As the so awaited 2021 is accelerating its way, let’s analyze the fintech development paths to watch and follow over the next 12 months
The 2020 definitely became a turnkey milestone for the fintech industry as the whole world understood the ineluctable necessity of totally contactless and fully digital financial and banking services. The whole industry fastened its development. So, what disruptive changes are there to expect this year?
The recent Blockchain service providers survey demonstrated a significant increase of 14% in fintech projects moving into production while in 2019 this same parameter was at 5% only. Although, it turns out that Bitcoin’s high valuation is not that irrelevant to the growth of the enterprise (legal) Blockchain and fintech projects. In this prospective, large mainstream Bitcoin holding should foster innovation in decentralized finance applications where Bitcoin can be used to secure loans, borrowings and other financial instruments, rather than simply being stored as a purely stored (like digital gold) value.
Thus, CeDeFi will take its significant place in the fintech field. By 2022, the DeFi technology will be ready for early adoption by enterprises if regulatory requirements would be clear. Defi’s evolving apps will be adopted by traditional centralized finance companies and will be integrated into blended CeDeFi offerings that combine the best of both centralized and decentralized financial systems: old school regulatory protections with innovative financial infrastructure and new disruptive products.
The Central Bank Digital Currency trend will be also booming this year as at least forty countries are working on the digitization of their sovereign paper currencies. For example, China has already issued it and Switzerland has registered patents on its Digital Franc. The tokenization of fiat currency into stable coins will undoubtedly increase financial transactions with the Blockchain’s distributed ledger accelerating technological adoption.
Another breakdown point to be overtaken is the innovation decelerating border that resides in the banking core systems. Thus, different integrations and tech synergies will be observed during the 2021. Integrating and managing different vendors and providers looks like the most effective and comfortable way of development for huge traditional banking and financial institutions. At this point fintech projects become the main integration fit for those institutions as they are the only ones to optimize payment mechanisms as far as to offload transactions from core processing.
At the same time, it is absolutely obvious that traditional banking institutions will continue their synergies exploitation with fintech projects. The recent Deloitte report states the pandemic having eliminated numerous obstacles previously preventing traditional banks from digital transformation having pushed many established firms towards an investment in their services and infrastructure. Yet, an integration with disruptive fintechs would require quicker integration methods, teams as far as higher degree of internal processes adoption to this brand new fully digital reality.
From that standpoint, it is also obvious that not only banks but also huge enterprises will be rapidly digitalizing themselves. Thus, adopting WhiteLabel solutions, among which payment and acquiring infrastructures and services as these are only WhiteLabels that allow faster and higher quality integrations wrapping around the existing corporate core and bringing a better and wider experience to existing customers while attracting new ones. It may then result in fintech gaining its reign place in the post-COVID world replacing full-stack and partly automated existing infrastructures and mechanisms.