The fintech sector has seen some fantastic advances in 2020. With more than two million open banking users in the UK, the EU’s PSD2 directive is well on the way to achieving its goal of mass adoption. Artificial intelligence and the internet-of-things are two other technologies working alongside open banking initiatives to transform the finance industry. Individuals and businesses now have access to financial products and services that help them to manage their accounts more effectively, save money in numerous ways and get the best deals from a much more competitive marketplace. In 2021 the technological shift will continue, with a few trends likely to take centre stage.
According to PwC almost 40% of the banks they surveyed are ready to share data with third parties which is a necessary requirement of the PSD2 directive and will further bolster the open banking sector in 2021. For those keeping track of the app store on OBIE, it’s clear that the number of fintechs offering products and services enabled by open banking is increasing every week. The use cases range from a simple upgrade to the way a consumer banks to truly dazzling innovation. Another cardless trend is the mobile wallet. Those such as Apply Pay and Samsung Pay are increasing in popularity. iCard alone saw a 45% year-over-year increase in transactions during 2020 and global mobile payments are expected to grow from $1.15billion to $3.1billion in 2024. Digital wallets are particularly appealing to Generation Z with location also playing a role in their popularity. Sweden and Denmark report higher adoption rates than the UK, the Netherlands and Italy and uptake is even lower in Germany, France, Spain and Finland. That said, overall adoption is on an upwards trajectory and a swift one at that.
Biometric and two-factor authentication are already a security feature in many sectors. In the world of payments, this type of technology is aspected to grow to ten times its size by 2024. The highly secure nature of biometrics means higher spending limits can be set and there are even trials of biometric debit cards which unlock when a person who has the right fingerprint holds them. Many people are already accustomed to securing their phone with FaceID or fingerprints so it will be interesting to see how the payments sector takes off in this area. Mobile Point-of-Sale (POS) is helping shop owners turn their phones into sales terminals. It makes it easier for vendors on the move such as market stalls to accept digital payments. Although mPOS tends to be more expensive than the merchant services provided by a bank, it’s easy to launch and integrate which makes it attractive for small to medium sized companies. Many SMEs started to accept digital payments in 2020 due to the pandemic because cash was deterred as unsafe and because businesses became increasingly mobile by offering delivery services. In Europe alone mPOS transactions increased by 120% in 2020 so this is definitely a trend to watch in 2021. All of the trends mentioned work well together and are not mutually exclusive. Seamless payments are at their core and that benefits both those making them and those receiving them.