In this article, we take a look at some key trends in technology in financial services along with some general high-level trends in software engineering in the sector. It’s pretty obvious to say that things have changed considerably for financial services (as in any other industry) over the past 18 months, the ascendency of FinTech, however, remains quite notable with global fintech investment reaching $98bn. In the UK, FinTech investment hit a new record of £18bn in the first half of 2021, placing it second only to the United States, impressive during a time of considerable uncertainty brought on by the pandemic and short term Brexit fallout.
The FS industry has proved extraordinarily resilient and indeed many segments have even thrived during this period, such as FinTechs operating around digital payments and processes. The overarching trends for the industry are the accelerated digitalisation of banking, adoption of embedded finance (including buy now, pay later) and decentralised finance to further democratise access and opportunity to financial services.
Digital payments and eCommerce growth
Disruption and innovation in payments technology are constant. A recent Mastercard report found the first quarter of 2020 had a larger shift towards digital payments in 10 weeks than in the preceding five years and another that consumers spent nearly $900bn worldwide with online retailers in 2020. Less than a year since contactless limits increased across Europe, Visa has hit one billion additional touch-free transactions, 400 million of which took place in the UK.
In light of this surge in digital payments volume and to better align with customer preferences and capitalise on advances in payments technology, stakeholders such as issuers, networks, payments processors, and merchant acquirers are investing heavily to retool their payments systems. Meanwhile, embedded finance, point-of-sale lending and buy-now-pay-later financing products are reshaping the lending and payments experience to create faster digital options with less friction.
Millennials and Generation Z were already used to managing their financial affairs through digital channels, and they are now joined by many other demographics and late adopters. This means there will not be a significant rollback to the old ways of interacting with financial products, presenting a clear opportunity for innovators within B2C FinTech.
What’s Next For FinTech?
The FS industry will need to make permanent some of the learnings of the lockdown periods to create more agile workforces which boost productivity, creativity, and collaboration. Many of the trends of the last year will remain in the new way in which the financial services industry operates. Digital payments, improved data security and system resilience, and innovation in the use of blockchain and digital assets are not new to FinTech, but now they offer up genuine avenues for solving the real-world problems of today.
This article is an abstract from a full post on the Erlang Solutions blog.