Offering an efficient and convenient alternative to traditional financial services through the integration of new technologies such as AI and blockchain, fintech is a dynamic and growing sector. This rapid growth requires a quick response on the part of fintech entrepreneurs. It is critical for anyone in this industry to be aware of which trends are likely to define it in the coming years. An understanding of these trends is key to adapting to them.
Specifically, looking toward 2021, fintech entrepreneurs should be aware of the following developments. They will likely play a significant role in shaping the future of fintech.
Amid the rise of fintech, the industry has faced some challenges, such as navigating the complex regulations that apply to companies in the financial sector. Governments substantially regulate the financial services industry, and navigating these regulations poses a challenge that fintech startups need to overcome. This is often difficult if a fintech startup founder has no experience in this sector.
It’s also another reason why many fintech startups choose to partner with banks that have already cut through the regulatory red tape, as they can share their knowledge and help them to understand the applicable regulations.
Prioritizing the digital experience
Since the early days of fintech, many have considered the ways that it may challenge the dominance of established banks and other financial institutions. Over the years, leaders at these institutions have expressed varying degrees of concern about the fintech revolution, although they are starting to realize the many benefits of working together with fintech startups. Fintech startups can enable banks to provide better service through technological innovation.
Those varied perspectives are turning into more of a consensus. Surveys reveal that leaders at established financial institutions are increasingly recognizing the value of prioritizing the digital experience. That’s not at all meant to suggest that fintech entrepreneurs should be worried. They should simply be prepared. Additionally, fintech startups are realizing how partnering with an established financial services firm can result in a mutually beneficial relationship. Fintech startups can support banks by providing innovative technology and ideas. Meanwhile, banks can support fintech firms by offering guidance on regulatory issues and introducing their products to a larger customer base.
Value of fintech continues to grow
There’s never been a better time to be a fintech entrepreneur. The pandemic has created a global environment in which the value of fintech products and services have become clearer than ever.
Thus, while many industries have struggled in recent months, fintech has actually thrived. This has generated a degree of momentum that many believe will continue to propel the growth of fintech in the coming years.
Fintech entrepreneurs must be prepared to leverage this momentum. Now is the time to re-evaluate plans and determine if it may be reasonable to set more ambitious goals.
In recent years, the growth of fintech has impacted the roles that certain key team members play at both fintech startups and established financial services firms. Specifically, the role of the chief technology officer is changing.
In a traditional business environment, where the chief technology officer may have some degree of power, they’re still essentially focused on executing the chief executive officer’s vision. That’s changing in the financial services industry. Because applying the latest technology to offer customers the most valuable experience possible is becoming a priority, it’s apparent to many that giving the chief technology officer more freedom to make important decisions is a smart idea.
Fintech entrepreneurs need to consider the power dynamics within their own companies. If a chief technology officer’s power is limited, then a company’s growth potential might be, as well.
Growing presence of artificial intelligence
While many fintech leaders already understand the importance of paying attention to the growing role of artificial intelligence in the fintech sector, it’s still worth mentioning because this trend will impact fintech to a significant degree in the near future.
The specific ways in which fintech companies will be able to leverage AI will vary depending on their own needs and that of their customers. For example, some fintech companies may use AI primarily to improve the customer service experience, while others might mostly use it to complete behind-the-scenes tasks with greater efficiency.
Regardless, fintech entrepreneurs need to assess not only how they’re currently applying AI, but also how they plan to use it in 2021 and beyond. They should also consider these trends when developing plans for the next few years. Doing so will increase their chances of success.