly, to withdraw from traditional banking and swap to Fintech services.
Adoption of Blockchain
Blockchain integration into Fintech services can enhance 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 in solving issues and also:
- Improved contractual performance due to Smart Contracts
- Improved capital optimization
- Reduced cost of services
- Reduced error handling and reconciliation
- Diverse and stable credit landscape
- Instant settlements
Lack of Expertise
Many countries are still lacking the expertise in Fintech app development services. Traditional banks usually try to follow their websites, offering clients user-unfriendly interfaces. The nuisance of mobile apps leads to low integration of Fintech services and poor customer experience.
Providing Fintech services in those countries can build trust in the people, and then they can start understanding Fintech development. 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 boundaries of the traditional banking systems as it is quicker and provides innovative and secure solutions, and also it is very highly effective.
The future of Fintech technology depends on the mixture of new technologies such as blockchain, Machine Learning, AI, etc., and the enhancement of cybersecurity measures.
Having solved some current issues, Fintech software development companies always face new challenges. Nowadays, to stay on top of the ladder, it becomes essential to meet customer’s technological needs by building user-friendly Fintech applications and complying with a significant number of requirements imposed by world organizations.