Main trends in fintech in 2021

  • April 2, 2021
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No matter how promising the industry is, there are always problems that need to be overcome. Today, the financial industry is experiencing the same difficulties that have been the focus of attention in recent years. Among them are the following:

* Outdated technologies. Many traditional financial institutions still use outdated technologies and business models. Competition is growing steadily. Customers want and expect more. But many companies are trying to compete with fintech startups using outdated technologies that slow the development of the entire industry. The pandemic has accelerated digital transformation. However, it requires time and internal changes within the company, including customer interaction models and business philosophy.

* Regulatory documents. Since fintech uses many online technologies that are designed to speed up the processes of interaction with the client and making payments, the importance of data privacy is growing. A new approach to financial management requires new laws. The first directive on payment services laid the foundation for the rapid development of the fintech industry in Europe back in 2007. It also created a legal basis for SEPA (Single Euro Payment Area). Since then, legislation related to fintech has been constantly developing and striving to increase its value to customers in order to compete with traditional institutions. The achievements of recent years are GDPR, PSD2, etc.

* Secure data storage. Secure storage of user data is another risk of modern online business. The leak of data such as payment card numbers, passwords is simply unacceptable. Fintech companies do their best to prevent this, but failures happen. Especially when users want to see transparency in their operations, they need a solution that combines transparency with security. Therefore, the issue of secure storage and transmission of user data remains open.

* Trust of users. If a financial institution does not provide customers with the necessary level of services, threatens data security, then customers lose confidence, and lack of trust does not lead anywhere. Bank security, for example, is one of the most important criteria for selecting customers. And since more and more data is being transmitted on the Internet, cyber-attacks have recently become more frequent. According to Security Intelligence, the average cost of data loss in 2019 was $3.92 million.

* Termination of funding. This call is related to recent events. According to CB Insights, the COVID-19 has suspended funding for fintech technologies, since the end of 2019 the total number of transactions for fintech companies has sharply decreased. Funding for startups is also declining, as traditional financial institutions that previously preferred to work with startups now create internal development departments and work on their own new financial solutions. Under these conditions, startups, which have been the driving force behind the development of fintech in recent years, will have less chance of success.

Understanding all these difficulties, financial market participants continue to improve the quality of services and offer new solutions based on the latest technological trends.

Digital banking and non-banking

More and more banks are switching to the digital banking model, which means that all services are provided online and there is no physical representation of the bank. Such banks have many advantages, both for the business itself and for customers. As a customer, you don’t have to queue, come to the bank to open an account, sign a bunch of documents, instead you can quickly pay bills, have convenient expense management, quick balanced view, and real-time analytics. All transactions take place online and mostly automatically. This means that the banks themselves can save on office and staff costs. Chat bots, mobile POS terminals, and new underwriting models allow you to automatically process user requests in real time.

You should know that there is a difference between digital banks and non-banks. Digital banks are often an online division of a traditional bank, while non-banks are completely digital and independent. Users around the world note the convenience of non-banks, primarily associated with personalized customer experience. So you can see your balance in real time, keep an effective record of personal funds without any monthly fees or withdrawal costs.

While maintaining competitiveness, some traditional banks work with different technology platforms to provide more innovative services. Now we live online, so such online platforms are a lifeline for us. The future belongs to digital banks.

Big Data

Online technologies are associated with a huge amount of data that needs to be stored safely and processed quickly. According to Statista, the global big data market is projected to grow to $103 billion by 2027. Today’s financial companies aim to provide a more personalized experience for their customers, so they use customer data to deliver more customized offerings at the right time.

Financial companies try to collect as much information about the client as possible in order to draw up a detailed portrait of each client and build an effective work strategy. Also, by analyzing the data, firms can predict future events, personalize offers and thereby increase customer loyalty. By working with big data, financial companies can segment customers, get real-time user information, predict what services will be of interest to customers in the future, and optimize prices. To sum up, big data translates your business into a customer-centric model to deliver big results.

But the more data, the more difficult it is to effectively manage it while securing customer information from third parties. Therefore, over the past ten years, the financial industry has invested heavily in data collection and processing: data warehouses, analysis tools, data visualization tools, forecasts based on current information. User expectations have changed, competition is increasing, so data needs to be processed quickly and qualitatively to attract and retain customers while maintaining security.


Blockchain is a promising technology that from the very beginning was inextricably connected with the financial world. In many ways, blockchain can help combat industry challenges by providing opportunities to exclude third parties from the transaction process, securely store data, and build a transparent system. While blockchain used to be an area of ​ ​ startups, in recent years, many traditional institutions have begun to experiment with this technology, creating new solutions based on blockchain. According to Statista, at the end of June 2020, the number of blockchain wallets reached more than 50 million blockchain wallet users. This is a huge figure that indicates the market’s readiness to introduce distributed registry technology.

For the financial sector, blockchain is primarily an opportunity to build a P2P system with lower commissions and a higher payment rate. According to Finivi, the total market capitalization of the crypto market as of March 2020 was more than $155 billion. Not surprisingly, financial companies are also trying to work with cryptocurrencies that make cross-border payments cheaper and easier. In addition, the blockchain allows you to simultaneously build a safe and transparent system that best meets the needs of users of financial services.

A special role in the implementation of the blockchain is played by opportunities associated with smart contracts, which are designed to reduce transaction costs. Self-executing programmable contracts can significantly improve the quality of financial services related to contracts, such as loans and insurance. Smart contracts can automate processes such as customer order submission. In addition, they increase confidence in financial institutions, since the parties simply cannot fail to fulfill their obligations, and the whole process is absolutely transparent and traceable. Market Research Future predicts that the global smart contract market will reach approximately $300 million by the end of 2023.

Artificial Intelligence Solutions

The use of artificial intelligence-based technologies in finance has already become something more than just a trend. Advanced artificial intelligence algorithms can automatically determine whether a client corresponds to a specific segment and start a chain of the most appropriate actions. Using a set of pre-programmed criteria, artificial intelligence improves the efficiency of daily operations and the quality of user experience. Financial institutions use artificial intelligence-based solutions to create chat bots and implement fraud and risk detection functions. According to Finivi, AI is projected to reduce the bank’s operating expenses by 22% by about 2030. And according to a Juniper Research report, chat bots will save $7.30 billion globally by 2023.

Artificial intelligence minimizes the likelihood of human error, so more companies are focusing on process automation. In addition, AI processes information much faster and is able to provide instant solutions, which ultimately helps reduce the costs and risks of a financial company. Artificial intelligence is one of the main trends in banking, especially when it comes to non-banks, where user experience comes first.

The development of solutions based on artificial intelligence is gaining momentum, becoming more and more complex. For example, there are automatic assessment systems for optimal investment directions, assistant systems for creditors and bankers, which allow you to automate both routine administrative tasks and more complex analytical ones. Experts predict that artificial intelligence will become the number one trend in the coming years.


Financial systems must be secure to inspire user confidence. Cyber threats can lead to serious consequences and further loss of the reputation of a financial company. Problems arise for many reasons, the main of which is cooperation with third parties, the reliability of which cannot be trusted, the active use of mobile technologies and online data transfer, and the growing level of hacker attacks. According to Cybersecurity Ventures, cybercrime-related damage will reach $6 trillion a year in 2021. Therefore, cybersecurity is one of the main areas of implementation of new technical solutions.

Among the main areas of work on cybersecurity for fintech companies are the following:

1) Transaction security, including transaction analytics risk control and secure identity authentication.

2) Data security management, including personal data protection.

3) Cybersecurity, including security services and security technology.

However, improving the quality of the security system is not only related to technology. Many fintech companies work on internal security and threat response strategies, as well as raising awareness for both employees and customers. Fintech companies, like no other segment, are associated with money, which makes them especially attractive for cyber attacks. A recent study shows that banks invest about 70% of their funds in the development and implementation of security strategies. Understanding this, the financial market in recent years has invested a lot in the development of security systems, including blockchain solutions.


WealthTech combines wealth and technology to deliver better financial management solutions. During the lockout, this direction of fintech received a new round of development. According to Fintech Global, WealthTech financing in the first quarter of 2020 reached $1.7 billion. These are impressive figures that show the prospects for the development of WealthTech. Many entrepreneurs realized that it is possible to successfully conduct business on the Internet, so new digital services have appeared to manage personal and corporate finances. And experts predict that in the near future, the use of advanced technologies such as AI and big data will give us even more effective financial solutions.

Among the most popular services of Wealthtech-Robo-advisors. These are automated platforms that use algorithms and machine learning to help investors make important financial decisions. Robo-advisors provide users with recommendations based on market data and the personal goals of the user. In the future, such programs may be able to completely replace financial advisers, but so far they simply offer additional opportunities for investors.

Other interesting solutions from Wealthtech include digital brokerage platforms that provide easier access to stock market information, micro-investment platforms that allow you to regularly invest small amounts of money without having to pay a commission, and others. Since the fintech industry aims to create new, simpler, and more profitable financial solutions, WealthTech is designed to make capital management more accessible and convenient for everyone.


Experts predict a bright future for fintech, despite all the difficulties. The financial market is changing, this is a fact. The industry is inextricably connected with the online and technical process, so it uses the latest technologies, such as blockchain and artificial intelligence, to create more profitable financial solutions. Security remains the main risk zone for financial companies, so the development of security strategies is firmly entrenched in the ranks of the trends of 2021. In any case, modern trends show that the industry continues to develop, and new breakthroughs should be expected in the near future.

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