Top 6 Trends That will Shape the Financial Services Industry in 2021

 Information technology has revolutionized every aspect of our lives, from accessing information to shopping, getting medical aid to financial transactions. 

Monetary transactions  like money transfer, bill payments, insurance and investment of funds are all happening digitally through options like net banking, payment wallets, UPI, and credit cards.

 Financial services in 2020 was defined by a sudden acceleration in digitization and digital engagement—pushed by the impacts of the COVID-19 pandemic. 

Exchanges shut down their trading floors and moved to remote trading, mobile banking transactions spiked, personal trading apps saw record transaction volumes, and call center personnel kept customer support going by working from their living rooms.

While the financial services industry was able to weather the digital tsunami and continue its operations, it has become clear that the winds of change are not transient. 

Financial institutions are now thinking strategically about their technical setup and questioning whether the tools that they have previously relied on are the right ones to use going forward. 

Here are a few major themes we’ve identified as being likely to dominate financial industry conversations and technology roadmaps in 2021.

While the pandemic has disrupted the past year and will continue to disrupt the financial services industry in 2021, the chaos surrounding the tumultuous events of 2020 will influence the industry, as well as the sector’s business models and technological capabilities.

While the sector has recovered from the COVID-19 shocks by performing resilient and crisis-driven analysis of the various financial markets, data will continue to be essential as company strategies are based on analyzing what trends within the market will lead to positive results.

#1 Break the "The Iron Triangle"

Online trading platforms have connected various parts of the financial world—and become a common comfort for financial traders with a range of investments—by ensuring an immediate transaction is executed within a matter of seconds. 

Whether you’re in Panama City’s stock exchange, Manhattan’s Wall Street, Singapore’s NST, or Hong Kong’s Stock Exchange, ensuring transactions go through as quickly as possible can have a positive impact on the day’s closing price.

Smartphones also allow consumers to monitor live prices and price alerts, allowing you to trade accurately regardless of where you are. 

The connected world will also facilitate economies in agriculture, where the logistical burden increases to an extent that makes it necessary to streamline and digitize business systems to support movement—just as we’ve already seen a boom in financial services to help customers connect to blockchain from abroad.

#2 Diminishing Profit and Massive Losses

While global investors have made significant losses in 2020, financial institutions’ profits have largely been on the side of activity. 

The second quarter of 2020 was the second-worst quarter in a decade as the COVID-19 crisis morphed into something that prompted the most drastic reductions in employee payouts to date, and may have led to a potential halt in dividend payments.

Due to these unprecedented shifts, it’s likely that the trends that will shape the financial services industry in 2021 will focus on minimizing the impact on customers while also minimizing the financial institutions’ financial stake. 

In this way, the workforce could be used more effectively to improve efficiency and cost-effectiveness.

#3 Sustainable Solutions for Industrial Systems

Industries have been left out of the disruptive technologies of 2020 for a number of reasons—accelerating the need for sustainable industries to safeguard against the future changes and challenges of the technology. 

Unsurprisingly, the coming decade will also emphasize innovation and eco-friendly solutions in the global financial services industry.

#4 Technology is becoming a Predictor of Innovation

There are over 1,000 million users on both the blockchain and cryptocurrency markets. 

Going forward, these figures will steadily increase as sophisticated use cases of the same are used to gather accurate usage data with an automated platform. 

It’s therefore reasonable to assume that the “Information Era” will grow stronger than ever in 2021. 

This means that the volume of technological changes may also increase significantly as a result of the technological growth that will dictate broader outcomes and practices.

#5 Future Investing Matters

As more people use the internet as the foundation for their wealth accumulation, digital banking will become more and more widespread. 

The future of digital banking that is revolutionizing customer experience will represent a key trend. 

As far as financial  in general are concerned, this will lead to more interactive, personalized and verifiable bank transactions.

The potential breakthroughs in technology that will be enabled by the use of blockchain will also reshape the industry.

#6  Cybersecurity Will Matter More

As a result of the 2016 hack on the security company Target, 2015, and 2014 hack on the number one bank, the account data belonging to more than 40 million customers was compromised. 

The affected customer data were used for malicious, financial transactions before a detailed investigation revealed that it would take years to recover the stolen information.

It’s likely that 2021 will include some type of cybersecurity breach, especially as more business transactions were carried out through digital platforms in 2020 than ever before. 

The critical importance of the cybersecurity industry will be amplified as firms expand their use of artificial intelligence and machine learning to help secure their systems against malicious incidents.

Conclusion

2020 was the year of adaptability, forcing financial institutions to scramble and digitize their customer-facing processes to survive. 

2021 is going to see a renewed focus on digital and lead to the emergence of connected banking. The time is ripe to accelerate digital and leverage technology to stay relevant, competitive, and future ready.

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