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Promising Outlooks for Fintech and Payments in 2021

The trading platform Blocktrade recently published their predictions for the coming year in the fintech and payment worlds.

We all know that 2020 was a highly unusual year – the Covid pandemic not only impacted the global economy, it also accelerated ongoing changes and developments in the Fintech and Payment industry.

Lockdown measures and an economic downturn have increased cost pressures mounting on industry players, strengthening their push for digital innovation and transformation to stay competitive. As the last weeks of 2020 are approaching, we take an outlook at what trends 2021 could have in store.

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Let's take a look at the predictions.

Predictions for 2021

Blocktrade foresees heightened collaboration and fusion between established players and fintechs:

The competition between established banks/financial institutions and fintech startups has generally been seen as a winner-takes-all-dynamic, as e.g. the term “challenger banks” entails. However, the philosophy in the industry is gradually shifting from competition to collaboration and fusion as actors realize their strengths and shortcomings.

Industry giants like VISA, Mastercard, Barclays, Raiffeisen, ING have set up venture funds and accelerator programs to acquire and onboard innovative fintech startups. Deloitte suggests that fintechs should also seek partnership opportunities with fintechs, bigtechs, and nonfinancial services firms.

When we look at all the predictions, prediction number four is one with which we heartily agree:

Trend #4: Artificial intelligence (AI) adoption in fintech and payment will increase. 

Artificial intelligence (AI) is expected to massively disrupt the financial industry in the coming years. Potential applications of AI solutions in financial services are legion, the most prominent one being the prevention of fraud and data breaches.

We've have realized the ability of AI and Deep Learning to revolutionize check processing to achieve straight-through processing, and we're seeing remarkable results from deployment of these technologies to check fraud detection and image analysis.  And let's not forget how these technologies are automating the processing of paper-based remits and EOBs/EOPs for bank lockboxes and other revenue cycle management organizations.

All these predications are consistent with the fifth and final trend on their list, Digital payments and wallets will outgrow debit cards.  Blocktrade notes that "Mobile payment services like Google Wallet and Apply Pay are rapidly gaining traction. While not all consumers are comfortable with using such services yet, already in 2019 there were 2.1bn mobile wallet users – a number that is set to grow quickly."

We've already seen this shift in China, where many consumers prefer to use "WeChat Pay" to pay for goods and services. Additionally, there is speculation about Wal-Mart entering the digital payment space, which would further "mainstream" instant payments and perhaps sink the debit card for good.

These predictions are not revolutionary, and many have predicted the same in the past. However, the pandemic is seen by many industry experts as the "catalyst" to sparks the acceleration of innovations and we look forward to what's to come in 2021.

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