Digital Horizon investment company presented a study highlighting the main fintech trends for 2021.

Banking outside banking applications

In 2020, this trend has picked up speed and is not going to slow down any time soon: financial services are going “behind the scenes”, becoming an integral part of non-financial products.

Embedded finance tools allow integrating payments, debit cards, loans, insurance and even investment tools into almost any user experience. For example, you can obtain a loan directly on the website of an online store or a supplier company without filling out the forms. As for money, it can be transferred through apps that seemingly have no relation to finance. This approach will increase the profits of the banks and fintechs, as it will allow them to compete with players who are trying to drive customers to their banking applications.

Rebirth of insurance and loans

New user scenarios fueled by simple human insights are rapidly developing in the economy. First of all, people don’t like - and often can’t - pay the full price for expensive goods or services at once. Secondly, having already made a purchase, many people are afraid that something is going to happen it. Thirdly, in case it breaks, gets lost or stolen, the majority want a third party to take responsibility for solving the problem, but at the same time no one likes to pay insurance companies.

These scenarios make us take a different look at traditional financial products: insurance is entering the territory of loans, the loans emerge in areas where insurance has always prevailed; hybrid models combining loan and insurance components, are emerging.

This is how subscriptions, installments, short-term insurance and other solutions appear, offering people an opportunity to pay a regular fee for guaranteed access to goods, an apartment or a car, simultaneously allowing them not to face large one-time expenses and the need to take risks.

Data live

2020 “broke” the predictive models based on historical data. The financial situation of people and companies changed rapidly: “financial trauma” and afterward recovery randomly alternated. Information became obsolete so fast that in order to make decisions banks needed to track it practically in real time.

It has become important for financial institutions to see the whole picture of the client’s financial stability. In addition to credit history, data on current income and expenses, as well as any additional factors that may affect the solvency of a person or company, acquire great importance. But the more data, the higher the load on data-departments is, which means the computational cost increases.


Therefore, in response to the growing need for up-to-date information, analytical and scoring products, which provide real-time insights and are able to not only calculate historical scoring, but also make predictions based on big data, are going to develop.

Unmanned finances

2020 has “shattered” our financial discipline even more (and it’s not about job losses and falling incomes). The crisis forced people to look for new ways to save and increase savings.

A year ago, we noted that fintechs were beginning to respond to users’ need to take care of their financial health. However, the service that would successfully solve this issue has not been invented so far. The reason is simple: there is demand but there is no suitable business model yet.

Perhaps in 2021, finances will have “their Facebook”, which will at first have uncertain monetization, but will quickly grow, helping the users to maintain their financial health.

Such a product will, most likely, develop on the territory of automated finance. The first steps on this path are piggy banks that round the purchase amount and send the difference to a savings or investment account.

But to make finance truly automated, fintech products need to move from a closed to an open model. Then they will be ready to initiate transfers between accounts in different services, guided by the user’s benefit rather than by their goals. This is important not only for individuals: business is also waiting for an automatic treasurer who will distribute funds to the accounts of the banks offering the best conditions.

Payments without intermediaries

The pandemic has led to a sharp increase in online payments and exacerbated the issue of transaction costs. While businesses were complaining about high fees of Visa and Mastercard, next-generation payment providers were gaining momentum.

Thus, in the third quarter of 2020 the number of new active PayPal accounts grew by 15.2 million, the volume of payments through the service – by 36%. The number of transactions on Checkout.com platform since the start of the pandemic has increased by 250%.

The development of integrated payment channels (when payments are served by software companies rather than traditional financial providers) is a long-term trend. The business actualizes the request for alternative methods of online payments, including e-wallets, QR codes, and cryptocurrency.

Of course, the international payment systems will not disappear in 2021. However, we will see the development of solutions that make it possible to go without Visa, Mastercard and acquiring banks. They will be implemented by both fintechs and consortia of banks, for example, the Scandinavian P27 platform.

The flourishing of digital assets

After China, in 2020 dozens of countries announced that they started developing their own digital currencies or considered this possibility, like Russia. In parallel, the regulators have tightened control over cryptocurrencies, requiring crypto-services to identify users exactly the same way as banks do. As a result, many players in the financial industry have changed their minds and decided to create a hybrid model with digital assets.

Designer of financial technologies

Since in 2020, traditional financial institutions were forced to accelerate the infrastructure upgrade and the transition to digital, it led to the development of a trend aimed at simplifying the digital infrastructure in terms of customization and integration. In the short-term perspective, we are talking about low-code development (with minimal knowledge of code), and in long-term one - about no-code solutions.

Already today, we witness specialized providers offer banks services of low-code platforms, instead of modular solutions. This allows easily and quickly adding necessary services: from payment solutions to more complex products, which are related to machine learning and include pre-trained models.

In the future, banks will be able to assemble customized solutions that will best meet customer needs, and not just follow standard use cases.

The partner of Fintech section is