The year 2021 will unquestionably go down in the annals of the payments industry. It ushered in a new age of consumer and technological trends. Fast-moving fintechs and other key technological advances are now reshaping the payment landscape, becoming increasingly competitive.
In the past few years, the financial technology scene has strengthened dramatically – and in a good way. For instance, the coronavirus opened the door to a host of new sophisticated business models, which allowed numerous fintech firms to jump the digital bandwagon to meet the demands of the affected population.
As social distancing restrictions were implemented for public safety, customers of all ages swiftly adopted digital, contactless payment methods. The need for digitisation in the payment sector is more evident than ever. The trend of being cashless affected the entire world, and while some transitioned quickly, elderly folks found it more difficult to adjust.
Modern technologies – such as tap-to-pay, NFC payments, wire transfers, and even cryptocurrencies – have played a significant role in developing the financial system into what it is today. Undoubtedly, the year 2021 will be remembered for its ever-changing technologies, so let us take a closer look at some of the stuff that changed the fintech industry.
Contactless Payment Is the Way to Go
One key consideration that stands out is that shops that embraced cashless payments saw an 8.3% increase in sales compared to merchants who did not adapt. This proves that digital transactions are here to stay and will only become more prevalent in the future.
People worldwide have had to learn to deal with extra challenges, such as social distancing measures. What was once a routine trip to the supermarket for items like milk, condiments, and toilet paper, has since undergone a significant transformation.
Because of the ongoing outbreak, we have all become somewhat paranoid about coming into contact with foreign objects. There is a strong trend toward consumers wanting to go cashless, as it will ideally help safeguard them from the novel coronavirus to some extent.
The pandemic also created new economic prospects for individuals who operate offline. Most were able to function online after learning how the coronavirus affected their business. Those who adapted to digitalisation are now making more money than they ever could have, as their consumer base has grown beyond imagination by going online.
The shift from cash to cashless transactions is most likely the result of a pandemic that affected everyone. Some reasons that hastened the process are:
- ● Working from home has become increasingly popular across the world.
- ● For safety reasons, many businesses refused to accept cash payments.
- ● E-commerce boom. For instance, sites like Amazon, Alibaba, and many others helped ease the pain of coronavirus.
- ● Digital payments are fast and reliable, with no need to scour for the change anymore.
Cashless transactions are just getting started, and we’ve only seen the proverbial tip of the iceberg.
Embedded Solutions Making Payments Easier
Embedded solutions are payment-processing systems that make B2B transactions a breeze. Thanks to these embedded solutions, the checkout and settlement processes will be faster, resulting in a better customer experience.
Merchants would take payments within their software rather than rely on a third-party software package to process payments. According to research conducted by Plaid, partnered with Accenture, it’s predicted that embedded payments could add up to $250B in revenues by 2025. If appropriately implemented, it has the potential to increase revenue by up to five times.
Embedded payments have their own set of advantages. The three most attractive aspects are preserving the front-end consumer experience, expanding the number of customer touchpoints with the business, and providing digital wallets for customers. However, embedded solutions are still in their infancy, and their actual potential will be determined by future growth.
How Neo Banking Has Improved the Banking Industry
Because of covid-19, many established banks have needed to alter their old structure, or new emerging banks and fintechs would grab their market share. Traditional banks have controlled the fintech industry with minimal progress. It’s about time we see new features. Two such emerging concepts are Neo Banking and Open Banking.
Both open and neo banks are lucrative ways to safeguard your hard-earned money. Their rapid growth in recent years is attributed to their ability to offer new services at appealing prices and rates to consumers. There are two key ways that open banking and neo banking differ from traditional banking, and these are:
- ● Neo banks are companies in the banking sector that primarily operate online. They don’t have any physical branches and instead provide all their services via mobile applications.
- ● Open Banking permits banks to access consumer accounts (with their agreement) to collect data to give a more personalised experience.
Thanks to APIs, customers will enjoy a tailored experience with open banking. And, with the advent of open banking, managing several accounts from a single dashboard was never easy.
Indeed, there are various advantages to these new technologies, but they also have certain negatives. The most serious of these is, of course, the risk of data leakage. However, with time, we will ultimately know if they are here to stay or if it’s just a temporary stopgap.
The payment ecosystem will be much richer in the next few years than it is today. A smooth, worldwide, adaptable, and secure payment system is a need for businesses looking to stay on top of the game in the digital age. As far as we can tell, 2021 was merely the beginning of the digitisation process – and only time will tell how these technologies will affect us in the long term.