Market Research

#BankTech #FinTech / Top 5 Banking And Fintech Trends For 2021

[Key takeaways from the article in Forbes:]
Changes (or disruptions) to the value chain have certainly been in the works for a while now, but 2021 is going to shine a much brighter spotlight on those activities—making 2021 the year of value chain disruption in banking and fintech.

#1: The Battle For Small Business Moves Up (and Down) the Value Chain
1) PPP loans. The Paycheck Protection Program was important because it enabled many mid-size and small banks and credit unions to lend to small businesses...
2) Goldman Sachs/Amazon partnership… It’s an important move because Amazon issued $1 billion in merchant cash advances to its merchants a couple of years ago.
3) Stripe’s announcement of Stripe Treasury… “Stripe Treasury will enables platforms like Shopify to offer merchants access to financial products...

#2 Payroll Fintech (Finally) Gets Some Attention
To date, the battle for consumers’ money has centered on payments—either in the form of the spending account (e.g., challenger banks) or the payment itself (e.g., P2P, mobile payments).

This battle, too, is going to move up the value chain to the point of payroll… four categories in the payroll fintech space:
1) Salary On-demand… flexible access to earned wages.
2) Salary Advance... short-term credit to employees based on their salary...
3) Early Direct Deposit… enables account holders to receive paychecks up to two days in advance from standard payday.
4) Crypto Payroll… wage payments through multiple crypto-currencies.

#3 Financial Health Gets Political
Financial health is going to take center stage in 2021… Financial health scores are emerging. The topic of financial health is often dominated by discussions of financial literacy… Financial health will be regulated. Look for the new administration to require banks to monitor and improve their customers' level of financial health...

#4 Fintech-as-a-Service Platforms Emerge
There’s a supply and demand imbalance in the market today. Lots of fintechs want to partner with banks—but few banks are equipped to partner with the fintechs... Banking-as-a-service has become a popular term (and service) and refers to enabling a company—usually a platform—to embed banking services into their offerings… Companies like Moov... will enable banks to provide a range of services—e.g., ACH processing, transaction processing—to fintechs in a more modular way.

#5 Banks Step Up Fintech-Powered Core Workarounds
[-] Core integration providers. Companies like Constellation, Sherpa Technologies, and Sandbox Banking have been offering core integration platforms for the past few years enabling banks and credit unions to better integrate with—but potentially migrate away from—their core systems.
[-] Payment hubs. Fintechs like Payrailz and Finzly... not only enable financial institutions to intelligently route payments to the optimal payment mechanism, but allow them to offload transactions from core processing.
[-] Digital cores. Companies like Finxact, Q2, and NYMBUS have been helping financial institutions digital banks… The smart institutions, however, recognize that the digital cores are good ways to create and deploy new products and services that would take years if they tried to do it with their existing core system.

Overall, however, this is going to be the banking and fintech story for 2021: The disruption of the value chain.

[tags BankTech, FinTech]