Technology Trends Shaping the FinTech Industry in 2021
Updated: May 3, 2021
Demand for Fintech and digital banking products, already rising steeply before the COVID-19 pandemic set in last year, was given even greater impetus during 2020 and is likely to have gained years of ground in what has been an extraordinary year. Moreover, it is expected that virtual payment and banking solutions will take the lead in the financial services industry in 2021 due to the following main reasons.
In this article, we outline 4 technology tendencies that we expect to be of great importance in shaping the Fintech industry within the next few years.
Fintech Trends in 2021
Microservices have a considerable role to play in the successful evolution of the fintech industry. In fact, without them, the potential of the industry to disrupt the existing financial services players would have been constrained.
Microservices give fintechs the flexibility to develop innovative, groundbreaking banking technology and agility to adapt to changing circumstances and competitive forces.
Built on a one code basis, monolithic systems are developed as a single unit, and over time customized technology is added and integrated into the system to meet the changing needs of the company as and when they arise. Critical pieces of the technology platform are tightly coupled and highly interdependent, so it is difficult to change without affecting the entire architecture. Many traditional large financial services companies operate on monolithic systems, which means they cannot respond quickly to customer behaviour, preferences, and choices.
Microservices offer a completely different technology proposition. They are independent applications developed, deployed, and maintained separately to deliver on specific business requirements. These microservices help solve common, complex issues like speed and scalability while also supporting continuous testing and continuous delivery.
In essence, microservices give a company the ability to be agile and responsive to customers and allow them to be faster to market with services the company has identified will enhance a customer’s experience or meet a specific need. In so doing, companies provide a seamless experience across multiple channels, such as mobile applications, point-of-sale systems, social media, Internet of Things devices, virtual reality, digital assistants, or chatbots.
Microservices also give legacy companies ways to change how they do things without making a wholesale move away from their existing architecture. Microservices can be deployed alongside a monolith to replace components of the platform gradually. This allows an enterprise to stay innovative (re-platforming implementations can take years) with minimal risk.
2. Artificial Intelligence and Machine Learning
From Robo-advisers to regulatory technology (Regtech), AI/ML-driven systems are enabling companies to put big data to effective use in monitoring customer behaviour and detecting anomalies and opportunities they can factor into their services and product offerings.
Whereas banks have traditionally relied on the scale of assets, the financial services players of the future, namely Fintech companies, will depend on the scale of data. Instead of treating customers as the masses, fintech companies will differentiate themselves by providing a highly personalized, customized service to their clients. All of this will be made possible by combining the best of technology and human skills in what Deloitte calls augmented performance versus dependence on human ingenuity.