The COVID-19 pandemic has put FinTech companies in an awkward position. The situation challenged the business, but everything was able to recover. New opportunities have appeared, just how to apply them? If you are related to FinTech, use our tips to act in today's situation. Read ten FinTech trends during the pandemic to watch out for.
1. Constant communication changes after a pandemic
Residents of Canada have been doing all the major financial processes over the Internet for decades. Sites of this type, applications, programs have long been a regular part of everyday life before the pandemic. These users are called Enthusiastic Experimenters and Adaptive Achievers. In early 2020, skeptics did not want to engage in financial activities on the Internet. Some people are worried about privacy, while others are afraid to learn new technologies. These people are protesting against the transition to FinTech. Even in 2021, they refuse to use digital financial instruments.
The rest of humanity immediately accepted the need to download applications from their financial institutions. In April 2020, a study by the Fidelity National Information Services (FIS) recorded an increase in new registrations of mobile banks by 200%. Mobile banking traffic increased by 85%. Since then, communication between users and employees has changed significantly. The adoption of FinTech in everyday life has grown rapidly.
Even older Americans have learned the rules of paying bills online. A study by the National Retail Federation reports that 45% of Baby Boomers buy more goods online. Another survey for April 2020 shows that 77% of older people surveyed regularly make payments online.
2. User perception of digital tools
Users first had to accept the new terms of FinTech. However, later it got tiring. Whether it was a privacy issue or an inconvenient use of technology. Only recently have consumers begun to put up with applications. They accept change and complexity. At the same time, fintech companies are trying to add new features, provide additional convenience, and provide access to additional tools. We mentioned baby boomers who use internet banking services. The Boston Consulting Group published a study in June 2020. According to the data, 44% of age groups from 18 to 34 first registered on the Internet and online banking at the beginning of the pandemic.
The FinTech industry is watching the explosion of active users. Processes take place in personal finance, budget, investment tracking, stock trading. FinTech demonstrates its potential to use programs for firms in emerging markets or countries that are beginning to grow strongly. The World Bank Group described the industry as adapting to the pandemic. As a result, there are many nuances. Besides, the company should not be associated with problems, but more will be able to join users. Data were collected from 1,385 FinTech firms in 169 jurisdictions. Most of them have grown, and in North Africa and the Middle East, there has been significant progress - by 40%.
The World Bank Group is a major source of funding and knowledge for developing countries. They help them and take quick action. Specialists support public health measures, work on the renewal of the public sector, as well as on improving the work of FinTech enterprises.
Why is there such a rise?
- Financial shocks are increasing and people want to control everything.
- The largest FinTech companies have begun to invest more in advertising to offer assistance programs.
- Security element.
3. Apps for debt management and budget-saving
Many consumers need to get a new credit card or loan but are afraid of getting into debt. Some already have accumulated debts, and they do not know how to get out. Applications have been created for this purpose. They are designed for budgeting and debt management, help manage finances and provide tactics to reduce monthly expenses.
There are dozens of tools that you can add to these applications to suit your needs. A monthly expense tracking system is the most popular. The user must enter all monthly bills and all expenses. The software offers to eliminate unnecessary expenses, such as dinner or some purchases.
Debt repayment calculator works to reduce user interest payments. Helps to become debt-free at a much faster rate than monthly payments. If you are thinking of creating such a program, you need to focus on the target audience so that they are relevant to these features. In any case, the tools should be simple and convenient.
4. Withdrawal from payment in cash
We have already mentioned mobile applications in Canada. Besides, the share of transactions for cash payment offline is also decreasing. COVID-19 certainly accelerates the trend towards change. 62% of consumers have used less cash since the pandemic, according to Payments Canada. Retailers have stopped accepting all cash for fear of contracting the virus through bills or coins.
With mobile apps, you can make many payments. For retailers, this does not have a huge impact on earnings. However, globally, it is an environmentally friendly method of payment, as well as much more convenient. The risks of sabotage are reduced by changing the magnetic stripe cards to chip cards. Criminals useless information to read and store data inserted into machines. Security is an important aspect of the cardless feature and it helps reduce the risk of fraud. This was stated by Reuters.
At Bank of America, users have digital wallet applications. There they confirm their identity, they can press their phone on the wireless panel of the ATM. The Brazilian Banco Bradesco gives customers access to an ATM by tapping the scanner with their palms to read the pattern of their veins. Japan and India use fingerprints for authentication. In Cambodia, the mobile application offers the ECash service to withdraw cash lessly and pay bills.
FinTech startup in Singapore SoCash has gone further and allows you to withdraw cash almost anywhere. This turns small businesses into "cash points". To withdraw cash, you need to place an order on SoCash, choose a seller and pick up the money at the point of sale. The concept of technologies and innovative schemes of the financial sector from the Monetary Authority of Singapore provided evidence to support the development of this startup.
5. Cashback and reward apps
The evolution of payments has already occurred. People get used to earning, buying, paying online. Uninterrupted transactions through digital payment platforms are most valued. For example, PayPal, Payoneer. Due to the integration of peer-to-peer platforms (P2P), customer satisfaction is also growing. The list includes the following programs: Zelle, Apple Pay, and Venmo. People are flattered when the program returns cashback. Cashback saves your budget and returns bonuses for purchases. The most popular applications in 2021:
- Fetch Rewards;
- Receipt Hog;
This motivates further use of non-cash payment. For example, in Ukraine, there is an Internet banking “Monobank”. In several former Commonwealth of Independent States (CIS) countries, the site LetyShops is popular.
6. Increased pressure on digital identity
The interaction of banks and credit unions with customers is improving to compete with digital players. Increased attention to large banks than to regional or medium-sized ones.
Smaller players in this great financial game are also trying to get on board. If a user applies for a payroll loan program, large financial institutions will benefit. However, the little ones also have results. FinTech means full work online, so all businesses have room for improvement. The level of satisfaction of bank customers who work exclusively via the Internet is low.
Although we see information everywhere about the widespread digital transformation in the financial sector. In pandemic times, people are still learning to use FinTech and still do not trust them 100%. Many people need better feedback.
7. Entrepreneurs' technologies for financial institutions
This segment has not lagged in development since the beginning of 2020. Unlike 2019, financial institutions for entrepreneurs have improved. New technological solutions for fast operations are appearing. Security and accessibility are also important.
The main components:
- digital payment services;
- digital investments;
- digital lending.
In 2021, companies will focus on the Corda platform. This is the next generation of open-source blockchain. Corda supports the highest level of confidentiality and protection. In addition to small and medium enterprises, the structure is suitable for financial services, health care, insurance, and government.
8. Changing the approach to insurance
Digital technology during the pandemic changed the online insurance system. It has become very affordable. Internet banking provides this feature. They inspire confidence in users. To take out personal insurance you need to follow the algorithm from the site and all. You can often pay a fixed amount once a month instead of all the money at once. In case of injury, you should contact the bank, provide certificates and get your well-deserved insurance. Often it is not even useful, but people prefer to protect themselves in case of accidents.
Residents of India are accustomed to standard insurance, but in early 2020 began to move to FinTech. Pricing, service, a wide range of services have improved. Insurance companies have developed digital infrastructure and are constantly improving it. It was the Indian FinTech companies that became the first digital insurance providers. After all, in this country the statistics are acutely not observed: there are up to 2.74% of the life insured, and less than 1% have access to non-life insurance.
9. Lender comparison programs
It is difficult to find a lender if you have a large debt, a low level of credit, or a huge mortgage. We know that this is not an easy task. At the beginning of the pandemic, people began to suffer from a reduction or destruction of income, and therefore credit scores received a huge blow. Many lenders offered deferral plans to defer monthly payments to borrowers, but some did not. Lenders who could offer help often abruptly stopped their deferrals. So how do you find a lender in difficult circumstances?
A new trend has emerged in FinTech - an application for comparing lenders. It collects information from various lenders and provides it to the user.
Information is also collected from the user accordingly. This is required to form a human profile. Indicate the amount owed, regular expenses, the desired amount to search, the range of credit points. The application uses the best lending opportunities based on all factors. These types of FinTech programs have the lowest level of complexity, and do not require a user's social security number. Instead, they leave personal information completely protected.
The key for many companies during COVID-19 is to connect companies to dynamic financing networks. In such conditions, crowdfunding develops faster. The way you get financing is changing, as is the way you do business. FinTech is a leader in this regard. Crowdfunding companies account for 6% of the national market in Mexico. It helps create jobs and grow the business. FinTech actively uses crowdfunding together with blockchain technology. For example, cryptocurrency transactions between wallets are easier to transfer to traditional bank transfers. The SWIFT international payment system conducts transactions within three working days. As a result, the manager also receives a report on the inspection of work processes.
We create every FinTech startup from scratch. We are domain-oriented and help with validation in terms of technology and business. We know the key problems in this area, and hence the models for solving them.
During the COVID-19 pandemic, trends in FinTech evolved. Due to changes in human life, users have faced an unusual financial impact. Their focus has shifted from investing to at least some attempts to stay afloat. FinTech companies were able to adapt to the situation of customers and diversify products/services to their needs.
We have described the main trends that give many benefits to users. Their symptoms expand and bring a lot of benefits to people.
Even after the normalization of everyday life, it is likely that the implementation of FinTech will remain relevant. Methods of bank ordering, payment of bills online, payment of the debt, savings, other financial transactions, etc. FinTech becomes permanent for the everyday life of each user.