Written by: Amol Ghemud, CEO, UpGrowth
The Paytm IPO may have been a bit of a dampener — but there’s still plenty of steam left in the fintech space. The pandemic has seen an increase in digital payments and the fintech space has evolved to fit the needs of the new consumer.
With remote working and shelter-in-place orders likely to resume as we deal with new variants of COVID, consumers will continue to favour digital payments and tools. The trends we’re seeing are all about making finance fast, simple, secure and convenient for the consumer. Here is what we are keeping an eye on for the year ahead.
People want convenience… and fewer steps before checkout makes the shopping experience easier. Digital payment methods are now overtaking credit cards, which can be cumbersome — enter the card number, enter your code, enter a password or OTP… several steps are involved. Digital payments, on the other hand, are easier and quicker. Amazon was among the first to roll out the “one-click payment/checkout” feature and other retailers are following suit. Payment solutions providers are likely to phase out manual checkout and move towards one-click payments.
Buy Now Pay Later (BNPL)
If you’ve indulged in some online shopping of late, you may have noticed payment options like Sezzle — where you can complete your purchase and make the payment at a later date, in installments. It’s an alternative to credit card payments and works for people who don’t want to bother themselves with getting one. While there are perks to being able to buy something you need and pay at a later date, there are also pitfalls, being a form of short-term micro-credit. You have to repay in a shorter window (usually 3-6 months) — but if you slip up or fall behind on payments, you could incur some heavy interest payments and late fees.
Cryptocurrency and Banks
The great thing about cryptocurrency is that transactions can get verified without the services of a bank. Consumers and investors can send and receive payments from anywhere, safely and securely. The global value of cryptocurrencies is rising, and it’s likely that more banks will offer cryptocurrency services, since they are popular amongst investors. It’s easier and hassle-free: the transactions are recorded in a public ledger, while cryptocurrency is stored in a digital wallet.
You can’t talk about cryptocurrency without blockchain. A blockchain is a decentralised public ledger that is shared digitally across a network, and often used with cryptocurrencies. Some banks are adopting blockchain technology, and other fintech companies are assessing how it can be used in order processing and currency funds. Blockchain allows for information to be recorded in a safer way, as each transaction is added to the ledgers of members within the blockchain. Thanks to its secure nature, a focus on blockchain adoption is likely to see a spike in the year ahead.
If Web2.0 brought forth a revolution in cosmetics and UX/UI, Web3 aspires to democratise and decentralise the web and restructure it on user-driven ledger technology, blockchain. As this kicks in, decentralised finance or DeFi, which serves as Web3’s primary mode of financial exchange, will require strong consumer protection codes and tools. Consumers will want to engage with the web and DeFi mechanisms in a safe way, and this will be a key focus for fintech companies.
It’s clear that the future is digital and centred around making payments and trading easier for the consumer. So fintech companies will be wise to adopt some of these trends and technologies to cater to their customers.