In the year ahead, there are many important developments that are set to take place in the fintech space. In this article, we look at five top fintech trends 2022, which are predicted to change the financial landscape, and impact all industries more broadly in the upcoming year.
The Fintech Trends to Watch for in 2022
Let’s take a look at five of the trends that will shape the future of fintech.
1. Cashless is King
Cash payments now account for less than one in six payments, according to UK Finance. The pandemic accelerated the already considerable shift to non-cash payments, with a 35% drop in payments using banknotes or coins in 2020.
With the rise of the non-cash merchant combined with the increase in digital transformation across industries, including digital accounting and financial management operations, this trend is only set to increase in 2022. Before long, it will be the norm to pay only with debit or credit card, using apps such as Google Pay on your mobile phone, or via other electronic payment means.
2. The Year of the Blockchain
With a number of key developments taking place, 2022 is set to be a milestone year for blockchain technology.
There will be a growing demand for Blockchain-as-a-service (BaaS) products. With the growth of crypto and more broadly, digital transformation, fintechs that build their products on the blockchain are expected to gain greater prominence, as companies across industries look at ways of digitalizing and streamlining all areas of their business. To use two examples, blockchain solutions are increasingly used to manage company invoicing and cross-border payments.
Traditional banks truly embrace blockchain
According to Deloitte’s 2021 Global Blockchain Survey, 76% of executives surveyed globally “believe digital assets will serve as a strong alternative to, or outright replacement for, fiat currencies in the next 5–10 years.”
Corporations and traditional banks are largely aware of the potential for blockchain to transform society, which is no understatement, enabling a whole new way to transact and serve customers. 13 of the biggest banks in the world have invested a combined $3 billion in cryptocurrency development, whether directly or as funding for cryptocurrency companies.
Notably, investment banks have begun adding crypto assets or funds to their portfolio offerings. Arguably the most prominent of these is JP Morgan. Once a noted crypto skeptic, JP Morgan CEO Jamie Dimon has led the organization’s embracing of crypto, registering a bitcoin fund with the Securities and Exchange Commission and even launching its own coin. Companies can expect a sharp increase in this institutional banking crypto interest in 2022.
Global crypto framework to come into being
Bank of International Settlements (BIS) executive, Benoît Cœuré recently revealed that regulators around the world have been in discussions on implementing an agreed international framework in response to the massive rise of crypto and decentralized finance. The overarching goals of such a framework would be to create measures to limit associated downside risk while harnessing the significant benefits that it can generate.
Cœuré indicated that a realistic draft proposal would take form in 2022. Such a framework would represent a massive endorsement of crypto and blockchain, and would likely help propel it further towards mainstream adoption by business and society at large.
3.Video Banking to Go Mainstream
As part of the migration to non-branch banking, financial institutions are looking at how to use video as a means to best deliver key services to their customers. Video banking builds on smart chatbot service by using AI and machine learning technologies. For instance, AI can generate appropriate answers to specific customer questions.
One prominent adopter of video banking is ABN AMRO. Joeri Hartmans of the investment bank has said, “Customers are really looking for personal conversations, with quality and expertise. What we add with video banking is the convenience of digital that customers need.”
The more tech-savvy traditional banks are likely to invest in video banking in the year ahead, as a way of driving customer engagement, combining both human employees with the assistance of AI and machine learning.
4. Talent Battle to Be Fiercer Than Ever
The Great Resignation has seen millions of talented professionals leave their jobs since the onset of the pandemic. This development coupled with the surge in the need for skill-specific professionals, particularly in the fields of data science and customer experience, will see organizations in technology and finance fight tooth and nail for the finest talent.
Key to this battle will be how organizations respond to the growing workforce demand for flexibility, in terms of scheduling, remote working environments, and meaningful work, the latter of which is a key requirement for a size-able portion of Millennials and Generation Z professionals. The ability to attract and retain top specialist talent will go a long way towards financial organizations’ success in 2022 and beyond.
5. Bank Digitalization Thanks to Fintech Partnerships
The pandemic led to a massive drive among the world’s leading banks to become more digital in response to market demands, driven by lockdowns and restrictions. Banks were able to implement digital processes relatively quickly and serve their customers well by doing so, negating the impact of the pandemic in an impressive manner.
Traditional banks have also become far more open to the enormous benefits of cloud computing and the opportunities that open banking can deliver in 2022. However, it is by partnering with the right fintech organizations that will enable banks to truly excel digitally. By doing so, banks access a ready-made digital solution and are able to avail of specialist talent without having to go through the often time-consuming, expensive process of recruitment.
With the huge challenge that banks have now of hiring top talent, the ability to partner with innovative fintechs makes business sense to respond to the market, develop themselves digitally, and manage internal costs.
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