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Fintech Trends 2021


According to the Matrix Fintech Index, Fintechs could see $100 billion of liquidity in 2021. There is every reason to believe that, as in 2020, the public Fintech stocks rose 97%, compared to a 14% rise in the S&P 500 and a 10% drop for the incumbent financial service companies over the same time period.

The pandemic has accelerated global digital transformation and major players succeeded in digitizing many financial transactions, making them available to the masses and igniting explosive growth of Fintech.

We have analyzed the main challenges of 2020 and identified five key Fintech trends in 2021.

Embedded Finance

Embedded finance is a new niche in Fintech that embeds credit, insurance, debit card, and investment payments into virtually any non-financial products. This is especially crucial to e-commerce where profitability and customer loyalty are dependent on how fast a transaction can be completed. Why make the customer to visit a bank to apply for a loan, undergo the scoring process, and wait for a loan approval, if it is possible to add a ‘credit’ or ‘buy now, pay later’ option to the store’s web site and help the customer make a purchase in a couple of clicks?

In an effort to retain customers and increase sales, offline retailers also actively launch new loyalty programs, offering hybrid debit and credit cards. It takes as little as five minutes for a customer to apply for and receive a chain store’s card, either at a store or elsewhere, which allows the customer to make purchases now and pay later. This is true not only for loans, but for other financial instruments, too.

Tour operators and carriers automatically offer multiple types of insurance policies (health, life, trip cancellation, pet, baggage loss, etc.) right at the time a purchase is made by a customer on their web site, and the customer only needs to confirm their choice and pay. Messaging apps are also transforming into payment service platforms.

The main lessons learned from the pandemic are a shift in attitude toward new financial technologies and tools and a new user experience of contactless payments with the help of any device. Therefore, financial instruments embedded in non-financial apps will be one of the key success factors in the future.

Such solutions will help banks and Fintech companies to boost their bottom line, while promoting healthy competition both in financial and other markets.

Source: https://techcrunch.com/2021/01/25/fintechs-could-see-100-billion-of-liquidity-in-2021/

Big Data Management

Big Data is becoming increasingly valuable. The main source of Big Data is financial institutions (loan applications, debit cards, deposits, brokerage services, tax records, bank account statements, internal reports). That information could be used to identify important trends and potential risks and to make informed strategic decisions.

Deep understanding of data is crucial and helps discover hidden opportunities, optimize products and services, and automate business processes.

Fintech developers can significantly improve data processing by creating apps that quickly and accurately extract information from any document or data warehouse, analyze and present it to the user in the required and user-friendly format. Current algorithms can easily identify and sort out various data types, but they frequently run slower if they have to deal with hard-to-read documents. Thanks to new Fintech apps designed to accurately recognize images, media files or text, businesses will be equipped with a reliable tool to analyze their current operations, forecast needs and risks, and take well-thought-out management decisions.

Source: https://techcrunch.com/2021/01/25/fintechs-could-see-100-billion-of-liquidity-in-2021/

Digital Collaboration and All-Encompassing EDI

According to an IDG research of long-term effects of the COVID-19 pandemic on business, around 40% of employees expect that work-from-home arrangements will be permanent. This means that financial institutions will need digital tools that would ensure secure access to files and facilitate interaction with colleagues and counterparties. Paper documents should be converted into digital formats with a high level of accuracy and be accessible to users without jeopardizing the integrity and validity of data, while allowing to automatically track the history of changes.

Without a purpose-built solution designed to view, edit and manage documents, users have to rely on third-party apps that could compromise data and increase the probability of a critical error.

By incorporating convenient API web tools into their software, developers provide the company with a solution that facilitates the handling of documents within a secure infrastructure.

Digital Currency in 2021

In 2020, many countries announced the possibility of creating their own digital currency, while some of them already took steps to develop one. Amid the rivalry between banks and IT companies and cryptocurrencies, digital currencies are expected to contribute to greater sustainability and a healthy competition in the financial sector.

Besides, cryptocurrencies could enable financial inclusion as they offer a payment infrastructure with lower operating costs. Thanks to the programmability and transparency of digital currencies, it will be much easier for regulators to pursue their monetary management policies. Introduction of a national digital currency is, therefore, only a matter of time, though there is no single approach to its usage. So far, most projects propose domestic usage. In contrast, the European Central Bank, the Central Banks of France, Spain, and the Netherlands, and the Eastern Caribbean Central Bank focus on the cross-border use of digital currencies.

China that is actively testing the digital yuan is the closest to launching a national digital currency, and the Blockchain Service Network (BSN), a Chinese national blockchain project, plans pilot integration with digital currencies of global central banks. BSN plans to build a universal digital payments network (UDPN) based on central bank digital currencies (CBDCs) of various countries. The UDPN system is currently at the design stage and BSN expects that a beta version will be launched in the second half of 2021.

Russia is not an exception. The launch of the digital ruble could make the Russian currency more competitive in international settlements.

As noted by Ivan Chebeskov, Head of Financial Policy Department, Russian Ministry of Finance, at the meeting of the Bank and Banking Commission of the Russian Union of Industrialists and Entrepreneurs, “we see that China wants to use its digital currency as an instrument for international settlements, so that to strengthen and reinforce the yuan in the global competition. And I think that we also have to focus on that aspect, as the digital ruble will, essentially, compete with other digital currencies from across the globe, rather than with the fiat ruble.”


Businesses invest enormous amounts of money in ensuring compliance with all regulatory requirements. This is especially true for the financial sector that is subject to special scrutiny by the regulators. That is why financial institutions focus on taking preventive measures to mitigate risks of losses and violations of laws.

Regulatory technologies (Regtech) are innovative technologies that allow companies to use advanced solutions designed to simplify and speed up the work of their business units.

Regtech make it possible to automatically check every step for compliance with the existing laws and regulations. All Regtech solutions could be divided into two big categories: software for regulatory reporting, transaction monitoring, risk management, and identity management; and software designed for compliance purposes. With the help of Regtech apps, banks and other financial institutions can significantly reduce their administrative costs, protect their clients, and ensure their own financial strength. Besides, new financial technologies ensure high speed, flexibility, and scalability, and provide tools for end-to-end analytics.

Thanks to automation based on Big Data and machine learning, Regtech can, every single moment, process huge amounts of regulatory requirements applicable to each aspect of business. These automated solutions are programmed to constantly extract and discover patterns in large data lakes. By using Regtech, it is, therefore, much easier to identify irregularities or fraud.

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