FinTech’s Top 10 trends that could affect banking in 2021
A big thanks to FinTech for putting together an excellent read on the Top 10 trends that could affect banking in 2021.
10. Cloud bursting: A farewell to data silos
If the last year of fintech has taught us anything, it’s that trying to do everything in-house is an approach highly susceptible to disruption from ecosystems. Accenture recommends that banks join cloud communities and avoid siloed efforts.
In the news: Finastra launched in October 2020 Fusion Data Cloud, a suite dedicated to driving engagement, growing revenue and enhancing digitisation.
9. Digital regulators
As banking continues to evolve in the digital era, Accenture believes that organisations should act with vigilance and caution; unexplored areas of business can be exciting, but as regulations catch up some banks could find themselves caught out.
In the news: HSBC opted to partner with regtech firm Silent Eight in a multi-year agreement to fight against financial crime.
8. Biden’s America
A new administration in the White House has a major effect on global finance, and Accenture has no reason to believe the beginning of Joe Biden’s tenure will be any different. The company highlights open banking as one area of which to stay particularly mindful.
In the news: Ceres recently told us that it expected Biden’s position on climate-focused bank regulation to more engaged than his predecessor:
“With the Biden administration set to take a leadership role in combating climate change and US financial regulators showing a newfound willingness to regulate climate risk, regulation of climate risk is coming to the US banking sector.”
7. Sustainability-focused lending
Accenture believes that 2021 will represent an “inflection point” for sustainable lending. Although COVID-19 is dominating headlines, industry leaders are under no illusions that climate change represents a far bigger threat to global economic conditions.
In the news: In addition to our ‘Top 10 ESG fund’ list, which highlighted the robust environment-focused investment market, companies like TreeCard are combining payments with eco-philanthropy.
6. Cashless society
“Cash is not king,” says Accenture, and this might be true. COVID-19 For now, cash still has its place. But, as populations become increasingly interconnected digitally, that could change in the very near future.
In the news: Mastercard recently recorded a surge in digital infrastructure uptake among Australian companies as a result of COVID-19. According to its research 52% of surveyed businesses had refocused on ecommerce structures.
5. Credit management
The importance of the credit sector’s evolution has been underscored by the pandemic. Indeed, Experian is of the opinion that shifting to alternative credit datasets could play a significant role in healing the post-COVID economy, particularly for thin-file consumers who are particularly struggling.
In the news: TransUnion in South Africa recently partnered with financial marketplace Fincheck to streamline credit applications.
4. Transparency
Accenture believes that 2021 will present a challenge to standard banking strategies. In-line with customer opinion polls, the company believes that transparency will become a far more marketable attribute. Account holders want to know where their money is being invested, and banks have been given an opportunity for competitive differentiation.
In the news: A lack of transparency and regulation can quickly destabilise strong market players. This has been demonstrated clearly by Ant Group’s present struggles with authorities.
In a recent statement, Pan Gongsheng, the deputy governor of the People’s Bank of China, praised the country’s new fintech regulations.
3. Banking apps are reaching maturity
A wide variety of personal finance apps are currently providing consumers with unique ways to track wealth management, investments, savings and more. But could banks’ wholesale migration from branches to smartphones spell the end of standalone innovators? Accenture believes this could be the case. Watch this space!
In the news: Look out for FinTech Magazine’s February 2021 edition where we'll explore the Top 10 mobile apps for personal finance.
2. The new normal
Challenger banks and incumbents are locked in a race to see which can capitalise on the new normal. Neobanks are using their tech focus to design more enjoyable customer experiences, while incumbents rely on their history and in-built customer trust. Each needs to learn from the other to survive, and those who don’t could find themselves defunct.
In the news: JPMorgan has ventured into the UK digital retail banking market via its Chase brand.
1. Collaboration
Finally, Accenture encourages grand ambition and a ‘winner takes it all’ attitude in a highly competitive market. That’s not to say that collaboration shouldn’t be encouraged; on the contrary, banks may find that by working with fintechs and creating new ecosystems, they are able to secure advantages that would be difficult to secure otherwise.
In the news: Read our article ‘Fintech and banks: competing through collaboration’ to learn more about the benefits of collaboration in banking.
