2020 has been a stressful year that nobody wants to remember. The chaos and uncertainties of the COVID-19 outbreak hugely impacted many industries, and the financial sector is no different. Financial services in 2020 experienced an unexpected acceleration in digital engagement in response to the impacts created by the pandemic.
As the economy opens in 2021, and the pandemic is still causing turbulence, it is difficult to predict what the future holds for the financial industry. However, many emerging financial trends are likely to dominate and spike progress despite the turmoil. Here are the top three finance trends for 2021.
Cashless Banking
Banking is expected to go beyond cash in 2021, with digital engagement receiving a tremendous increase. Although the cash system dominated before 2020, contactless payment is underway and has already become a norm across Asia and Europe. It’s also slowly becoming a way of life in the U.S, with over 27% of American businesses confirming a steady increase in contactless financial transactions by customers due to the pandemic.
Additionally, fintech companies have responded to the situation by developing plenty of finance apps to meet consumers’ changing needs. Ultimately, in 2021, the financial sector is expected to continue investing in digital platforms, intelligence capabilities, modern data, and other digital solutions in response to consumers’ increasing reliance on digital and mobile payment services.
Open Banking
Although traditional banks are popularly known for safeguarding people’s finances, this trend is likely to change in 2021. This is because of the increasing awareness of financial literacy, which pushes many people to invest their money instead of letting it stay in the bank. Furthermore, third-party financial institutions are hugely taking root in the economic corridors and offer a plethora of convenient high-income generating financial products. And consumers are keen on utilizing these opportunities through open banking.
Automation and AI
The COVID-19 outbreak has seen a great transition from office-based working to remote working across many industries. Professionals in the finance industry have already adapted to remote working, and the trend is likely to grow in 2021. AI and machine learning technologies are increasingly integrating with people’s daily lives, impacting the decision-making process both in and out of the workplace. There is likely to be an increased focus on AI solutions and deployments in 2021.