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Intellias: FinTech Industry Trends in 2021: The Year of the Connected Customer

One meta-trend will underpin all developments in the FinTech space in 2021 — the rise of the connected customer. Here’s what you should know

It’s that time of year again: time to talk about financial services industry trends and outlooks.  

In 2020, big things happened in the FinTech space. 

FinTech Industry Trends in 2021: The Year of the Connected Customer

Source: ATOS – LookOut 2020+ Industry Trends Banking: Toward next-generation financial services ecosystems 

As an industry veteran, you’ve probably heard all this before: 

  • The FinTech sector is smoking hot: investments are ripe, competition is fierce, and demand is high.  
  • Millennials are the driving consumer force, gradually building up their wealth and on track to become the dominant generation in the financial space in 2029.  
  • AI, ML, and big data analytics are becoming commodity technologies. They’re no longer nice-to-have but must-have to compete. 
  • Open APIs, platformization, and bundling are also trends. 

So will there be any really new financial services industry trends in 2021? Yes and no.  

We believe that 2021 will be defined by one key meta-trend: the rise of the connected consumer whose pains, needs, and demands will drive product development and shape the overall vector of the financial industry. 

This year, instead of talking about individual tech trends, let’s go on a bit of a journey through the customer looking glass.  

The era of connected customers has arrived  

Once upon a time, all a customer expected from a bank was to store their hard-earned cash and provide some way to spend and withdraw it. Then came challenger banks and other FinTechs and showed that all things finance could be lightning fast, mobile-friendly, and affordable.  

Meanwhile, customers grew even more accustomed to top-notch omnichannel experiences thanks to Amazon, Uber, and other apps making once-daunting processes a one-click breeze. Gradually, most of us developed a neat digital ecosystem of products to fulfill our every need. Now FinTech apps have the opportunity to find their place in the heart of that ecosystem. 

As we highlighted in our New Age in Banking whitepaper, Millennial and Gen Z consumers — the key target demographics for 2020–2030 — want to see their banking products as their companions and advisors who are helping them reach their financial goals. Gen X is not far behind Millennials in FinTech adoption.  

Plus, last year, FinTech adoption surged on a global scale:  

FinTech Industry Trends in 2021: The Year of the Connected Customer

Source: EY – Global FinTech Adoption Index 2019 

The data above isn’t all new, but it’s worth looking at it again. In 2021, the customer experience will become the competitive battlefield for FinTechs. 

Wait, but wasn’t 2019 the year of the Customer Experience (CX)? And 2018 too?  

Yes and yes, and most financial companies have made huge progress. Collectively, FinTechs have reimagined the once-daunting tasks of opening a bank account, sending money to friends, applying for a loan, and planning for retirement. 

Now mature FinTechs will need to transpose that smooth CX from single-purpose to multi-purpose financial products. We’ve come up with a good formula for that:

Machine Learning (ML) + User Experience (UX) = Top FinTech Customer Experience (CX)


In a nutshell, connected customers want financial products that are: 

  • Simple and intuitive  
  • Frictionless  
  • Engaging and interactive  
  • Able to solve one pressing money matter (or better, several at once!)
  • Personalized to their needs 
  • Designed to proactively help them get better at what they want to accomplish  
  • Built around a consistent omnichannel experience 

In 2019, we already saw how both incumbent banks and FinTechs adapted to these demands. In 2021, most will likely keep on with those transformational initiatives aimed at building better, smarter, and more complex products.  

Intellias take on the financial services industry trends in 2021 

  • FinTechs are now competing at the ecosystem level. In 2021, we’ll likely see more marketplace banks, a bunch of new super apps, and loads of cross-industry partnerships — all aimed at meeting the demands of connected consumers.  
  • To bundle or not to bundle? That’s the big industry question. Younger FinTechs are getting their slice of the market by going after niche use cases — small business digital banking, bill consolidation, startup credit cards, you name it. Bigger unicorns are full speed ahead, beefing up their core offerings with additional products. Think about Wealthfront’s move into savings accounts. Both approaches have their merits, and we expect these trends in financial services of starting niche and growing bolder to stay strong.  
  • Customer data collection and operationalization will remain imperative. FinTechs should continue to focus on viable machine learning and AI use cases, deploying predictive analytics to gauge a user’s current standing and future financial aspirations, devising the next best action strategies for them, and delighting with AI-driven personal finance management 
  • And yes… customer-centric is still a huge buzzword. We believe that the financial system as a whole is evolving to meet customers’ needs. 

The “let’s do money better” trend — financial literacy  

In 2021, we should address the elephant in the room: 

Most of your customers are bad with money


Heck, they’re the first to admit it.  

  • People who are 34 and younger with no children have $4,727 in savings on average.  
  • 66% of Millennials state they have little or only partial confidence in planning for and achieving their financial goals. 
  • 33% of Millennial mobile payment users say they occasionally overdraw their checking accounts, compared to 19% of those who don’t use mobile payments. 

Also, according to a Credit Karma/Qualtrics survey from 2019: 

  • 56% of respondents feel their financial goals are out of reach 
  • 55% think they don’t have enough money to make ends meet  
  • 59% feel stressed about money every single day 

85% of Millennials surveyed by Credit Karma/Qualtrics say they often feel too burned out to think about or deal with their personal finances


How about offering these people some help?

FinTechs already have the tools to do so:

  • Access to a wealth of customer data on spending behavior, recurring payments, categorized spending, upcoming bills, and debt.
  • Off-the-shelf customer analytics solutions to provide users with at least an overview of how they’re doing.
  • Commoditized access to big data analytics, ML, and AI to build more advanced financial coaching solutions

Investing in customers’ financial literacy is the key to winning them for the long term.  

First, show customers how to avoid overspending on late bills or cancel unwanted subscriptions. Then teach them how to save more (without sweating too much over it), spend smarter, and invest better. As a result, you’ll have happy, loyal, higher-net-worth customers who are willing to stay with your brand for the long term. It’s a win-win.  

Autonomous finance — “Doing better money” on autopilot  

Having computer code decide how we should save, spend, or invest our money isn’t a futuristic idea. It’s the reality in 2021.  

AI-driven personal finance and wealth management are already here, as we highlighted in our research on new-gen personal financial assistant applications 

Consumers who are burned out and stressed out clearly vote in favor of this hands-free approach to managing their money 

Wealthfront, Betterment, Credit Karma, and SoFi are on the road towards becoming one-stop shops for automated money management


How comfortable would you feel using each of the following services?  

FinTech Industry Trends in 2021: The Year of the Connected Customer

Source: Quartz – Get ready for self-driving money 

We expect to see a surge in the growth of AI in: 

  • Investing. Ready to meet Robo Advisor 4.0 who uses self-learning AI to balance your portfolio in real time based on market conditions, your stated goals, and your financial behavior?  
  • Personal finance trends in 2021 and budgeting. Perhaps you’d like a financial assistant that suggests when to pay a bill, which savings account to use, or where to find cash for that dream vacation? 
  • Lending. Get approved for a loan in seconds, automate the growth of your credit score, and receive personalized credit offers with lower fees — these are just a few things autonomous lending apps promise.  

As AI becomes a commodity technology, great things can happen.   

Intellias’ personal finance tips for 2021: 

  • For a wider reach, FinTechs should coach. Finances excite too few consumers, as most view money management as a daunting, complex chore. FinTechs so far have done a good job of showing that investing, budgeting, and saving can be fun (thanks to gamification). Now they need to help customers build their skills even further. FinTechs can’t grow if their customers remain bad with money. So it’s time to teach (but not to preach).  

We found people don’t always want to be spoken to like a ‘customer,’ but engaged with as the breathing, living, well-rounded human beings they are.


  • Intuitive, intelligent tools will drive the growth of your user base. Empower your customers with engaging tools that will help them proactively master different aspects of finance. Offer analytics, calculators, predictors, and estimators to show them where they stand now and what it will take to meet their goals. Deploy AI assistants to help them close that gap.  
  • Align customers’ day-to-day needs with the financial products you’re offering them. It’s time to move from reactive to proactive offerings. Thanks to advances in AI, you can now anticipate consumers’ needs and capture their day-to-day struggles with high precision. What FinTechs are missing so far is the ability to pitch the best offer to the customer at the right time.   
  • Prep for autonomous finance. It’s happening. The question is, Will you be at the forefront of the innovation?  

Voice and virtual cards: A rising payment method duo 

FinTech Industry Trends in 2021: The Year of the Connected Customer

Such conversations are inevitable in 2021, as Alexa now knows how to track utility bills, send reminders, and compare month-to-month payments.  

Considering all the previous tech advancements in the voice payment space, we expect that other voice assistants will pick up new skills and take a more proactive role in payments and money management in 2021.  

In particular, voice assistants will:  

  • Provide conversational support and basic updates. They’ll be able to reply to common queries, provide basic account/balance data, send reminders, set up recurring payments, and more.  
  • Validate and authorize transactions. Some financial institutions are already using voice as an authentication method, and voice payments are no longer an industry novelty.   
  • Delight with new skills. More advanced use cases will let users perform a wider range of activities, e.g. set up recurring payments, cancel subscriptions, and reroute money between accounts.  

Of course, voice will also remain an avenue for shopping:  

  • 9.6% of consumers made a voice purchase in 2020, up from 7.7% in 2018.  
  • Among Millennials who own voice-activated speakers, 32% use them to shop online.  
  • Spending by drivers via Google Assistant integrated into digital dashboards is expected to increase by 31.9% in the next few years. 

Connected car commerce is growing, as newer vehicles come furnished with connectivity and integrated payments. Since browsing and driving is bad practice, most drivers choose to place orders by voice. 

The skinny: Voice payment technologies had a slow start, but they’re expected to pick up speed in 2021–2022. For FinTechs, the best opportunities will lie in connected car commerce and conversational AI assistants 

Virtual cards are another not-so-new but rising payment trend. After all, the volume of credit card fraud is far from decreasing. With the latest series of high-profile card breaches, consumers feel wary to disclose their information to just anyone.  

In fact, most connected consumers actually use digital wallets (PayPal, Venmo, Google Pay, Apple Pay, etc.) to mask their card details and perform transactions securely. Or they opt for a virtual card if one is available from their digital bank.  

Offering virtual cards is a quick way to delight customers and stave off the competition from FinTechs who are making a cautious foray into the payment card space: 

  • The new Apple Card entices users with cashback, interest-free credit for Apple products, and no fees.  
  • Google Wallet has also started offering one-time virtual cards.  

However, the real revenue opportunity for virtual cards is in the B2B payment space.  

By 2022, the business use of virtual cards will increase by 90% and hit $1 trillion. That’s a $568 million increase from the estimated 2019 total.


As we shared in our digital business banking post, virtual cards are among the features most requested by customers as they effectively address three big payment challenges: 

  • Speed – Topping up a card is almost instant (unlike checks), and payments also go through instantly.  
  • Reconciliation – All spending information is immediately visible, so managing employee expenses is less of a hassle.  
  • Reduced fraud – Virtual cards are useless if stolen.  

The skinny: Virtual cards are leading the race in the corporate payment technology space. However, we also expect to see more virtual card offerings from both challenger banks and FinTech players.  

Open Banking: Not quite there yet 

Open Banking was promised to take off in 2020. But that didn’t quite happen. According to a Tink report: 

  • 41% of the 442 European banks failed to meet the first Payment Services Directive 2 (PSD2) deadline in March 2019. 
  • None of the 69% of European banks who met the June deadline for Open APIs actually managed to deliver APIs “of sufficient quality to have met the required regulatory standards for integration.” 
  • Banks were given an 18-month extension on Strong Customer Authentication (SCA) implementation, and we’re yet to see how that goes.  

Only 24% of banks and 29% of EU FinTechs confirmed that they are ready to comply with PSD2.


The general industry sentiment is this: financial institutions have not fully figured out how their Open Banking setups will look in terms of technology, products, branding, and tech.  

If you’re undecided about the idea of Open Banking, here’s a quick recap of its benefits according to Accenture: 

  • 90% of financial leaders believe that Open Banking can boost organic growth by 10%. 
  • In 2021, the EU Open Banking leaders are expected to bring in up to 20% of total lending revenue and 21% of current account revenue, process 17% of payments, and handle 12% of retail investments 

Plus, connected consumers are very much up for Open Banking: 

  • 85% of those aged 18–24 would trust a third party to aggregate their banking data.  
  • Over 50% of customers with 4+ accounts in different banks will try an aggregation service.  

Intellias skinny: Becoming PSD2 compliant and meeting SCA requirements is challenging. But it will be an imperative in 2021 if you want to stay competitive and adopt new business models such as marketplace banking 

Trends in financial services: New regulations and recommendations 

PSD2 and SCA are the top-of-mind compliance hurdles for FinTechs in the EU.  

But there’s some good news too. The newly released set of recommendations on regulations, innovations, and finance from the European Commission proposes some much-needed changes: 

  • Revising limitations on the types of non-core business services financial companies can provide. 
  • Reducing the fragmentation of regulations among member states. 
  • Introducing a more harmonized KYC process and requirements.  
  • Ending the customer requirement for providing paper documents. 

Overall, the report proposes several sound steps that would ease FinTech operations. The strong focus, however, remains on customer data protection and customer privacy.   

FinTech Industry Trends in 2021: The Year of the Connected Customer

Source: KPMG – Regulation and supervision of fintech 

US regulators are taking a somewhat different stance on FinTechs.   

The U.S. has traditionally been of the approach that we’ll try to fit [fintech] into one of our regulatory boxes.


Case in point: A new bill in the US Senate proposes making Facebook’s upcoming libra cryptocurrency a security under the law. Most other FinTechs are also treated in line with outdated financial legislation from the 70s. And while everyone recognizes this isn’t the way to go, little action has been taken so far.  

On a brighter note, US authorities plan to give the financial industry at least some boost with a new round-the-clock real-time payments and settlement service, announced to go live in 2023–2024. Codenamed FedNow, the new system could become a game-changer for smaller banks and FinTechs, as they will no longer need to build a private infrastructure (or rent one from a larger bank).   

Intellias regulations insights for 2021: 

  • The EU and the UK are heavily exploring innovative guidelines that would support and promote FinTech innovations. PSD2, SCA, and GDPR may be daunting, but ultimately they aim to increase market-wide security standards and promote secure exchanges of data between all participants. 
  • The US financial regulatory landscape is yet to catch up. Most FinTech operations are governed by outdated legislation such as the Gramm–Leach–Bliley Act (1999), the Fair Credit Reporting Act (1970), and the Electronic Fund Transfer Act (1978), among others. Clearly, these are hardly suitable for today’s reality. In 2021, it’s unlikely that any major changes will happen unless prompted by a joint industry effort. 

What’s next for FinTech? 

Ultimately, this is a question for you and your customers to answer.  

  • Listen closely to demands.  
  • Anticipate your customers’ next moves with better analytics.  
  • Align your products and offers to your customers’ lifecycle of financial needs.  
  • Earn trust through a transparent and seamless experience. 
  • Respect customer privacy and seek consent.  
  • Prioritize your tech investments and product development on all of the above.  

Author: Anna Oleksiuk

Read the original article here. Find out more about Intellias here.

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