2021 predictions from Luc Gueriane, Chief Commercial Officer at Moorwand

2020 has been dramatic to say the least. In the fintech industry there has been a monumental shift towards digital payments. The mix of shop closures, lockdown measures and the booming ecommerce sector have made fintech products more relevant, and more important, than ever. And businesses have relied on fintech and payments solutions to facilitate rapid change.

Now looking to 2021, we can expect this turbulent year to have a longstanding impact with even more drastic change on the horizon. So, what do the next 12 months have in store?

Open Banking will start fulfilling its promise

Despite having registered over two million users in the UK, Open Banking is still failing to meet its goal of creating a more competitive retail banking landscape.

Its two million active monthly users equates to just 3% of the UK population. To put this into context there were 247m cheques sent in 2019 according to Pay UK. From these estimates cheques are used by over four million people.

Yes, cheques are more popular than Open Banking. 

Fintechs, however, are going to widen the adoption of Open Banking and help it to fulfil its promise. To date, one of the biggest problems for Open Banking is the cost and expertise required by non-bank service providers to access the necessary infrastructure. Fintech technology providers from dedicated Open Banking players to issuers and acquirers are making this infrastructure more accessible. 

In 2021, we will finally see Open Banking use cases go beyond account aggregation and these will be driven by fintechs not incumbent banks.

The world will go contactless

The last year has proven that cash is more troublesome than digital payments. For businesses cash is expensive to handle and for consumers it is inconvenient. It takes time for banks to process cash for businesses and it takes consumers time to find cash points or bank branches. Crucially, in an era where data is paramount to decision-making, cash contains no data and shares no insights at all. 

These problems have been made more acute by the Covid-19 crisis which has pushed consumers towards contactless payments due to health concerns around cash.

With physical stores re-opening, in the next year consumers will demand the ability to pay via contactless. And they will have options – they will be able to pay contactlessly via their cards, digital wallets and super-apps on their phones and even using wearable devices. We’re seeing strong adoption of the K-Ring, the world’s first contactless ring, especially as it can be used contactlessly on the Tube. With rival options appearing such as AEKLYS by high fashion designer Philippe Starck, the wearables space is hotting-up.

With payment options extending beyond cards and mobiles into new uncharted territories like luxury wearables, 2021 will be the year the world goes contactless.

With the travel industry ‘on ice’, fintechs will diversify

Travel used to be solid ground for many payment fintechs, a lucrative business that took advantage of broken FX rates. Heavily reliant on consumer travel, these firms capitalised on a gap in the market, but now that gap has disappeared along with the margin. Combined with the mass travel-restrictions imposed due to Covid-19, the revenue opportunity in travel has all but disappeared.

Take Revolut, for example. Revolut was initially positioned as a multi-currency Mastercard, then realising the revenue potential began marketing as a multi-currency travel app and card. Today Revolut is now marketed as a global bank offering everything from crypto trading to subscription management.

In 2021 the market will be forced away from the “cash-cow” that was travel. With the e-wallets like Apple Pay and Google Pay growing in dominance, payment companies need to shift from “nice to have” travel products to “must have” wallet cards. 

Final thoughts

The way consumers interact with fintech products has changed forever. 2021 will see fintech companies steer away from the formally reliable FX market and focus on genuine consumer-led innovation to ensure their products are top of wallet. Coupled with the growth of Open Banking and the rise of contactless, 2021 is set to be just as seismic a year for the fintech and payments industry as the last.