Home Crypto News Fintech in 2021: The Year’s Hottest Trends So Far, according to the Experts

Fintech in 2021: The Year’s Hottest Trends So Far, according to the Experts

17 min read

For a lot of the world, 2020 was such a foul yr that it has virtually grow to be a joke. The pandemic induced chaos in our private, skilled and social lives.

The monetary and fintech worlds had been turned utterly the wrong way up. Companies had been compelled to adapt to a rapidly-changing set of restrictions and challenges; prospects had an ever-evolving set of wants and corporations wanted to be taught shortly how to meet them with restricted assets.

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As a consequence, plenty of main modifications shortly unfolded in fintech. Now, with mass-distribution of COVID vaccines, it appears as if there’s a mild at the finish of the tunnel: the finish of the pandemic could also be in sight. However, lots of the tendencies that developed in the fintech world because of COVID are probably to keep lengthy after the virus loosens its grip on world society.

What are these tendencies? Here is what the consultants have to say.

#1: Alternative Assets Are on the Rise

One of the most vital tendencies that the fintech business has seen thus far in 2021 is the rising recognition of different belongings–specifically, cryptocurrencies.

Cryptocurrencies have steadily been gaining recognition since their inception round 2010. This development was accelerated in late 2017 with the preliminary coin providing (ICO) growth and the short-lived Bitcoin run to $20,000. However, since the begin of the COVID-19 pandemic, modifications in financial coverage round the globe have led a rising variety of people and establishments to search new methods to defend and develop the worth of their financial savings.

Of course, the most outstanding instance of that is Bitcoin (BTC). Since late 2020 and into the begin of 2021, plenty of main firms have added Bitcoin to their stability sheets, together with Tesla, Square and MicroStrategy. Additionally, plenty of main banking establishments have begun to supply Bitcoin-based funding merchandise to their purchasers.

Moreover, Cryptocurrencies past Bitcoin have gained recognition in mainstream monetary and cultural spheres. Controversially, Dogecoin (DOGE) grew to become a favourite of many retail traders after Tesla Founder, Elon Musk started to promote the coin on Twitter.

Snoop Dogg, Gene Simmons, Soulja Boy and plenty of different celebrities have adopted swimsuit. Additionally, plenty of firms have latched onto DOGE: for instance, Slim Jim and Snickers, two US-based snack meals firms, have each Tweeted some iteration of “Dogecoin to the moon.” Trading app Robinhood started providing Dogecoin investing to its customers in April.

As a consequence, the costs of Bitcoin, Dogecoin and cryptocurrencies throughout the board have risen significantly since the starting of the yr. At press time, Bitcoin (BTC) was up roughly 86% since the starting of the yr (from ~$29Okay to $54Okay); Dogecoin was up a whopping 6650% (from $0.004 to $0.27). As an entire, the whole market cap of all cryptocurrencies was up roughly 73% (from $776 billion to $2.05 trillion.)

#2: Non-Fungible Tokens (NFTs) Are Finally Having Their Moment

A outstanding a part of the rise of cryptocurrencies and different different belongings has been the rise of non-fungible tokens or NFTs.

These tokens are distinctive digital collectables that may be tied to something from digital kitties, to multi-million greenback artworks, to properties, to dwell occasion tickets and extra. Anything that may be collected in the ‘real world’ may be made into an NFT.

In addition, NFTs can present new methods to ‘own’ items of artwork or different inventive work. While non-fungible token tech has been round for a number of years, it’s the NFT circumstances in the artwork world which have actually induced their recognition to explode.

Eloisa Marchesoni, NFT specialist.

It all began in March when plenty of high-profile celeb artists started launching NFT ‘drops’ the place they may market their wares. Canadian musician Grimes pulled in a number of million {dollars} for the sale of a number of digital artworks; since then, some NFT works have offered for as excessive as $69 million.

However, some analysts imagine that the NFT artwork craze might not survive into the future, a minimum of, not in its present kind. “Since the majority of today’s NFTs neither make much sense nor provide much value, we’ll see the hype die down and the prices of many non-fungible tokens plummet,” defined Samson Mow, Chief Executive of Pixelmatic, to Finance Magnates earlier this yr.

Samson Mow, CEO of Pixelmatic and CSO of Blockstream.

NFT specialist Eloisa Marchesoni advised Finance Magnates that: “NFT artworks should only be purchased because the work in question has artistic value to the buyer and not because of potential future profits.”

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“As with any purchase, consumers should consider whether they get good value for money, in terms of how much an NFT is worth to them, but I wouldn’t bet on selling it at a profit. That doesn’t mean you won’t be able to have a profit, but that shouldn’t be your main motivation.”

#3: The Rise of DeFi: 2021 Could See the Lowering of Barriers to Entry into DeFi

Decentralised Finance, or DeFi, has been on the rise for the previous a number of years–even since earlier than anybody had even heard of COVID-19. However, the development of the DeFi ecosystem has been explosive since the time that the pandemic started.

However, DeFi nonetheless has some moderately excessive boundaries for entry. Primarily, many analysts argue that the majority of DeFi platforms are laborious for the common particular person to use. Beyond that, GoodFi Founder, Piers Ridyard advised Finance Magnates that the excessive quantities of collateral on some DeFi derivatives act as one other excessive barrier to entry. GoodFi is a non-profit organisation with a mission to get 100 million folks to put a minimum of $1 into DeFi by 2025.

However, Ridyard believes {that a} answer to this second barrier-to-entry is on its method. “Capital efficient derivatives are coming in 2021,” he advised Finance Magnates.

“So far, derivative protocols like Synthetix require very large amounts of collateral to create a derivative instrument (7x collateral); however, lower collateral derivatives are coming,” he mentioned. “Once we have capital efficient derivatives, it is quite likely that the nominal value of traded instruments on DeFi will explode from where it is now, potentially even 10x.”

Piers Ridyard, Founder of GoodFi.

#4: Collaborative Fintech: Remote Work Is More Popular than Ever–and So Are the Risks That It Brings

“Fintech’s trend to look out for in 2021 is the Enhancement of Digital Collaboration,” mentioned Jake Smith, Managing Director of Absolute Reg. “Most of the financial sector has adopted remote work arrangements for the near future in reaction to the COVID-19 pandemic.”

“As a result of the change, there is a high demand for digital tools that can help people collaborate more effectively and safely,” he continued. “Not only must physical documents be transferred to digital format, but companies must also figure out how to make such files accessible to remote workers without compromising data protection or creating version uncertainty.”

And certainly, there are fairly just a few kinks to work out when it comes to cybersecurity and distant work. “Rather than introducing a dedicated, all-in-one solution, organizations often rely on a number of incompatible software applications and improvised workarounds to satisfy their viewing, editing and document management needs,” he mentioned.

“Unfortunately, these haphazard solutions introduce inefficient third-party dependencies, expose data to unnecessary risk and increase the likelihood of human error,” Smith defined.

How may or not it’s doable to mitigate these issues? “Fintech developers may use SDKs and web-based APIs to combine these features into a single application,” Smith mentioned.

#5: New Types of Fraud Have Forced Fintech Companies to Find New Solutions

Creating functions that may enhance cybersecurity in fintech organizations is more and more essential as fintech firms face new sorts of cybersecurity challenges.

Steve Maloney, Executive Vice President of Acuant, advised Finance Magnates that: “there were new types of fraud introduced during COVID, but some that will continue to be pervasive are synthetic fraud and muling.” According to Investopedia, artificial fraud occurs when a prison combines actual and faux data to create a brand new identification. Muling is when individuals are recruited as cash laundering intermediaries for criminals and prison organisations, typically with out realizing it.

Steve Maloney, Executive Vice President of Acuant.

How will firms deal with these evolving safety threats? “[With] more robust, fraud-fighting KYC/AML solutions that can truly verify an identity and uncover the associated risk, essential to doing business,” Maloney defined. “AI-powered risk-decision making with real-time analytics can place trusted users in the fast lane, while suspicious users will be flagged. This will be the basic standard,” he went on.

Amber Morland, CEO & Founder of WinCope, advised Finance Magnates {that a} collaborative strategy is important to successfully deal with these new sorts of threats. “The challenge posed by cybercriminals and fraudsters will result in common threats that must be handled collaboratively across the financial system.”

“This is the route that fintech companies should take to become more cyber stable. They must deliver safe properties, form trusted commercial relationships with well-established companies, and adhere to regulations in the jurisdictions where they work.”


What are your ideas on tendencies in the fintech world in 2021? Let us know in the feedback under. 

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