The last two years have taught us that truly transformative change can be achieved, especially if driven by necessity. Digital payments in the pre-pandemic era looked different from today and where we are headed in the future.
As modern digital payments mature in 2022 and converge with the possibilities offered by growing technology, fintech businesses can leverage the future of digital payments to make money transactions more convenient than ever.
Amidst the pandemic outbreak, people started turning away from physical banking as it’s inconvenient and unsafe to be in a room full of people who might be carrying the virus.
As a result, more people are turning to digital banking than ever before. According to a recent McKinsey survey, there’s been a 78% increase in the use of digital banking in 2020 as compared to 2019, and the numbers continue to climb. We live in the most conducive environment for fintech entrepreneurs to launch banking as a service and find early success before the competition rises in the coming years. This brings us to the next point.
The Rise of Neobanks
Also known as digital-only banks, a neobank does not have a physical presence and offers services and products to its account holders through digital channels. A neobank user can open an account, make transactions, and access other banking services from the convenience of their mobile or desktop device.
According to a report, it is estimated that over 47.5 million users will have accounts with neobanks by the year 2024.
As of now, it seems that neobanks are here to challenge the status quo of the banking industry and change the way people interact with financial products and services. However, traditional banks are watching their ‘competition’ closely and deploying similar experiences for the benefit of their customers.
Thanks to the recent pandemic situation, people are no longer comfortable with transactions done in hard cash for safety and hygiene reasons. Also, reaching into the wallet is sometimes inconvenient and, in some cases, you can only hope to get your change back from the cashier.
While the pandemic initially forced people into using online modes of payment, it has become a habit and people are reluctant to go back to cash transactions. This is an opportunity for entrepreneurs to step in and provide a safer, faster, and hassle-free way of making digital payments.
Blockchain And Crypto
Cryptocurrencies are making rounds in the virtual world but no one can say with absolute certainty where all of this is headed. Investors across the globe have complete faith in crypto and recommend investing. However, the recent slump in cryptocurrencies tells a different story.
While we can’t say much about crypto, its foundation (Blockchain) is rock solid. Many young startups are embracing blockchain technology because it’s secure and fast, but it has been rather slow in finding its way through legal and compliance regulations and onto the financial turf.
Considering all the buzz around blockchain, it would be foolish to ignore this trend.
Machine Learning And Artificial Intelligence
From maintaining ledgers and using Excel Sheets for number crunching to deploying Artificial Intelligence for delivering amazing customer experiences, we have come a long way in the last few decades. Artificial intelligence combined with intelligent analytics and process automation can help financial institutions quickly assess credit profiles, minimize risks, and improve operational efficiency.
The best part is that these AI-based solutions get better by the day, with more and more data fed into their algorithms.
Mobile Payment Is Everyone’s Favorite
We are living in a world where smartphones have become indispensable to our lives. Whether you want to book a ride, order a pizza, or send money to a friend, your smartphone is pretty much everything you need.
Mobile banking picked up pace right after the pandemic hit the world and is expected to go mainstream in a couple of years down the line. The biggest advantage of mobile banking over cash or credit/debit cards is that it’s contactless. Moreover, it eliminates the possibility of card cloning, which has been a huge concern for financial institutions and customers for a long time.
We can safely predict that customers will favor financial institutions that offer mobile banking as a feature going forward.
The recent innovations in the technology sector have disrupted the fintech industry, leaving the traditional banking system on the verge of going obsolete. However, many traditional banks see potential in leveraging fintech technology to serve their customers the way they want to be served.
It is in everyone’s best interest if digital-only banks and traditional banks can find a way to collaborate in the future.
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