The Beginning of the End of Cash? 2020 in Fintech Trends

2020 was a big year of change for the fintech industry.
Before the pandemic struck the globe, fintech companies around the world entered the new year with expectations that were shattered within months. Many of the trends that began in the year were abruptly halted; fintech companies were forced to quickly adapt, or else.
Fintech became a signficiantly more important part of global society as many of the traditional ways that individuals and companies handled their financial dealings were disrupted. Additionally, fintech companies played an important role in distributing aid.
No matter which way you slice it one thing is for sure, the fintech industry will never be quite the same. Here are some of the most important changes that fintech underwent in 2020.
In the US, Fintech Companies Provided Vital Support for Small Businesses Affected by COVID-19
The COVID-19 pandemic brought about widespread financial difficulty in many areas across the world. In the United States, the government’s response to financial hardship caused fintech companies to hold a new level of importance.
Indeed, Lindsay Lockhart, Co-founder and Chief of Staff at Neocova, a St. Louis-based fintech providing technology to community banks and credit unions, told Finance Magnates that fintech’s most important trend in the United States was the “support of the rapid digital transformation of financial community institutions.”

Lockhart specifically pointed to the role that fintech companies played in the Paycheck Protection Program (PPP). The PPP was an important part of the government’s stimulus program that was launched in response to the economic fallout that resulted from COVID-19.
In April, the United States government made the decision to approve Paypal, Intuit, and Square as which provided forgivable loans to small businesses that keep all employees on their payroll for at least eight weeks.
Lockhart said that these fintech companies were “vital” to the PPP and to the traditional financial institutions “that supported countless businesses and Americans all while handcuffed by legacy technology.”
“Fintech rose to the occasion to help these community banks and credit unions digitally transform at a rapid pace,” Lockhart said. Fintech firms helped these local institutions to “support their clients in this new remote world where brick and mortar became obsolete and to fulfil the PPP demand that larger financial institutions shirked.”
Fintech Saw “a Staggering Rise in Fraud and Cyberattacks” in 2020
However, the larger role that many fintech companies played, the more of a target they became for bad actors.
Indeed, Donald Kasdon, the Founder of payment processing service, T1 Payments, told Finance Magnates that “the most sweeping change in fintech this year was a staggering rise in fraud and cyberattacks.”
“We’ve seen it all, from credit card testing schemes to identity theft,” he said. “In response to this dangerous trend, fintech companies have had to adapt to prioritize cybersecurity and fraud prevention.”
This was true in the cryptocurrency world, which experienced a significant rise in the number of phishing and malware-related attacks throughout 2020.
“Many e-commerce merchants don’t think a cyberattack will happen to them and have avoided investments in fraud prevention in order to cut costs,” Kasdon explained.
“This year, many merchants have learned the hard way that this technology is essential to run and future-proof an e-commerce business. It goes without saying that a cyberattack like credit card testing can be devastating to a small business, both from a brand trust and a financial standpoint, as this can result in enormous chargeback fees.”
Therefore, Kasdon believes that anyone dealing with fintech should learn to take extra precautions in the future: “as a start, merchants should implement identity verification and SCA tools on their sites, such as AVS and CVV, as well as session validation,” he said. “These tools are a simple and straightforward way for merchants to prevent fraud while not alienating real customers by making them jump through hoops.”
However, Ruston Miles, Founder and Advisor at Bluefin, believes that “when in-person retail and dining resumes in 2021, I expect to see a sharp rise in card data breaches later in the year and on into 2022.”
“Hackers follow the money. They’ve spent 2020 online, where the money quickly moved to,” he said. Therefore, “merchants should take the opportunity to upgrade their card acceptance devices to accept contactless cards and phones and to have the latest encryption in place to thwart hackers as consumers return to brick-and-mortars.”
Cash Is out, and Contactless Payments Are Here to Stay
A representative of the Fletcher Group told finance Magnates that one of the year’s most important trends in the fintech world has been contactless payments.
“The digital, contactless payment trend is pushing the envelope on payroll,” Fletcher Group told Finance Magnates. “The COVID-19 pandemic drove a huge increase in the number of people who want to pay in digital, contactless ways, and experts expect this to continue long after the pandemic is over.”
But, the contactless payment trend is not just about cards that do not have to be swiped or inserted, it is also about
As such, “this trend is not only impacting a large portion of the workforce, including 14.1M U.S. adults who are still unbanked and locked out of these payment options — it’s also impacting their employers,” Fletcher Group added.
“This is especially apparent in service industries where tipping is a significant portion of wages. According to a recent Netspend survey of restaurants, 93% found that their customers are using less cash as the result of the pandemic, which leaves businesses left with little cash on hand to pay out tips or expense reimbursements.”
As a result, the current payment ecosystem still has a lack of connection between cash and digital payment methods,” the Fletcher Group explained.
Therefore, the Fletcher Group believes that preloaded payment cards could play an increasingly important role in industries that previously relied primarily on cash.
“Payment cards bridge these gaps because they can be loaded with cash and then spent digitally, giving cardholders the freedom to spend where they want,” the Group’s representative explained. “As people and businesses continue to adapt to current circumstances, the plastic card at the core of each of these payment accounts remains central to the consumer’s convenience, security, and safety.”
Fintech Companies Are “in a Totally Different Environment Where the Need to Prove Value Quickly Is Immediately upon Us.”
The circumstantial changes that 2020 brought about were different in that the circumstances of survival for fintech companies changed.
Brandon Dewitt, Co-founder and CTO of MX, told Finance Magnates that the companies that survived the change in circumstances best were those “that have substantial value propositions and the ability to sustain a business on revenue without outside investment.”
“Capital markets were difficult to navigate in 2020, and it’s certainly a different world out there right now,” DeWitt said. “You have to have a business that has already crossed the chasm to make it through this time period.”
There have been plenty of companies that were unable to cross this chasm. DeWitt explained that in terms of his own company’s experience, “in a normal year we’ll see maybe two acquisition opportunities in a month” – “acquisition opportunities” meaning companies that are about to fold and need to find a buyer in order to stay afloat.
“In 2020, it was more like two a week,” he said. “We’re in a totally different environment where the need to prove value quickly is immediately upon us. If you’re a good company, you can prove value very quickly based on what you’re going after.”
Which companies are doing the best job of proving their worth? “Companies often perform the worst when their goals are not in line with the goals of their customers and consumers,” DeWitt explained.
“As I always say, money is a follower, not a leader. If you’re pursuing money and concerned about that side, you’re going to do worse than if you’re concerned about impact. A lot of organizations have suddenly realized that putting advocacy at the center of their mission has become a necessity.”
Engineering a “Human Touch” into Fintech Platforms Is More Important Than Ever
Another of this year’s most important fintech trends has to do with .
Indeed, Mike Rhodes, partner at full-service CPA firm, Citrin Cooperman, told Finance Magnates that before COVID-19, “there were high expectations as to how AI could streamline customer experience through chatbots and their ability to complete increasingly complex customer requests and increase customer purchasing of financial products.”“AI chatbots did not achieve the adoption rates that were originally expected as we entered 2020,” he said.
While it is still possible that AI-powered chatbots could become much more popular in the future, the fact that they failed to achieve widespread adoption this year could signal
Earlier this year, Eric Anziani, Chief Operating Officer at Crypto.com, told Finance Magnates that “one of the reasons why senior citizens still walk to the bank twice a week and queue in line is not because they are incapable of obtaining money in any other way: it is because they value the human interaction and the personal touch that comes from banking face to face.”
“That’s an important point to bear in mind when designing fintech platforms: your mandate to automate processes doesn’t have to come at the expense of dehumanizing the experience. Maintaining customer support who can assist users when they get stuck, while demonstrating that there are real people behind the platform who actually care, is imperative.”