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Rise of Subscription Services Hints to Future of FinTech

4 April 2021

Subscription as a model is seeing increased popularity in almost all industries, and the onset of the COVID-19 pandemic has only further propelled the popularity of subscribing to digital platforms. As the global population shrouded by uncertainty continues to move in and out of lockdown, it’s depending more and more on subscription-based digital services for different purposes, such as shopping, entertainment, food, medicine, and education.

The FinTech industry is one of those industries that has been somewhat positively affected by the global pandemic, specifically subscription models that tend to lean towards being affordable and convenient for a variety of customers that are understandably money-conscious during these trying times; our new normal has seen such a rise that industry players are beginning to contemplate whether or not it’s the future of FinTech.

As the world takes to digital more every day, subscription models are becoming more appealing as business models and people are discovering its added benefits, such as the transparency behind companies revealing their fees upfront, getting access to a product or service that gets better over time, and the provision of better customer service and real-time updates, which ultimately results in better customer loyalty and trust.

Many FinTech players are still assessing the risk involved in catering to subscription-based platforms, but many others have already taken initiative to provide consumers with products that allow them to manage their many subscriptions, such as offering virtual cards for each subscription service they are part of. On the business side, FinTech providers also benefit from subscription models as they get access to a lot of customer data which enables them to re-target their services to their existing customer base, and this is achieved by incorporating innovative concepts like Artificial Intelligence (AI) and Machine Learning (ML) into their products or services. This incoming user data is further analyzed and broken down to allow companies to get richer insights about their consumer base, in turn enabling them to create better, personalized products and even showcasing the need for a completely new product or service by highlighting hidden opportunities within the user’s behavior, for instance.

There are several FinTech providers that are currently offering subscription-based models in one aspect or another, and their approaches vary. Microinvesting spare-change applications are one example, bridging together investment, retirement plans, checking accounts and more across different subscription levels that each provides a list of services with fixed fees per month, while providing an easy, smart and trusted solution. Other startups provide an all-in-one subscription service by giving exclusive discounts and amenities that include phone insurance, free cash deposits, and the ability to withdraw fee-free cash. Looking at challenger banks, some are offering their customers exclusive value-adding perks for a set monthly fee, such as access to global travel lounges, free ATM withdrawals, and travel insurance. On the other hand, some banks have created a subscription-based m-banking program that includes checking, savings, a debit card and a line of credit of up to 75% of a person’s savings, all for a fixed monthly fee.

Forward to today, and we see that an increasing number of people are willing to pay a lesser monthly subscription fee than a significant lump sum upfront, especially during the ongoing pandemic. Users can always cancel their subscriptions if they feel they have better use for this money, as opposed to having paid a large amount that is non-retrievable. Today, with an improved digital payment infrastructure that is getting more secure every day and with many account-2-account payments providers budding all around the FinTech ecosystem, it’s now much easier for businesses to offer their customer a seamless subscription experience, while making it much simpler to integrate their payment gateways into existing software solutions that support businesses with recurring monthly or annual payments.

FinTech applications are on the frontline today when it comes to facilitating digital payments and tying together the many subscription models that are finding their way into our lives, and as commercial platforms increase at a rapid pace, so does the underlying digital finance infrastructure that allows these platforms to blend seamlessly into our daily lives. As consumers continue their search for the best digital experience amidst an uncertain period around the world, FinTech should hold the reigns and spearhead the subscription economy into a brighter, more profitable future for all parties involved.