5 reasons why 2021 is a big year for fintech

5 reasons why 2021 is a big year for fintech

Fintech is growing fast – and 2021 is proving to be the biggest year so far in its rapid evolution. Here are 5 key trends that are powering that growth.

  1. Bigger than Bitcoin

When the market value of bitcoin smashed through the $1trillion barrier in February 2021, many casual observers would have been forgiven for thinking it was a development that would overshadow anything in the fintech sector. But that’s not the view of experts at JPMorgan. They describe bitcoin as an ‘economic side show’ compared to the growth that’s possible from fintech innovation. Because the cryptocurrency is still beset by a number of issues, they say, that may prevent it from becoming a mainstream asset. On the other hand, one of the effects of the pandemic has been to fuel rapid growth and acceptance of digital finance, thus creating opportunities for innovative fintech solutions. JPMorgan’s experts are reported as describing fintech alternatives as the real financial transformation story of the Covid-19 era.

2. Increase in contactless usage

That JPMorgan comment alludes to the fact that throughout history, global crises have produced winners and losers in business – and fintech has certainly been boosted as a result of the pandemic. The most obvious example is that more consumers have adopted contactless technology. These figures from the US National Retail Federation show that trend in the states, but there’s similar evidence from around the world. But it has kickstarted a change in social attitudes towards contactless that many experts predict will continue.

3. Impact of climate change

Every business in every sector is under pressure to ramp up its sustainability policies as the world looks to the commercial sector to play its part in addressing climate change, and that means fintech innovation has huge potential as a key to open the door to a greener future. This year Forbes reported that ‘the public’s focus on climate change is here to stay, which could continue to spur more exciting innovation in financial services focused on creating a greener world’.

4. Disruptive technology

Microservices (where fintech is used for customized applications that can be quickly deployed) is another growth area. In an era when agility and speed are essential to provide truly customer-focused solutions, this aspect of fintech gives disruptive innovators a massive advantage over bigger rivals that are slower to respond to consumer demand. The microservices architecture market is expected to reach $32billion by 2023, growing at a CAGR of over 16%.

5. An AI opportunity

AI and machine learning is continuing to transform the fintech space with the value of AI tech in the sector predicted to grow at a CAGR over 23% (CAGR), which if continued would mean it would be worth over $22billion by 2025. That growth will be generated from a myriad of applications, from chatbots that deal with inquiries from bank customers at one end of the spectrum – through to ever more sophisticated security tools that can identify genuine customers and scammers, and analytics applications which provide usable insights from large volumes of data.

These are just the highlights of what’s likely to be a massive year in the evolution of a sector that will continue to transform how we all live and work.

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