Fintech Trends to Look Out For in 2022
3 out of 4 people have used a fintech service worldwide.
What makes people opt for the ever evolving fintech services?
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Technology has impacted the stalwarts of the industry and traditional banking is no exception. No one could have predicted the transition from traditional to digital banking a few years ago and now countries are considering going fully digital in the next one to two years.
Smartphones becoming an everyday commodity has transpired the change from traditional to digital banking along with other contributing factors. Bitcoin first came into the limelight in 2009 and everyone brushed off the idea instantly terming it another fad. The last five years have seen immense evolution in banking trends and Fintech has come out to the industry to look out for in 2022.
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Trends to Keep an Eye Out For
The fintech market value is expected to reach $309.98 billion by 2022, more than twice its 2018 value of $127.66 billion. More than the numbers, it is how clients are shaping the interactions that occur and how the financial world is adapting to the changing demands.
A digitized society
Access to mobile phones and other means to carry out digital activities has increased exponentially in the last decade. According to data by Statista, there are over 6.37 billion cell phones in use in the world today, up from 3.6 billion just 5 years ago. This is an indication that there’s a potential for diversification of uses but also banking the unbanked the world over. The trends have been changing, people are an option for more digital means to conduct day-to-day and business transactions. In 2021, more than 52% of online purchases were made using a digital wallet. Meanwhile, the use of non-cash payments is rising at a rate of 32%, and 2021 will be the year when digital payments will take over the cash payments for the first time ever. The societal change in behaviors directly impacts banking behaviors.
Contactless service delivery
The covid-19 has influenced consumer behaviors. Businesses faced with the struggle to adapt to the new socially distanced and remote normal, did well in a rather short period of time. According to research by VISA, almost 33% of businesses now accept only contactless payments, with 78% of consumers adapting to the new payment methods. The business that aspires to survive the crunch will have to be readily available to adapt to the demands of the consumers and be inclusive of the changing times and trends.
Rise of digital/Neo banks
Neo banks have broken the old monopoly of the few big names in the banking world and have made banking convenient and accessible for the unbanked in the developing world. It promises lower banking fees, an easy and convenient mobile banking system, and an improved banking experience.
According to Statista, the Neobank sector was valued at $30+ billion in 2020 and is projected to grow at a Compound Annual Growth Rate of 47.7% over the next eight years.
Neobanks are also attracting unbanked customers with a combined purchasing power of $1.2 trillion. As people get more inclined towards the online banking system, in-store banking will be surpassed by digital services.
Cross border real-time payments
According to Levvel Research, Approximately 40% of large enterprises in the US have opted for real-time payments, and the number is set to rise. Other than the US, in other countries and regions, the fintech trend of online real-time payments has picked up as well. As the domestic schemes become more established and popular, the real-time capabilities are then expected to transcend the geographical borders.
The trend of open banking
The pandemic and the sole reliance on online banking and self-serving banking has confirmed the need for banks to become more digital. Open banking is an API-enabled, technology-driven approach that allows banks and other providers to deliver financial services employing aggregated and authenticated customer data. Fintech companies around the world are incorporating opening banking into their products. Banks that won’t embrace the trend will be limiting their abilities to better serve their customers and clients. It will also hold them back from expansion and growth.
The trend of automated responses
Automation is costly but it’s a well-known fact that manual services are time-consuming and not the most efficient when it comes to businesses. Despite the cost factor, companies are investing huge amounts of money into automation for finance, from back-end core services to front-end services, from payments to lending. Automation isn’t only efficient but increases client satisfaction because of the communication and proves to be a great investment in the long run as it can reduce operational costs significantly.
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The revolutionized payment options
Modern-day business transactions are dependent on this core area of Fintech. There has been an increase in the payment options, for customers to have more accessibility and convenience.
- Contactless payments
- Mobile wallets
- ID verification technology
- Machine learning technology
- Artificial intelligence in fintech
According to PaymentJournals in 2020, the shift to online purchases is expected to increase in value to over $2.7 billion in 2022, with the real possibility of furthering the value of global e-commerce over $5.4 trillion in 2025.
Artificial Intelligence and Fintech
Financial companies are increasingly investing in AI-based fintech products. According to a recent Research and Markets forecast, AI in fintech investment is expected to reach USD 22.6 billion worldwide by 2025.
Artificial intelligence can be used in multiple use cases and has proved great so far. It can be used to enhance security, improve CRM, fraud detection, algorithmic trading and etc. We will be seeing a lot more AI-based products in 2022.
Blockchain in Fintech
Blockchain in fintech is a match made in heaven. The utilization of blockchain technology in fintech allows the banking processes to become reliable, fast, and simultaneously secure.
It is going to replace the traditionally expensive and less secure methods as it is a more reasonable and secure alternative. Blockchain is primarily a secure system and not just for financial transactions.
For example, blockchain technology can be used to support the growing peer-to-peer lending industry, which is expected to grow to a value of $1,000 billion by 2025.
Future of Fintech
For businesses to stay relevant, they need to adapt to the changing trends and demands of the customers. It is important to keep in mind that not every trend will suit every industry.
The future of fintech is promising as customers are more interested in online and remote services.
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