What Can the World of FinTech Expect in 2021?

By Björn Goß, CEO and Co-founder of Stocard

Last year was a year like no other as the Covid-19 global pandemic caused us to change how we live and work.

The pandemic caused huge challenges for people across the world as we sought to survive in new, difficult circumstances, which the fintech industry faced like all others.

But the tests brought along by the impact of Covid-19 also brought about the unpredictable growth of more digital financial services such as mobile payments.

Because of Covid-19 these changes were created quickly and the take up rates of consumers greatly exceeded previous industry predictions for adoption of these new technologies.

So what can we expect from the fintech industry in 2021? Here are my thoughts.

PSD2 will give customers more choice

Payment Service Directive 2 (PSD2) will come into force this year. This will end the decades long lock of banks that has dominated the industry and let fintech’s access customers’ bank accounts.

Financial institutions have long sought ways to work around the PSD2 regulation to lock in consumers and offer no choice. But this enforced change will give consumers better access to fintech services that are more convenient and effective for individual needs.

As more providers enter the market to offer financial services, we expect much more debate and discussion around regulation this year.

For instance, there has been debate about legislation that would offer banks incentives to grow the wealth of their customers, whilst also sanctioning banks if they sell products to consumers that are not in the customer’s best interest.

If this new regulation does come into effect this year then banks will need to focus more on offering the most relevant and beneficial products instead of the ones that bring banks the highest profit margins.

Greater European Fintech Success 

2021 is set to see strong growth for European fintech companies as more innovation in the sector will see it build on a good performance last year.

Numerous big and successful fintech companies are springing up in areas across Europe, away from the major traditional financial hubs of the UK, France and Germany.

Dedicated solutions that focus on specific areas, like trading, will keep growing this year. But, long-term we will see a consolidation in the market and the European fintech companies that are able to compete in this environment will be those that are truly relevant in our daily lives.

These apps are turning into the first point of contact for everything money related and I expect to see more innovation and growth in this area from across Europe this year.

Björn Goß

Rise of the digital wallet super apps

The digital wallet super app is becoming the central focus in our lives for everything around money, shopping, and banking as payments and accounts keep migrating to smartphones.

The future of banking will keep shifting to entirely mobile solutions working in combination with other financial services that are in one easily accessible place.

This year I expect the use of digital wallet super apps to grow massively in Europe as consumers look to streamline their digital services and use trusted, simplified apps. This is likely to feature 3 or 4 key players like Apple, Google, Alipay and Stocard.

This will merge shopping, payment and financial services into one wallet app, which consumers favour, as one app with an easy-to-use interface lets them do everything they need to do, in one place.

The consumer can pick the services that are the best at meeting their individual needs, which means the apps that can add the most value beyond banking and payments will shine through in the marketplace this year.

More buy now, pay later, for a while?

There was a growth in buy now, pay later (BNPL) services last year as consumers turned to online shopping. For example, recent research found a 168% rise in the usage of buy now pay later apps last year.

Many consumers saw this way of buying as less risky and took advantage of the convenience of it during lockdowns.

However, the recent high growth in this area was driven by the Covid-19 pandemic and regardless of its recent popularity the BNPL total share of wallet remains very low.

2021 will tell us if the shift to this new way of payment us a short-term change or a long term trend. The investment made by retailers and payment providers will make BNPL options both instore and online more accessible for consumers.

Conversely, there has been a lot of debate about regulation for these services and this may put the brakes on the growth rates BNPL services are experiencing at present.

Overall, the fintech industry is set for another strong year in 2021 as permanent change in consumer behaviour will keep driving new and improved digital services and innovation hubs.a