Top 3 Fintech Trends in 2020
2020 has been a huge year for fintech companies. The spread of COVID-19 across the planet had a massive influence on the role that fintech plays in the daily lives of people all around the globe, as well as in the backend infrastructure of the world’s financial systems.
In other words, it seems that fintech is bigger than ever.
As 2021 draws ever nearer, questions about the future are becoming ever more prevalent and more pressing. Whether or not the COVID outbreak will continue, will its influence on the fintech industry continue? Will the trends that developed throughout 2020 continue into 2021 and beyond? And what does this mean for the future?
These are the most important fintech trends of 2020:
1. Fintech platforms shifted from "can" use to "must" use
Since March of this year, fintech platforms across the board have seen massive influxes of new users and higher-than-ever transaction volumes.
Why is this? Because the pandemic caused people to start seeing fintech platforms in a new light. Data collected through a survey of 3000 US adults found that this is likely to continue:
37% of all respondents believe they will purchase more items online or through an app than they did before the global pandemic, whale 40% said they will rely more on the in-store retail experience, post-pandemic.
21% of respondents in the 25-34 age group said they have signed up for meal delivery services since the start of the global pandemic
12% of all respondents said they will only use contactless payment going forward
16% of respondents who use personal finance/budget apps to manage their money said they used personal finance/budget apps for the first time due to the global pandemic.
This has also caused companies that didn’t have a presence in the digital space to consider adding fintech components to their operations. Enabling digital access for so many important treasury, accounts payable, and accounts receivable functions across devices and locations is fundamental to creating ongoing success for so many businesses, both now and in the future.
2. Alternative assets are seeing an increased interest
The pandemic also seems to have caused an increased level of interest in "alternative" assets, and that much of this seems to have come coupled with the quantitative easing and other measures that governments have taken to prevent short-term economic crisis.
Many investors have been looking for safe-haven assets as a hedge against inflation. That has spurred both gold and cryptocurrencies to make significant gains and has triggered a trend toward gold-backed assets. As decentralized finance products and fintech solutions boom, gold-backed tokens are understandably popular this year because they combine the best of both worlds: gold and "digital gold".
Beyond the gold-backed stablecoin world, however, cryptocurrencies are also reaching heights that haven’t been seen for several years with, for example, Bitcoin holding over $11,000 for weeks
Additionally, a number of altcoins, including ADA, BAND, LINK, ETH, and many others, have made headlines with their recent positive price movement. Many of these altcoins belong to DeFi (decentralized finance) platforms, which have also gotten unprecedented amounts of attention so far this year, and it's an important trend that is still gathering steam.
Platforms that enable users to generate yield by depositing various blockchain tokens as collateral, have attracted billions of dollars in aggregate. As with any such hot new market, the opportunity for outsize gains is beset by legal and financial risks.
3. The rise of neo-banks
Beyond trends in the ways that platforms are building and developing products, there are also important trends in the ways that the industry is developing "behind the scenes".
We are seeing a maturing of some of the early players in the fintech space, with those firms being more interested in being a platform to power existing banks rather than compete with those banks seemed to have fared better, at least in the US
Additionally, the US regulatory environment is finally warming up to neo-banks, also known as digital challenger banks, which could have a major impact on the future of commercial banking and finance in the United States.
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