Financial technology, also known as Fintech, has become a crucial element in modern finance, reshaping traditional financial practices. Fintech offers individuals the convenience and speed to manage their financial affairs, presenting a vast potential to enhance global economic activities.
During the COVID-19 pandemic, Fintech played a pivotal role in helping businesses and individuals navigate financial challenges arising from social distancing and government restrictions. Despite its novelty, Fintech encounters various obstacles. This article delves into the key trends and obstacles prevalent in the Fintech industry in 2021.
Opportunities in Fintech
The evolution of Fintech has brought notable changes to financial processes, cementing its position as one of the most attractive sectors in the modern world. Global Fintech investments surged from $50.8 billion in 2017 to $135.7 billion in 2019, as reported by Statista.
Fintech has already witnessed remarkable successes in the business realm. Its continual evolution fosters the development of cutting-edge technologies, refines business models, and promotes better autonomy in financial management.
Highlighted below are the dominant Fintech trends, opportunities, and challenges anticipated in 2021.
Artificial Intelligence & Machine Learning
Artificial Intelligence and Machine Learning are set to gain prominence as these technologies aid in handling vast data volumes and facilitate the creation of more efficient Fintech software. Moreover, AI-powered voice technologies enhance voice assistants, resolve customer queries, and serve as biometric credentials for payment verification.
Security
While financial transactions have become swift—taking just a minute—Fintech developers face heightened cybersecurity risks. Biometric security measures are considered pivotal by many Fintech experts in elevating Fintech to newer heights.
Uncompromising security measures in the banking sector, coupled with Fintech’s integration with Blockchain technology, ensure robust security protocols.
Partnerships
In 2021, Fintech industry experts predict increased collaboration between transactional financial institutions and Fintech firms. The concept of open banking is gaining traction, enabling data sharing among banks and Fintech startups.
Financial Literacy
Enhanced awareness of Fintech tools, referred to as financial literacy, can enhance client experiences. Proficiency in utilizing Fintech tools empowers individuals to meet their financial needs efficiently and aids aspiring entrepreneurs in engaging Fintech developers for app development.
Financial literacy is instrumental, particularly in financial matters where individuals tend to grasp concepts swiftly. Fintech serves as a modernized version of traditional banking with tailored enhancements.
Key Challenges in Fintech
Exploring the primary challenges faced in Fintech App Development Services in 2021:
In May 2018, Europe introduced the General Data Protection Regulation (GDPR) to boost data privacy and transparency for European citizens. While large financial entities and Fintech developers dedicate resources to GDPR compliance, smaller Fintech startups often struggle due to financial constraints, potentially leading them to operate covertly.
Cybersecurity
Continued cyber-attacks pose a significant threat to Fintech firms. Financial data breaches escalated from 25 in 2017 to 145 in 2018, according to the Financial Conduct Authority (FCA). These modern-day attacks aim at data theft, system disruption, or manipulation, eroding trust.
Despite the substantial costs associated with cybersecurity, Fintech companies must prioritize these investments due to the incurred expenses of system restoration and irreparable damage to reputation.
Human Interaction
Distinct from traditional banking, Fintech services often lack human touch. While Fintech leverages ML and AI to deliver enhanced services, the diminishing human element raises concerns, especially among older demographics uncomfortable with machine-only interactions.
Convincing individuals, particularly the elderly, to transition from conventional banking to Fintech services poses a considerable challenge for Fintech software developers.
Blockchain Adoption
Integration of Blockchain technology within Fintech services enhances security and resolves common issues. Many Fintech software firms already leverage Blockchain technology for various applications like fraud management, swift payments, and digital currencies.
Blockchain enables improved contract execution through Smart Contracts, enhanced capital efficiency, reduced service costs, streamlined error handling, diversified credit options, and instantaneous settlements.
Lack of Expertise
Several regions still lack proficient Fintech app development services. Legacy banks struggle with outdated websites and cumbersome mobile apps, hindering the integration and adoption of Fintech services, resulting in subpar customer experiences.
Establishing Fintech services in these underserved regions can foster trust and comprehension, driving the need for dedicated Fintech development teams or hiring skilled Fintech developers to bridge the expertise gap.
Conclusion
Fintech stands as a burgeoning trend in the financial landscape, revolutionizing traditional banking practices by offering speed, innovation, and security with unparalleled effectiveness.
The evolution of Fintech technology hinges on the fusion of cutting-edge technologies like Blockchain, AI, Machine Learning, and bolstered cybersecurity measures.
Although current challenges persist, Fintech software companies must continually adapt to meet evolving customer needs by developing user-friendly applications and adhering to stringent global regulations.
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